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Source link: http://archive.mises.org/10183/return-of-the-dead-hand/

Return of the Dead Hand

June 24, 2009 by

A major significant failure of the resurgence of market-oriented policies was a failure to reform the monetary system. This failure left significant control and direction of all aspects of money, credit, and financial flows under central-bank planning and control. The resulting monetary and financial crisis is not a market failure, but a central-planning failure — an artificial boom is a centrally controlled misdirection of production. FULL ARTICLE


Harry Valentine June 24, 2009 at 7:48 am

Governments need to downsize and reduce their influence over what is supposed to be a free market. Except politicians seem hell bent to expand their influence courtesy of increased spending. Very few elected officials (eg Dr Ron Paul) have any understanding of Mises, Hayek or Rothbard, The present Canadian Prime Minister is a former libertarian who understood Hayek . . . except that he has become Keynesian (something that has happened to some elected officials who formerly embraced free market principles).

Enjoy Every Sandwich June 24, 2009 at 8:01 am

Thank you Thing!

Dick Fox June 24, 2009 at 12:16 pm

This is an outstanding article. Cochran gets it exactly right concerning recovery. Most importantly he recognizes as did both Mises and Hayek that as inflation is ended deflation must be prevented.

Thank you John Cochran for not praising deflation but calling it like it should be.

My only comment is that I wish we would change the rhetorice that the problem is the boom but the bust is actually the solution to the problem. In truth the boom often makes many rich but it is at the expense of the future, but that does not make the bust good. The bust makes many insolvent who had nothing to do with the previous inflation. People know the bust is bad so rhetoric that implies that it is good sounds crazy.

I know that John Cochran understands this. I am not talking about theory but rhetoric here.

newson, this is a good article to help you understand where I am coming from when I criticize modern Austrians who are driven by monetarist ideas.

Horst Muhlmann June 24, 2009 at 12:46 pm

Enjoy Every Sandwich, Is Thing turning off the Obama channel or turning it on? If the latter, I don’t think we should be thanking him :)

Michael June 24, 2009 at 1:13 pm

Very good article.

In my opinion, it is all a matter of market timing. It does not matter if it is gold, oil, or Microsoft, if you have access to good market timing signals, they will help you get in and out at a profit.

No guarantees in this business, but if they are right most of the time, you can still make $s.

There are may web sites providing them out there (search Google). Just find one that works and use it! Check out http://invetrics.com as an example.

Its Dow Jones timing signals are up 43% as of 6/23/09 while the Dow is up just 29% off its March lows.

Following a market timing system works!

greg June 24, 2009 at 3:34 pm

If you are convinced that these huge defecits is going to kill any recovery, look at TMV. It is a 3X short the 30 year T-bill fund. If interest rates rise on the 30 year, this fund will jump well over $100. But currently, this fund is trading at $81 which tells me that investors are not convinced we are going to see a rise in the rates as the demand for Treasuries are still holding up.

The question is, do you play the market or do you play your economic theory? I agree with Michael, it is all about timing!

Shay June 24, 2009 at 11:46 pm

Dick Fox, the point is that the bust is the solution; attempts to avoid it just keep the problem around longer and worsen it, without eliminating the eventual bust. It’s painful and a good thing, and better to get over with sooner than later.

Stephen Grossman June 25, 2009 at 10:16 am

“the collapse of the economies of the former Soviet states”

What was their monetary policy? I’ve read that Marxist political leaders respected gold.

James Fowlkes January 9, 2011 at 7:49 am

Check out Social Credit. It’s a much better system than the current “fake” paper money system we are currently using. I mean if someone told you “Hey, I’m going to print this money for you as payment for your services” what would your response be? Well, that’s what the fed tells us and the rest of the world.

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