How much of the monetary asset anybody wants to hold is ultimately subjective but it is clear that it depends crucially on the purchasing power of the monetary unit.

Demand for money is always demand for readily exercisable purchasing power. It is purchasing power that one demands, not the monetary substance as such, whatever it happens to be. It follows that every quantity of the monetary asset is sufficient. Different quantities of the monetary asset only mean that different exchange ratios to the goods […]

Economist Joseph Schumpeter said democracy was not an ideology in which the will of the people was fulfilled. Instead it was a process by which elites competed for leadership roles.

Once an election is over, votes are ignored and winning elites carry out preconceived plans.┬áThe United States and other democracies hold elections, yet benefits and bureaucracies balloon, regardless of electoral outcomes. In consonance with Schumpeter’s understanding of democracy as a channel by which planners take turns, what matters economically is not voting, but planning. All […]

The Origin and Purpose of Money

Private property owners can exchange property without the help of money. But in such a barter economy people cannot realize the full benefits of trade because transactions are possible only whenever both parties want precisely what the other party has to offer. If one of the two parties has nothing to offer that the other […]

The Founding Fathers were outspoken opponents of unlimited democracy, which they regarded as rule by the mob.

“The people”, warned John Adams, “when they have been unchecked, have been as unjust, tyrannical, brutal, barbarous and cruel as any king or senate possessed of uncontrollable power.” The principle of individual rights restrains the mob. It says that even if 99 percent of people want to violate the individual’s rights — say by sending […]

The endgame has emerged. Debt is compounding faster than growth. Monetary policy is impotent except to blow bubbles and buy time.

Structural change is impeded by political dysfunction. Substitution of sovereign debt for private debt has run its course; now the sovereigns themselves are stretched. Debt, deflation, demographics, and depression are demolishing elite dreams of free trade, free markets, and free capital flows. Elites hope for the turn of a friendly card, but the deck is […]

That the present money system must end, like all preceding paper money systems ended, is without question, and it looks increasingly likely that it will end badly.

There are ony two options. Either societies abandon the concept of unlimited money from nothing, allow the full and undoubtedly painful liquidation of previous capital misallocations and return to inflexible commodity money (i.e., gold), as has been done many times in the past, or we will experience a catastrophe in the form of a complete […]