Lesson #079 - Austrian Economics In Theory - Part 3
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Methodological Individualism – continued
Deductive Economics
What is this thing? It is quite simple, really. It means that if you look at what a group is doing, you can’t really know why a group is doing it or if it will do it again. A group is composed of too many people doing too many things for too many reasons. In other words, a mess.
It is impossible to figure…
Lesson #078 - Austrian Economics In Theory - Part 2
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METHODOLOGY
In this section, we will discuss the methods of Austrian Economics, particularly those of its most modern and important representatives: Ludwig von Mises and Murray Rothbard.
Why is a method important? Because a method provides a mechanism of how things happen in economics. If you understand the mechanics, you can use logic to deduce things you did not know. If you can deduce things, then you can also test them by…
Lesson #077 - Austrian Economics In Theory - Part 1
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This is going to be a tough lesson. We need to dive into what Austrian Economics Theory is, what are their key tenets, their main insights, critiques and why those critiques are incorrect.
We did not want to tackle this subject before showing you what Austrian Economics can do for you. Now that you have seen it with your own eyes in Austrian Economics In Pictures, we can move forward…
Lesson #076 - To Vote Or Not To Vote Is The Question
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Many people struggle with this question. Typically they would tell us that they don’t like their governments, that there are no good choices, that nothing ever changes, that things continue to deteriorate. Guess what? They are absolutely right. Then what? To vote or not to vote is the question. But what is the answer?
Let’s begin by saying that beyond personal reasons such as religious, moral or ethical, there is…
Lesson #075 - Senseless Inflation and Interest Rates - Part 5
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The Little Engine That Could
And so, we have gazed into Oracle’s ball and we have seen the future. However, for those of you out there still in disbelief, we will answer the following question, just for you.
Is it inevitable that governments fall into this ultimate self-destructive Interest Rate cycle?
The answer is yes!
It is indeed inevitable. If the past teaches us anything it is that politicians’ ways…
Lesson #074 - Senseless Inflation and Interest Rates - Part 4
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USA Melts Down
Something very similar happened in USA in 2006. In 2001-2002 the USA went through the dot-com crash (yet another bubble) and a recession followed. In order to “stimulate” the market, the USA CB printed, printed and then printed some more (i.e. lowered Interest Rates to ludicrous levels) and kept it there for a very long time. The CB lowered Interest Rates to 1% disregarding all lessons learned…
Lesson #073 - Sensless Inflation And Interest Rates - Part 3
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Banks Keep Marching On
The previous two parts of this lesson we made one critical assumption: Banks were lending and people were borrowing. This is what usually happens. Companies need to borrow money to expand or fix problems or simply to bridge a bad quarter. Banks are there and happy to loan.
People usually also borrow. People borrow for many reasons but the largest personal loan most people take is…
Lesson #071 - Senseless Inflation and Interest Rates - Part 2
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The International Flow
Internationally speaking, money flows from low Interest Rate countries to High Interest Rate countries. This is common sense. People want to get a higher profit.
When this happens, money (credit) becomes more scarce where Interest Rates are lower, therefore it’s price rises, therefore Interest Rates rise until they match the high Interest Rate of the country they were flowing into, to begin with. This is a…
Lesson #070 - Sensless Inflation And Interest Rates - Part 1
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People usually have only a passing idea as to how inflation and interest rates actually work in the real world. This is so, because thanks to Central Banks and the Fractional Reserve System (aka funny money), the interaction between multiple, occult, and inscrutable processes determine their levels. Senseless Inflation and Interest Rates have become the norm this days and have been embraced with by all mainstream media.
Interests are…
