(The following text is a revised update of an article that was first published in 2005.)
The recent outbreak of price inflation with the jump to an annual rate of 8.6 percent in May 2022 came as a surprise to the US central bank (the Federal Reserve). Having ignored the warnings of the Austrian school economists, the policy makers were paralyzed in the face of a phenomenon they deemed impossible to happen. None of their forecasting models had triggered an inflation alert.
Central Banks Don’t Fight Inflation
Failing to apply countermeasures in time, the Fed is now faced with the hard job of bringing down the price inflation rate without causing a recession. Prolonged stagflation may characterize the next decade. Are we back in the 1970s? During the stagflation at

Money velocity’s role in forcing up prices is misunderstood because today’s monetary “authorities” fail to consider how new money is injected into the economy.

Original Article: “The Fed Gets It Wrong on Money Velocity, Too”

“Inflation” is on everyone’s lips. Commentators and politicians are quick to point out the perpetrators. It is said that climate change is the cause of rising prices or that a specific war maker is to blame. A popular opinion holds that inflation is rising because the costs are rising—ignoring that costs are prices, too.
More informed people would probably point to the central bank as the guardians of price stability and lament their failure. While on the right track, even this explanation runs too short because central banks claim too

Too much government spending and loose monetary policy lead to rising prices combined with falling economic growth rates. All Keynesian roads lead to stagflation. It is the result of economic mismanagement. Again and again, the belief has been proven wrong that central bankers could guarantee the so-called price stability and that fiscal policy could prevent economic downturns. The present crisis is one more piece of evidence that interventionist monetary and fiscal policies are disruptive. Instead of a permanent boom, the result is stagflation.
Stagflation—a Keynesian Curse
“Stagflation” characterizes an economy that is plagued by inflation combined with stagnation. In this case, the conventional macroeconomic toolkit of monetary and fiscal policy is of no

A monetary system that allows the creation of money out of thin air is vulnerable to the fits of credit expansion and credit contraction. Periods of credit expansion typically occur over many years and even decades while the phases of credit contraction happen like sudden implosions. The monetary policy makers tend to promote the prolongation of credit expansion because they fear deflation.
By doing this, however, the central banks prevent monetary moderate deflation as it would happen as the natural consequence of rising productivity. This way, an antideflationary monetary policy lays the groundwork for an upsurge of price inflation along with augmenting the risk of an abrupt contraction of the financial markets.

Credit Cycles
Financial cycles can extend over

Ein staatliches Fiat-Währungssystem mit einer nur teilweisen Deckung des Geldumlaufs durch die Bankreserven macht es möglich, dass die Geschäftsbanken mehr Geld als in Umlauf bringen als sie an Bargeld halten. Das sogenannte Giralgeld wird als Bankeinlagen gleichsam aus dem Nichts geschaffen. So ein Währungssystem ist nicht nur äußerst volatil, sondern auch anfällig für lange und extreme Phasen der Kreditausweitung und der Kreditkontraktion.

Kreditzyklen

Verschuldungszyklen können lange Zeiträume umfassen. In den vergangenen vier Jahrzehnten ist es zu einer massiven weltumspannenden Kreditexpansion gekommen, die durch die Finanzkrise 2008, die Pandemiepolitik 2020 und die Sanktionspolitik als Antwort auf die Ukrainekrise jeweils neue Schubwellen

Über „die Inflation” wird viel Irreführendes geredet. Von Politikern, Zeitkommentatoren und selbst von manchen Ökonomen. Schon die am meisten verbreitete Definition ist falsch. So heißt es, „Inflation” sei ein anhaltender Anstieg der Preise. Weiterhin wird behauptet, dieser Anstieg ließe sich messen und demnach ergebe sich das „Preisniveau” und die „Inflationsrate”.
Preise
Der Grundirrtum des Ansatzes zur Messung der Preisinflation besteht darin, zu glauben, Geldpreise würden etwas „messen”. Demnach würde der Preis den Wert eines Gutes wiedergeben. Tatsächlich messen Geldpreise nichts. Und auch von der Existenz eines sogenannten „Preisniveaus” kann demnach prinzipiell nicht die Rede sein.
Nicht die Preise bestimmen den Wert eines Gutes, sondern das

Wieder einmal bedroht ein Konflikt in Osteuropa den Weltfrieden. Der Streit um den Status der Ukraine als unabhängiges Land bringt das alte Problem der nationalen Souveränität wieder auf den Tisch. Es muss eine diplomatische Lösung gefunden werden. Ein Ausweg bestünde darin, dass die Ukraine frei sein wird, der Europäischen Union beizutreten, aber militärisch neutral bleibt. Diese Lösung zeichnet sich ab, wenn man die Ideen Ludwig von Mises berücksichtigt, die sich in seinem Memorandum zur Sicherung eines dauerhaften Friedens in Osteuropa von 1941 und seinem 1944 erschienen Buch Omnipotent Government („Der totale Staat“) finden.
Russische Kriegsziele
Mit der Invasion der Ukraine am 24. Februar 2022 hat Russland deutlich gemacht, dass es eine Mitgliedschaft der

This second part of the series about the Principles of Economics treats Menger’s exposition of the economy. In continuation of the first part, which covered the general concept of goods, the part on the economy treats the role of economic goods in relation to human wants. Based on the original version in German, published in 1871 as Grundsätze der Volkswirthschaftslehre, the following exposition tries to capture the spirit of the work, with all direct quotes in the text freshly translated for this article.
Purpose of the Economy
Fulfilling needs and desires means living and thriving. Caring for the satisfaction of our desires means taking care of our lives and our prosperity. This concern is the most important of all human efforts, because it is the basis of all

Das Weltwirtschaftsforum (WEF) wurde vor fünfzig Jahren gegründet. Es hat im Laufe der Jahrzehnte immer mehr an Bedeutung gewonnen und ist zu einer Plattform für futuristisches Denken und Planen geworden. Als Treffpunkt der globalen Elite bringt das WEF die führenden Persönlichkeiten aus Wirtschaft und Politik sowie einige wenige ausgewählte Intellektuelle zusammen. Die Hauptstoßrichtung des Forums ist die globale Kontrolle. Freie Märkte und individuelle Wahlmöglichkeiten stehen nicht an erster Stelle, sondern staatlicher Interventionismus und Kollektivismus. Die individuelle Freiheit und das Privateigentum sollen nach den Projektionen und Szenarien des Weltwirtschaftsforums bis 2030 von diesem Planeten verschwinden.
Acht Vorhersagen
Die Freiheit des

Klaus Schwab of the World Economic Forum has big plans for a “sustainable” future. Most of it involves the destruction of markets and basic human rights.

Original Article: “The Dystopian “Fourth Industrial Revolution” Will Be Very Different from the First One“.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

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A Review of Stephanie Kelton’s The Deficit Myth
The good news is that Stephanie Kelton has written a book on MMT that is very readable and will strike many readers as persuasive and clever. The bad news is that Stephanie Kelton has written a book on MMT that is very readable and will strike many readers as persuasive and clever.

The United Nations has been the key institution in setting the stage for a global “Great Reset” devoted to global management of human society and of markets.

Original Article: “The United Nations and the Origins of The Great Reset“.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

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What Germany Must Do for a Speedy Recovery
On June 29, the German parliament reacted as parliaments normally do when there is a problem, namely, by allowing the government to spend more. In order to respond to the economic difficulties due to the corona epidemic and the government restrictions, it passed a typical Keynesian stimulus package in order to boost

About twenty-four hundred years ago, the Greek philosopher Plato came up with the idea constructing the state and society according to an elaborate plan. Plato wanted “wise men” (philosophers) at the helm of the government, but he made it also clear that his kind of state would need a transformation of the humans. In modern times, the promoters of the omnipotent state want to substitute Plato’s philosopher with the expert and create the new man through eugenics, which is now called transhumanism. The United Nations and its various suborganizations play a pivotal role in this project which has reached its present stage in the project of the Agenda 2030 and the Great Reset.
The Struggle for a World Government
The Great Reset did not come from nowhere. The first

The world is currently in the midst of a newly aggressive drive to bring about a new socialist order through a powerful and “efficient” technocratic state. This new order has been labeled as “progressive,” but it is merely the latest version of the socialist impulse which we have seen before in the form of socialism and communism.
A War on Private Property
Summed up in a single sentence, the plans of the communists aim at the abolition of private property. From there, the other major demands follow, such as abolishing the family, nation, and countries, and finally, as Marx noted, “communism abolishes eternal truths, it abolishes all religion, and all morality.” In as much as the program of liberalism “if condensed into a single word….is private ownership of the

In his Man, Economy, and State, Murray N. Rothbard investigates not only the role of the capitalist but also that of the entrepreneur in a market economy. Rothbard uses the theoretical concept of the evenly rotating economy (ERE) to compare the role of the capitalist to that of the entrepreneur. Entrepreneurs earn profits in so far as they successfully correct the maladjustments in the real economy and move it closer to the ERE without ever attaining that state.
Evenly Rotating Economy (ERE)
The function of the entrepreneur is analytically different from that of the capitalist. Because the real economy, different from the evenly rotating economy, is dynamic and therefore subject to constant change, entrepreneurs are required who are active in coping with the

However high the death rate of the COVID-19 coronavirus becomes, the governmental response to the threat will be even more dangerous. If the current blockade of economic life continues, more people will die from the countermeasures than from the virus itself. In a short time, the basic supply of everyday goods will be at risk. By interrupting the global transport and supply chains, important medicines will be missing and food supplies will be insufficient. This is how a containment strategy works: operation successful, patient dead.
Government’s Main Strategy: Destroy Commerce
The main concern for those responsible for healthcare is not the absolute number of deaths, but “flattening the curve,” i.e., stretching out the frequency of cases of infection.
The model

[In the second part of this interview, Brazilian journalist André de Godoy speaks with Antony Mueller about the relationship between credit and money, the inflationary process, and its relation to the real economy. How will the current debt binge end? What comes after Quantitative Easing?]
André de Godoy: Ludwig von Mises mentions in his books that credit expansion is one of the causes of the inflation beyond the monetary expansion. What are the similarities and differences between those two phenomena?
Antony Mueller: Money comes into circulation through the channel of credit. Commercial banks get a loan from the central bank and provide loans to consumers, business, and government. Thus, there are two sources of credit creation and two basic types of money: