Frank Shostak recently wrote that an increase in the supply of gold by itself cannot cause a boom-bust cycle as described by the Austrian Business Cycle Theory (ABCT). If that were true, then Austrians would have no explanation for booms and busts prior to central banking.Shostak cites Robert Murphy, who wrote that mined money could enter the loan market and lead to a boom. Believing Murphy is in error, Shostak counters with,Murray Rothbard disagreed with this. He held that increases in the supply of gold could not set in motion the boom-bust cycle. For him, the key reason behind the boom-bust cycle is the act of embezzlement brought about by the expansionary monetary policy of the central bank, which sets in motion an increase in the money supply out of “thin

“All animals are equal, but some animals are more equal than others.”―George Orwell, Animal FarmThe nation’s deposit insurer (FDIC) let slip the other day which large depositors were bailed out when Silicon Valley Bank (SVB) failed last spring. SVB banked the nation’s tech illuminate.Its failure exposed fractional reserve banking’s Achilles heel when a bank run was initiated via social media and carried out with depositors moving money on their cell phone apps. The bank’s assets were primarily government or government-backed securities, unfortunately purchased when interest rates were near zero.Fortune.com reports:A document from the Federal Deposit Insurance Corp., which the agency said it mistakenly released unredacted in response to a Bloomberg News Freedom of

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

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Both presidential campaigns are making outlandish promises in the waning hours before election day. Kamala Harris claims she will stop corporate price gouging with government force. The legislative mechanics of how she would do this are unknown. Prices distribute goods. A high price is a signal that more of that particular good should be produced. Increases in the level of all prices is caused by inflation of the money supply. Price inflation indicates a drop in the purchasing power of money. Murray Rothbard explains what will result with Harris price controls:Economic theory tells us the myriad evils that stem from any attempt at price controls of goods and services. Maximum price controls lead to artificially created shortages of the product; mini- mum controls

The Wall Street Journal recently reported, “Trump’s crypto campaign echoes some other presidential candidates who have dedicated themselves to specific fiscal policies. Much of William Jennings Bryan’s 1896 campaign was a protest of the gold standard. After taking office, Franklin D. Roosevelt issued an order restricting the private use of gold. Ron Paul’s 2008 campaign assailed the Federal Reserve.”With apologies to Lloyd Benson, “I know Ron Paul, and Donald Trump, you are no Ron Paul.” Dr. Paul is famous for his grilling of Federal Reserve Chairman while in office. As a student of Austrian economics and friend of Murray Rothbard, he has always understood that the central bank creates inflation, not the opposite as they claim. Paul has said “we are in the process

My friends at AARP were the first to let me know that my monthly stipend from taxpayers by way of Uncle Sam will increase by 2.5% beginning in January. The retiree advocate gives some laughable context, “The 2025 cost-of-living adjustment (COLA) is the lowest since 2021, reflecting a continued cooling of inflation following a surge in consumer prices during the COVID-19 pandemic.”Rob Williams, managing director of financial planning at Charles Schwab, told AARP, “Some may feel the increase for 2025 is low relative to the inflation they feel in their pocketbooks,” Williams says. “Still, it’s a welcome increase that builds on a 5.9 percent increase in payments in 2022, 8.7 percent in 2023 and 3.2 percent this year.” This week’s CPI reading remained higher than the

Luke Gromen told Dale Pinkert on the Forex Analytics F.A.C.E. Show July 22nd that the U.S. went to China last fall and asked the Chinese to strengthen the yuan. The Chinese said if the United States wants a weaker dollar they need to let it go versus gold, implying that the gold market is influenced by the government’s hand.Pinkert, being a currency trader, expressed concern that the dollar could be devalued overnight by government fiat, and asked how the executive branch could engineer such a devaluation. Groman matter-of-factly pointed to Section 2.10 of the Financial Accounting Manual of the Federal Reserve Banks and said the President could tell the Treasury Secretary to tell the chairman of the Federal Reserve to remonetize gold.Indeed, the first paragraph of

The market always seems to teach retail investors a lesson. Bloomberg reported leveraged EFTs such as The Direxion Daily Semiconductors Bull 3x Shares (ticker SOXL), which delivers triple the daily move of the NYSE Semiconductor Index, took in a record 1.5 billion last week, only to drop “15% Wednesday to extend a 37% loss in the past 14 days.”“The $23 billion ProShares UltraPro QQQ (TQQQ) and the $4 billion ProShares UltraPro S&P 500 (UPRO) fell nearly 7% and 11%, respectively, after taking in a cumulative inflow of about $650 million last week,” Denitsa Tsekova and Isabelle Lee reported. “There is a natural tendency for people to want to be part of a group or crowd,” writes Martha Stokes, Chartered Market Technician. But, “Retail investors will always lose money

My wife often poses the joke “Do you know the difference between doctors and God?” with the punchline being “God doesn’t think he’s a doctor.” The atrocious behavior of my neurosurgeon made me wonder: How does anyone get away with acting like this?In part one of my deep brain stimulation to fix the tremors in my hands, two holes are drilled into my skull while my head was secured in place by a metal cage with a plexiglass box fitted over it. I was sedated to a level where I was awake but didn’t feel any pain when the drill bit went through my skull, although I could hear it—a sound indescribable yet at the same time unforgettable.What I also heard was the surgeon continually yelling at the staff, “What I want you to do is just stand there and not move. There is

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

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When something valuable is mispriced at say zero, speculators appear to grease the wheels of commerce while earning a little something for themselves. This is all well and good until the government steps in to put a stop to the speculator’s arbitrage. The real issue is, “There were just too many diners for too few restaurants,” Appointment Trader founder Jonas Frey told Bloomberg. “I believe we’re serving a need. That’s why it worked.” A thriving market for New York restaurant reservations has turned into a mania, evidenced by the 30,000 people who have flocked to Frey’s site to buy reservations at some of the city’s hottest dining spots for $250 to $1,000 a seat. His platform has sold over $6 million in reservations over the past year, according to its

Price discovery in commercial real estate, which had been frozen while sellers insisted on prices from the good ol’ ZIRP days, is starting to thaw. Real Estate giant Related Companies has unloaded the property at 321 W. 44th St., New York, New York for less than $50 million, reports Bloomberg. Not only is that a 67% discount from the nearly $153 million that Related Fund Management paid for it in 2018, but the lenders including Canadian Imperial Bank of Commerce agreed to a “short sale.” For those who have forgotten 2008 or were too young, a “short sale” is when the lender agrees to a property sale for less than the outstanding amount on the mortgage. Owner loses everything, lender takes a large loss. In this case the lenders were more than cut in half as the

For lending, as in all things, necessity is the mother of invention. No matter the rate, lenders want to lend and borrowers want to borrow, with both sides tending to overdo it. The Wall Street Journal reports that the newest collateral thing is the AI chip. Wall Street heavyweight Blackstone led a $7.5 billion financing last week for CoreWeave, “a New Jersey–based startup that owns artificial-intelligence chips and associated computing gear in data centers.”The collateral of the realm these days is Nvidia’s graphics-processing-unit, or GPU, chip. For the moment, Nvidia can’t keep up with demand from the likes of Amazon and Microsoft. These companies are gorging themselves on the chips, sending GPU chip prices skyward. “For Wall Street, their utility has given

I heard a rumor the other day that Democrats are throwing the Presidential election. Party apparatchiks believe the stock market will crash, sinking the economy and they would rather have it all implode on Donald Trump’s watch, paving the way for having a Democrat in the White House from 2028 until eternity. This sort of conspiracy theory seemed spectacularly implausible until I read in the New York Times, that anti-Trump Republicans believe the Biden campaign is ghosting them. “Some Republicans blame the Biden campaign, saying they’ve heard practically nothing from an operation they think could use their help. And they worry that the omission represents a broader failure to bring moderate Republicans into the fold.”Susan Molanari told the NYT’s Jess Bidgood, “I’m

Construction lending juggernaut Bank OZK made news when its shares fell 17% after Citigroup analyst Benjamin Gerlinger wrote in a report that cut his rating to “sell.” Bloomberg reported “Bank OZK faces ‘largely idiosyncratic’ exposure to life sciences relative to peer banks,” with a $915 million loan on the Research and Development District on San Diego’s waterfront, developed by IQHQ Inc..“RaDD has been in development for more than 4 years and we believe 0% of the 1.7 million square feet is leased — indicative of a difficult life science construction lending market,” Gerlinger wrote.“Supply has outpaced demand across markets, putting leverage back in tenants’ hands and allowing start-ups to push for shorter terms,” JLL researchers led by Maddie Holmes, Amber

Stock market technicians are musing that if meme stocks are surging the Fed is not tight enough. Yes, after three years of hibernation “Roaring Kitty” returned with the first of a series of cryptic posts on X. Keith Gill’s (aka Roaring Kitty) post showed a man leaning forward with what looked like a gaming controller. Some traders interpreted it to mean Gill is coming back, according to Bloomberg. Gill rallied day traders on Reddit in an effort to squeeze GameStop short sellers and “reportedly turned a $58,000 options outlay into a $50 million windfall during the initial 2021-era meme stonk frenzy,” reports Almost Daily Grant’s. Needing no other excuses, punters have sent shares of GameStop and AMC soaring. A Bloomberg Markets Live Pulse survey just revealed that

Economics trumps sentimentality, and gold’s elevated price has some people raiding the family jewelry box to pay bills. “Young people are not wearing grandma’s jewels. Most of the young people, they want an Apple watch. They don’t want a pocket watch,” Tobina Kahn, president of House of Kahn Estate Jewelers told Bloomberg. “Sentimental is now out the door.”When times are tough, treasures change hands, the late Burt Blumert, once a gold dealer and Mises Institute Board Chairman, used to say. “Prices are high, and I need cash,” Branden Sabino, a thirty-year-old information technology worker said, adding that with the cost of rent, groceries, and car insurance rising, he doesn’t have any savings. He sold a gold necklace and a gold ring to King Gold and Pawn on Avenue

When the latest CPI number came in hot at 0.4% for March and the annual core CPI inflation rate held at 3.8%, Betsey Stevenson, professor of economics at the University of Michigan appearing on CNBC’s Squawk Box said nonchalantly “Three percent inflation is no big deal.” The comment got a rise out of co-host Becky Quick who reminded the professor that the three percent was adding on to the already higher prices consumers continue to suffer with. To Ms. Quick’s point, the latest Grant’s Interest Rate Observer cites once-upon-a-time Fed Chair William McChesney Martin who said (approximately) “the purchasing power lost to inflation is never regained.” Grant’s cites a paper entitled “The Cost of Money Is Part of the Cost of Living: New Evidence on the Consumer

Day-to-day we don’t hear much about the commercial office property crash. As The Fed’s Michael Barr said at an event hosted by the National Community Reinvestment Coalition in Washington, “This is the kind of thing where it’s likely to be a very slow-moving train as the financial sector and commercial real estate market move forward,” he said, adding that refinancing deals will play out in the next few years. “It’ll take some time.”Barr, the vice chair for supervision said “There are pockets of risks in the system. We’re looking at things like, what’s the level of unrealized losses on the balance sheet from securities? We’re looking at banks that have particular kinds of concentration in commercial real estate.” Wolf Richter at wolfstreet.com, citing Trepp,

Yeah, the other night I laid sleeping And I woke from a terrible dream So I caught up my pal Jack Daniel’s And his partner Jimmy Beam And we drank alone, yeah With nobody else Yeah, you know when I drink alone I prefer to be by myself ~George ThorogoodI poured hundreds of “Jack and Cokes” when I tended bar from the late 70’s to mid 80’s. It was beyond me how anyone could tell the difference between Jack Daniels Old No. 7 and anything else when mixed with coke or whatever carbonated cola was coming out of the gun. Turns out Dr. Fauci and the Center for Disease Control did Brown-Forman, the makers of Jack, a solid by shutting down America and cooping everyone up. More than some whiled away the hours with their old pal Jack Daniels. People may have had to work from

Followers of the Austrian school of economics know that the term inflation refers to increasing the quantity of money or money substitutes. The result being a rise in the price of goods and services or a fall in the value of money. But, in the modern era, this rise in prices is called inflation and as Ludwig von Mises wrote, “This semantic innovation is by no means harmless.” The semantic change has people looking everywhere but where they should to blame for higher prices.Bloomberg’s Enda Curran writes, “A prolonged period of elevated inflation has left consumers cranky and eager to cast blame.” With the term inflation evidently getting tiresome, Curren lists some new price increase buzzwords and phrases.“Shrinkflation” This is the President’s favorite. He even

For lower income folks the landing is already hard. Chief investment strategist at Charles Schwab Liz Ann Sonders posted on X (and reported by Almost Daily Grant’s) that the tally of domestic temporary help employees slipped to a three-plus-year low of 2.748 million down from 3.181 million as of March 2022. The 14% comes in 4th in the category’s downward drops percentage-wise since 1990; to the early 2000s, the 2008 financial crash and the Covid debacle, each coinciding with a recession. Outplacement firm Challenger, Gray & Christmas reports nationwide layoffs totaled 84,638 last month, the largest February sum since 2009. The Federal Reserve Bank of New York’s Survey of Consumer Expectations for February finds that respondents give themselves a 14.5% chance of

One would guess the folly of rent control regulations needn’t be explained any further. If rents are held in place by government edict, landlords have no incentive to maintain apartment units to attract renters, the housing stock ultimately deteriorates, and homelessness increases. But, as Bloomberg reports, “Tougher rent control, returning worldwide, destroys $75 billion in property value. Cash-strapped tenants cheer as they maintain a foothold in the city.”That was the article’s subtitle. The title of the piece authored by Patrick Clark and Prashant Gopal screams that New York City apartment values have been cut in half. In 2019, alarmed about the decline in affordable housing, New York State lawmakers made rent control laws tougher. They sharply reduced how

Something’s rotten under the Las Vegas Convention Center and it turns out it’s a chemical sludge with the “consistency of a milkshake,” reports Bloomberg Businessweek. This sludge is a byproduct of Elon Musk’s Boring Company tunneling from the Las Vegas Convention Center to the Encore and Westgate hotels. These tunnels don’t feature rapid transit but instead individual Teslas ferrying carloads of convention goers at just 40 mph. Workers are being burned by the sludge and the Nevada’s Occupational Safety and Health Administration (OSHA) is investigating. Bloomberg Businessweek obtained a copy of the report under the Freedom of Information Act.Leaving aside the worker safety issue, Musk has been, shall we say, aspirational about the Boring Company’s prospects for

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The number of U.S. commercial foreclosures spiked to 635 in January 2024 from a low of 141 in May 2020 reports real estate data firm ATTOM. The January count was up 17% from the previous month and roughly twice as many as in January 2023. “Commercial property deals in the US are picking back up at deep discounts—and forcing lenders to face just how far real estate prices have fallen,” notes Sarah Holder on Bloomberg’s “Big Take” podcast.Bloomberg commercial real estate reporter Natalie Wong detailed a New York office building at 1740 Broadway purchased and renovated by Blackstone at considerable cost and the company has walked away with the debt that’s behind that building being marketed at a 50% discount. Ms. Wong said,So you’re seeing these massive discounts on

Prices will always increase, some small banks will fail, and the Fed was asleep at the switch when the run on Silicon Valley Bank occurred. Fed chair Jerome Powell admitted those three things in response to Scott Pelley’s questions on 60 Minutes.
“But the overall price level doesn’t come down. It will fluctuate. And some . . . goods and services will go up, others will go down. But overall, in aggregate, the price level doesn’t tend to go down except in fairly extreme circumstances,” Powell said.
Of course, what Powell is referring to doesn’t exist. Murray Rothbard wrote,
There is no such thing as a single, scientific index of the movement of general prices. All such indexes are strictly arbitrary, and there are a huge number of possible indexes, all of which

The wordsmiths at the Federal Reserve wisely omitted the line about a “sound and resilient” banking system in its statement on January 31. That same day shares of New York Community Bank plunged when the bank announced a loss of thirty-six cents per share when analysts expected earnings of twenty-seven cents a share for the fourth quarter.
Internal or external auditors occasionally comb through individual loans in a bank’s portfolio and make judgments as to whether those loans are worth what the bank says they are worth due to lower appraised values and other issues either particular to an individual property or the market as a whole. Bankers then, begrudgingly, set aside earnings for potential loan losses.
In the case of the real estate loans at New York