Although the Bank of England is largely responsible for inflation in the UK, its leaders blame British consumers and workers for the price increases.
Original Article: "Bank of England Economist: Britons Need to Accept That They’re Poorer"
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Read More »The story of the failure of Silicon Valley Bank is the story of nearly every bank failure. Fractional reserve banking invites the risky behavior that brings down the banking system.
Original Article: "Silicon Valley Bank and the Failure of Fractional Reserve Banking"
This Audio Mises Wire is generously sponsored by Christopher Condon.
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With the apparent failure of Silicon Valley Bank (SVB) potentially causing a crisis in the American and even the global financial system, we will be treated to all manner of explanations, very few of which will accurately state the cause of these troubles: fractional reserve banking.
In modern banking there is little separation between warehouse and investment banking. The downside of investment banking is a potential loss of money since no investment can be a sure bet. The upside is the potential for a good return on money, the reward of taking on a degree of risk. In warehouse banking, such as personal or business checking accounts, the customer is not expecting any loss due to actions taken by the bank. The service rendered here is not expert investment advice;
As the Biden administration continues to inflate the dollar, other nations are questioning the existence of the petrodollar.
Original Article: "Saudi Arabia’s Quandary: The End of the Petrodollar"
This Audio Mises Wire is generously sponsored by Christopher Condon.
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In 1971 Richard Nixon took the US off the last feeble vestiges of the gold standard, otherwise known as the Bretton Woods Agreement. That system had been a bizarre gold-dollar hybrid where the dollar was the world reserve currency but the US agreed to keep the dollar backed by gold. Henry Hazlitt’s book From Bretton Woods to World Inflation explains the consequences of this situation well.
The end of this system left a vacuum at the heart of world financial affairs, one that needed to be filled quickly. The dollar, now unmoored by gold, remained the default currency for international trade, but without the confidence derived from its former gold backing, the US needed to bolster its credibility lest other more enticing options appeared to displace the dollar’s
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Fundamentally, inflation is fraud. The central government or bank printing more money lessens the value of the money already in circulation. A truckload of sand isn’t particularly valuable in Saudi Arabia. An increased supply of money means ultimately that prices denominated in that money will go up. Unless you are the one to receive that new money at its point of entry, and thus keep pace with the inflation, the real value of your money holdings will go down.
So, in essence the government has taken wealth from you, and offered nothing in return, except the vague promise that the inflation will grow the economy, from which you will subsequently benefit. As we will show in this article, that is a false promise that has never once worked, and there is plentiful
