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Joseph T. Salerno

Articles by Joseph T. Salerno

What Fed “Independence” Really Means

4 days ago

A recent undercover video interview with a Fed economist by a Daily Caller reporter contains explosive revelations about the profoundly anti-democratic doings of the Fed.    In the video, Federal Reserve principal economist Aurel Hizmo, a speech writer for Fed Chair Jerome Powell, reveals “classified information” about how Powell deliberately acted to undermine President Trump and expand Fed activities far beyond its legislated monetary policy mission to encompass research on cherished Progressive issues. Hizmo reveals that Powell “hates” Trump and “wants to be remembered in history as. . . someone who held the line against . . . Trump.”  Indeed, Hizmo tells the reporter, many things cross Powell’s desk that he says “no” to simply because they are

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The Myth of the Unchanging Value of Gold

February 12, 2024

According to mainstream economics textbooks, one of the primary functions of money is to measure the value of goods and services exchanged on the market. A typical statement of this view is given by Frederic Mishkin in his textbook on money and banking. “[M]oney … is used to measure value in the economy,” he claims. “We measure the value of goods and services in terms of money, just as we measure weight in terms of pounds and distance in terms of miles.”
When money is conceived as a measure of value, the policy implication is that one of the primary objectives of the central bank should be to maintain a stable price level. This supposedly will remove inflationary noise from the economy and ensure that any changes in money prices that do occur tend to reflect a

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Why You Should Read Human Action—Very Carefully

January 15, 2024

May 16–18, 2024:  Join Dr. Joseph T. Salerno, Dr. Thomas J. DiLorenzo, Dr. Jörg Guido Hülsmann, Dr. Joseph T. Salerno, Dr. Mark Thornton, and more for a conference in honor of the 75th anniversary of Human Action at our campus in Auburn. Space is limited. Register here. 
There are many good reasons why those who aspire to learn and practice sound economics should read Human Action. However, the reader should approach the book with care and humility. For a book as subtle and profound as Human Action presents several pitfalls for the careless or superficial reader. In these remarks I will briefly cite the most important reasons for reading the book. I will then dwell on a few pitfalls that may ensnare the incautious reader.
So why read Human Action? First and

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The Wrong Way and the Right Way to Fix the Fed

December 20, 2023

Monetary Policy as Inflationism
Today all governments and central banks operate under the ideology of inflationism. The underlying principle of inflationism is that the quantity and purchasing power of money determined by the free market leads to deflation, recession, and unemployment in the economy. The inflationist ideology is therefore embedded in the very concept of monetary policy, which can be defined as an increase in the supply of money aimed at lowering the purchasing power below the level determined by market forces. In other words, the purpose of monetary policy is perpetual inflation of money and prices.
For the past sixty years there has been a great debate about monetary policy. Some economists argue that monetary policy should be left to the

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Ludwig von Mises’s Monetary Theory in Light of Modern Monetary Thought

February 23, 2023

Ludwig von Mises’s contributions to the development of the technical methods and apparatus of monetary theory continue to be neglected today, despite the fact that Mises succeeded exactly eight decades ago, while barely out of his twenties, in a task that still admittedly defies the best efforts of the most eminent of modern monetary theorists, viz., integrating monetary and value theory. Such a unified and truly "general theory" is necessary to satisfactorily explain the functioning of the market economy, because the market economy, or any economy based on social cooperation under the division of labor, cannot exist without monetary exchange and calculation.1
Mises’s work on monetary economics is not only ignored by the roiled mainstream of neo- and "new"

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Murray Rothbard versus the Progressives

November 2, 2022

There has been a radical change in the social and political landscape in this country, and any person who desires the victory of liberty and the defeat of Leviathan must adjust his strategy accordingly. New times require a rethinking of old and possibly obsolete strategies. —Murray N. Rothbard1
Murray Rothbard wrote the above words in 1994, shortly before his untimely passing. They sum up the main theme of a series of brilliant articles that he published in the 1990s calling for a radical readjustment of libertarian strategy to the new political and social realities that had emerged in the aftermath of the collapse of communism in Eastern Europe and the Soviet Union. In these articles, Rothbard identified both the abstract social philosophy and the concrete

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Why I Love “Price Discrimination”

September 1, 2022

Last week, I went to a vision center to get my new eyeglass prescription filled. Because I wear progressive lenses with antireflective coating and do not have vision insurance, I anticipated that the out-of-pocket cost of the glasses would be quite high. When I entered the shop and stated my business, the manager immediately asked if I had vision insurance, and I responded that I did not. The manager consulted with a saleswoman and sent her to assist me in choosing frames to try on. I noticed that she was selecting mainly Ray-Bans and other designer frames.
When I questioned her about the price of the frames, she informed me and then hastily added that because I did not have vision insurance, I was eligible for a 20 percent discount on the total price of the

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Rothbard vs. the Religion of Progressivism

June 11, 2022

Our main text for the Rothbard Graduate Seminar this week is Murray Rothbard’s Power and Market: Government and the Economy, which contains a systematic treatment of one area of economic theory, interventionism. This represents a departure from past seminars in an important respect. Earlier seminars focused on texts by Mises or Rothbard that addressed a much broader scope of their thought. Previous seminar texts such as Man, Economy and State and Human Action over the entirety of economic theory. Human Action, in addition, features a full treatment of methodology as well as discussions of epistemology, political philosophy, and economic history. Other texts used at earlier Rothbard Graduate Seminars such as The Ethics of Liberty and Economic Controversies are also

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Let Unsound Money Wither Away

January 13, 2021

[This is a revised version of written testimony submitted to the the Subcommittee on Domestic Monetary Policy and Technology of the Committee on Financial Services, US House of Representatives, “Fractional Reserve Banking and Central Banking as Sources of Economic Instability: The Sound Money Alternative,” June 28, 2012.]

Chairman Paul and members of the subcommittee, I am deeply honored to appear before you to testify on the topic of fractional-reserve banking. Thank you for your invitation and attention.
In the short time I have, I will give a brief description of fractional reserve-banking, identify the problems it presents in the current institutional setting, and suggest a potential solution.
A bank is simply a business firm that issues claims to a fixed

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Banking and Monetary Policy from the Perspective of Austrian Economics

May 22, 2020

The editors are to be heartily congratulated for putting together this book, which covers an impressive range of topics in monetary economics from an explicitly Austrian perspective. Most of the twelve essays are of a very high quality and one will learn much about money and related topics by a careful reading of them. The chapters range from an insightful interpretation of Austrian monetary theory as a rehabilitation and development of classical monetary theory to novel applications of the theory to current issues such as inflation targeting, the consequences of unconventional European Central Bank (ECB) policies, and cryptocurrencies. In addition to its ambitious scope, this book stands out because most essays take an unabashedly Austrian approach to their

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Money Creation – Not Low Interest Rates – Is Behind the Boom-Bust Cycle

May 6, 2020

[unable to retrieve full-text content]In a recent article entitled “Where Are All the Austrian Scholars’ Yachts?” John Tamny has criticized Austrian economists, and Mark Thornton in particular, for their skepticism regarding the relatively “ebullient stock market” in the midst of the pandemic. Mark Thornton responded to Tamny’s main argument in an earlier post. In this post, I will address two serious errors that underlie Tamny’s argument.

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