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Articles by Mark Thornton

Austerity: A Real Solution to Help Heal the US Economy

December 30, 2022

Economists like Paul Krugman have claimed that practice of austerity in government would damage the US economy. As Mark Thornton points out, the opposite is true: austerity works.

Original Article: "Austerity: A Real Solution to Help Heal the US Economy"
This Audio Mises Wire is generously sponsored by Christopher Condon. 

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Tags: Featured,newsletter

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US Labor Market: Help Wanted!

December 26, 2022

As we enter the holiday season stock owners have been the big losers of 2022, but jobs are still plentiful and nominal wages are rising rapidly. The Wall Street Journal reports “Stiff Demand Drives Gains in Jobs, Wages” (December 4). Faced with a stagnant stock market, nothing bolsters confidence more than the plethora of job openings, seemingly everywhere, and for all types of jobs.
The number of job openings is a statistic worth paying attention to as a gauge of the overall economy, but certainly not the only one. Here we examine it in relation to economic conditions and other statistics. This reveals some good, some bad, and some ugly insights into the economy, but overall, the signs all point to the business cycle and the turn toward economic crisis.
The Good

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Austerity: A Real Solution to Help Heal the U.S. Economy

December 18, 2022

Austerity works. We know what it is and don’t like it, but it works. It usually means cutting your consumption and spending, paying down your debts, pawning assets, and working more hours to restore your economic situation.
You might invoke “austerity” because you lost your job, your house burned down, or you have an unexpected child on the way. You might take similar actions if the economy was in crisis. It’s essentially the same thing as cutting expenses to save for a down payment on a house, paying for a child’s education, or accumulating a fund for retirement.
Companies do likewise; delaying expansions, laying off workers, cutting expenditures, working longer hours, and selling off assets. The accounting aspect of the problem is straightforward: cut expenses,

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The REAL Solution to the Coming Economic Crisis

November 22, 2022

My previous article demonstrated how the free market solves a boom-bust crisis and is the only solution, its effectiveness depending upon the magnitude of the crisis and, more importantly, how much the government intervenes in response. The bigger the problem created by the Fed, the greater the crisis and the more government intervenes, and the slower the economy recovers.
Here we consider how the market works most effectively, with the efficiency of the process maximized by policy restraint. Like most illnesses, recessions can be “cured” with rest, hydration, nutrition, and fresh air, rather than major surgeries and dangerous medications.
The solution begins with getting rid of the initial monetary causes and allowing market participants, especially

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Black Hole or Shock Absorber: How Does a Free-Market Economy Respond to Crises?

October 31, 2022

Mainstream economists view the economy as fickle, unstable, and always in danger of utter collapse. They see the outlook as very bleak if not for the enormous existing superstructure of government intervention, including constant stimulus of “aggregate demand.” In their minds, this essential stabilization would also include the existing intricate arrangement of regulation and restriction, the army of technocratic bureaucrats overlording every market, and the rollout of massive interventions and macro stabilization schemes, whenever necessary.
This bureaucratic view is predicated on the assumption of the superiority of technocratic ability, “scientific” knowledge, and centralized resources. It is a view that is only plausible when combined with the supposed

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The Fed’s Real Mandate

October 11, 2022

The Federal Reserve has a legal dual mandate to minimize unemployment and price inflation. The current “dual” between the two mandates is to reduce price inflation by increasing interest rates to increase unemployment and kill businesses to choke off aggregate demand. This has been the most important economic and investment issue this year and this dual minimization procedure has dominated Fed policy for at least three-quarters of a century.
This is odd given that the Fed is in the business of creating money, the cause of price inflation, and it is responsible for all the largest surges in unemployment since its founding in 1913. Employing an army of monetary economists, macro theorists, and statisticians, the Fed appears to be pursuing its quixotic quest of the

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Thomas Piketty Wants to Bring Back Communism in the Guise of Democratic Socialism

August 16, 2022

Thomas Piketty’s Brief History is the fourth installment of his assault on economic inequality, following as it does the best-selling Capital in the Twenty-First Century and Capital and Ideology. The third, Time for Socialism: Dispatches from a World on Fire, 2016–2021, is just a collection of popular articles based on which the New York Times dubbed Piketty a “vaguely left-of-center” economist. This slim fourth volume from Harvard University Press calls for far-reaching socialist policies to establish economic equality. It is a siren song of communism: “economic justice” without any cost or noteworthy harm to society.
The primary reason for my concern with Piketty and this book is the relative influence of Karl Marx’s Communist Manifesto (written with Frederick

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How Did CNN+ Get Canned by Netflix? Austrian Economists Might Have an Answer

April 27, 2022

Days after Netflix reported bad earnings and an “unexpected” hit to their subscriber base, CNN announced that it had pulled the plug on its own brand-new streaming service, CNN+.
Despite arguments to the contrary from the parent company, the CNN+ adventure turned out to be a costly mistake that attracted few subscribers and a paltry number of regular viewers. The project had already invested $300 million plus actor contracts they must reassign. They had plans to spend $1 billion on the full rollout.
But this is small potatoes compared to the investments that Netflix has made in its streaming service. Meanwhile, more than a half a dozen other streaming services have launched, with billions invested in repackaging, reinventing, and regurgitating old-content shows.

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We’re Living in a Chaos Economy. Here’s How to End It.

October 21, 2021

The chaos economy we’re witnessing is not the fault of the market economy. Rather prices in some areas of the economy need to rise so high and so fast to harmonize supply and demand that entrepreneurs can hardly keep pace.

Original Article: “We’re Living in a Chaos Economy. Here’s How to End It.”

The Federal Reserve has been increasing the money supply at an explosive rate. The federal budget, deficits, and the trade deficit are record levels. Governments, both foreign and domestic, have locked down people, restricting production and consumption. How should this be viewed by an economist?
There is clearly chaos in the economy, and hardly a day goes by when I don’t find unusual if not unprecedented situations in day-to-day economic life. However, many people

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The Demise of the Gold Standard

August 17, 2021

[unable to retrieve full-text content]This is the fiftieth anniversary of the demise of the gold standard and the beginning of the current fiat paper standard. Many will say “good riddance” to gold and “thank goodness” for the “good ole greenback”! Reflection, however, produces an alternative conclusion.

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The Saving Problem in America: Alternatives and Reforms

September 22, 2020

Savings are the foundation for a productive and advanced economy. Unfortunately, governments insist on policies that make it harder for ordinary people to save.

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: “The Saving Problem in America: Alternatives and Reforms“.

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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

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The Saving Problem in America: Alternatives and Reforms

September 18, 2020

Since before covid-19 and the lockdown, I have written articles that touch on the purpose and importance of personal savings, and more importantly, why the lack of personal savings was going to make an economic crisis in the year 2020 potentially tragic for most Americans.
As a result, I have been interviewed a couple of times specifically on the topic of personal savings. These interactions have indicated to me that people do not understand the importance of savings and rather believe the demonization of savings as a “leakage” from the economic system and that hoarding money is one of the greatest threats to the economy.
Even more importantly, I discussed the reasons why Americans save so little and the related dangers, and I discussed how you can get around

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Two Analogies for the Economy That the Media Keeps Getting Wrong

June 1, 2020

In an attempt to maintain the lockdown and their authority over our lives, politicians, health experts, and the mainstream media have been misusing some unusual analogies to describe the current economy.
By using these analogies, our political overlords hope they can continue to keep the economy shut down, force companies to produce what the government forgot to purchase before the virus hit, and toss out trillions of dollars of handouts and bailouts to their friends. The results have been disastrous for an already badly weakened economy.
One: The Light Switch Analogy
One analogy that media analysts keep getting wrong is one in which pundits insist that the economy is nothing like a light switch and that it could be disastrous if we turn on the economy too

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