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In response to the coronavirus, central banks worldwide are currently pumping massive amounts of money. This pumping, it is held, is going to arrest the negative economic side effects that the virus-related panic inflicts on economies. As appealing as it sounds we suggest that this view is erroneous. The view that more money can revive an economy

Listen to the Audio Mises Wire version of this article. According to a popular way of thinking, monopolies undermine the efficient functioning of the market economy by being able to influence the prices and the quantity of products. Consequently, this undermines the well-being of individuals in the economy. By this way of thinking, the

To counter the likely severe side effects of the lockdowns on the economy—introduced to prevent the spread of the coronavirus—the Federal Reserve has embarked on massive expansion of its balance sheet. The size of the Fed’s assets jumped to $6.2 trillion in April this year from $3.9 trillion in April last year—an increase of 58.9 percent . In

Listen to the Audio Mises Wire version of this article. The yearly growth rate of US AMS jumped to 26.5 percent in April—a record high figure since 1960 (see chart). Now, during the period from January 1960 to April 2020 the average time lag between changes in the money supply and changes in the Consumer Price Index (CPI) stood at twenty-nine

What matters for the stock market is not the state of the real economy as such, but the state of monetary liquidity. In fact, bad economic conditions can actually be good for stocks. This is because monetary liquidity is determined by the interaction between the demand for money and the supply of money, the latter of which is associated with a

So far in March, the data indicates that the yearly growth rate of our measure for US money supply ( as measured by the AMS metric ) stood at 10.5 percent against 6.6 percent in February and 1.7 percent in March last year. Given that the Fed is busy throwing money at the economy as if there were no tomorrow, it is tempting to suggest that the

The imposition of lockdowns to counter the spread of the infection from the coronavirus is likely to severely damage the real economy. As a result of these lockdowns, economies have ground to a total halt. The production of goods and services has stopped while at the same time the enhancement and improvement of productive infrastructure has been

According to Milton Friedman, the key cause of the business cycles is the fluctuations in the growth rate of money supply. Friedman held that what is required for the elimination of these cycles is for central bank policymakers to aim at a fixed growth rate of money supply: My choice at the moment would be a legislated rule instructing the

Listen to  the  Audio Mises Wire  version  of this article. Once an economy falls into an economic slump and the level of unemployment begins to rise most commentators are of the view that it is the duty of the government and the central bank to step in to counter the rise in unemployment. Some commentators are of the view that the lowering of

By a popular way of thinking, it is the role of the central bank to make sure that economy follows a path of stable economic growth and prices. The economy is perceived to be like a spaceship that occasionally slips from this trajectory. Following this way of thinking when economic activity slows down and strays from the path of stable economic