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Listen to  the  Audio Mises Wire  version  of this article. According to some commentators, cost cutting by companies in order to protect profits can in fact set in motion an economic slump. It is held that if everyone tries to cut costs and save more, demand for goods and services from retrenched workers weakens, and as a result corporate

Popular thinking says that lending is banking activity. Banks are believed to be responsible for the expansion of credit. However, is this the case? The Meaning of Credit For instance, take a farmer, Joe, who produced two kilograms of potatoes. For his own consumption, he requires one kilogram, and the rest he decides to lend for one year to a

Why does the dollar bill in our pocket have value? The value of money is established, according to some experts, because the government in power says so. For other commentators, the  value of money is on account of social convention. The Difference between Money and Other Goods Demand for a good arises from its perceived benefit. For instance,

Listen to the Audio Mises Wire version of this article. According to the modern portfolio theory (MPT), financial asset prices always fully reflect all available and relevant information, and any adjustment to new information is virtually instantaneous. In this way of thinking, asset prices respond only to the unexpected part of any information,

Following the ideas of John Maynard Keynes and Milton Friedman, many commentators associate economic growth with increases in the demand for goods and services. Both Keynes and Friedman held that the Great Depression of the 1930s was due to an insufficiency of aggregate demand and that thus the way to fix the problem was to boost aggregate demand.

Understood properly,  inflation is not a general increase in prices but is an increase in the money supply “out of thin air” which brings about the impoverishment of wealth generators. When inflation is seen as a general increase in prices, then anything that contributes to price increases is called inflationary. In this framework, not only does

As a result of the coronavirus pandemic, most experts are of the view that it is the role of the government and central bank to minimize the damage inflicted by the virus—and the policy response to it—on the economy. The logic behind this reasoning is that increases in the demand for goods and services are the heart of economic growth. It is held

Listen to  the  Audio Mises Wire  version  of this article. Why does the dollar bill in one’s pocket have value? The value of money is established, according to some experts, because the government in power says so. For some commentators the value of money is on account of social convention. What this implies is that money has value because it is

One of the duties that a central bank is expected to fulfill is to keep the general level of prices in the economy stable. The whole idea of price stability originates from the view that volatile changes in the price level prevent individuals from clearly seeing market signals as conveyed by the changes in the relative prices of goods and

New government spending projects amount to little more than government squandering wealth. The fact that the private sector does not undertake these projects indicates that they are of low priority to individuals. The implementation of these projects will undermine the well-being of individuals, because they are funded at the expense of projects