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Mises Institute

The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, we seek a profound and radical shift in the intellectual climate: away from statism and toward a private property order.

Articles by Mises Institute

Why Government Plans for Fixing Recessions Ultimately Fail

2 days ago

An essential element of the “unorthodox” doctrines, advanced both by all socialists and by all interventionists, is that the recurrence of depressions is a phenomenon inherent in the very operation, of the market economy. But while the socialists contend that only the substitution of socialism for capitalism can eradicate the evil, the interventionists ascribe to the government the power to correct the operation of the market economy in such a way as to bring about what they call “economic stability.” These interventionists would be right if their antidepression plans were to aim at a radical abandonment of credit expansion policies. However, they reject this idea in advance. What they want is to expand credit more and more and to prevent depressions by the adoption of special

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Recessions Can Theoretically Happen in a Free Market. But Central Banks Only Make Things Worse.

2 days ago

Given the nature of the modern global economic system, it is only natural to focus on the role of government-created money and central banks when discussing recessions and the ever-expanding credit structure. However, it is important to remember that theoretically, boom-bust cycles and other downturns are not impossible in a truly free market system. Although, the length, scale, and scope of such downturns are greatly expanded under a system of fiat credit expansion.
I’ll explain the mechanisms and effects of free market versions of various downturns and why they’ll still exist even in absence of credit expansion. In addition, I’ll explain how these events are muted in relation to similar events under the modern central banking structure.
Free Market Recessions
Imagine for a moment you’re

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Not all PIIGS are Created Equal: A Comparison of Portugal and Ireland

2 days ago

The eurozone crisis was highlighted by five countries: Portugal, Ireland, Italy, Spain, and Greece. These peripheral nations were deemed to be the culprits behind the eurozone crisis due to their overspending. Namely, they had caused excessive deficits, coupled with large debt levels. They were dubbed by the media as the “PIIGS”
However, putting all five of these countries in the same basket obscures the real culprits behind the eurozone crisis. There was group 1, Ireland and Spain, which were countries without major fiscal irresponsibility issues, however, whose debt levels ballooned as a result of bailouts and the crisis. On the other hand, there was group 2, Italy, Portugal, and Greece. These countries have had big government spending policies dating back to the 1960s and as such could

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Power over Nature vs. Power over Man

3 days ago

[From Power and Market.]
It is quite common and even fashionable to discuss market phenomena in terms of “power”—that is, in terms appropriate only to the battlefield. We have seen the fallacy of the “back-to-the-jungle” criticism of the market and we have seen how the fallacious “economic-power” concept has been applied to the exchange economy. Political-power terminology, in fact, often dominates discussions of the market: peaceful businessmen are “economic royalists,” “economic feudalists,” or “robber barons.” Business is called a “system of power,” and firms are “private governments,” and, if they are very large, even “empires.” Less luridly, men have “bargaining power,” and business firms engage in “strategies” and “rivalry” as in military battles. Recently, theories of “games” and

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El Banco Central Europeo duplica su apuesta por el dinero barato

3 days ago

By: Ryan McMaken
No es que la mejora de la calidad haya desaparecido realmente, pero el Banco Central Europeo está subiendo el listón con el recorte de los tipos de interés de hoy. Según el Wall Street Journal de hoy:

El Banco Central Europeo redujo su tipo de interés clave y lanzó el jueves un amplio paquete de compras de bonos que sienta las bases para un largo período de política monetaria ultraloosa, sacudiendo los mercados financieros europeos y provocando una respuesta inmediata del Presidente Trump.

La iniciativa preventiva del BCE tenía como objetivo aislar a la tambaleante economía de la zona euro de una desaceleración mundial y de las tensiones comerciales. Se trata de la mayor dosis de estímulo monetario del BCE en 3½ años y un final audaz para el presidente saliente Mario

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There’s Nothing Natural About Socialism

3 days ago

The socialist idea has many forms and flavors; however, one can observe three main paths toward socialism. They are the socialization of the means of production, wealth redistribution, and collectivization of consciousness. Different socialist movements use these three approaches to varying degrees.
Orthodox Marxists and Marxist-Leninists consider outright expropriation of private property as the primary way toward a socialist society. Italian Fascists and German National Socialists allowed de jure private property, but established de facto  total control over all spheres of economic activities. The subjugation of the individual to the collective, which is collectivization of consciousness, and wealth redistribution were their preferred paths toward socialism. In all of these cases,

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De-Dollarization: Europe Joins the Party

3 days ago

The ongoing “World War of Currencies”, as the German journalist Daniel D. Eckert called it, the battle for the future of the world monetary system is not a shallow action film but more like Game of Thrones – a complex series with hundreds of actors and locations, stretching over decades and demanding full concentration from the viewer.
The bottom line is that what has been true for decades still applies. The US dollar continues to enjoy the confidence of markets, governments, and central banks. But faith in the US dollar weakens a little every year. Europe, China, Russia and many small countries set new initiatives every year to make themselves independent. And gold, too, plays a major role in this slow departure from the US dollar. But for the world financial system, none of their

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European Central Bank Doubles Down on Ultra-Easy Money

4 days ago

By: Ryan McMaken
Not that QE ever really went away, but the European Central Bank is taking it up a notch with today’s rate cut. According to the Wall Street Journal today :

The European Central Bank cut its key interest rate and launched a sweeping package of bond purchases Thursday that lays the ground work for a long period of ultraloose monetary policy, jolting European financial markets and triggering an immediate response from President Trump.

The ECB’s pre-emptive move was aimed at insulating the eurozone’s wobbling economy from a global slowdown and trade tensions. It is the ECB’s largest dose of monetary stimulus in 3½ years and a bold finale for departing President Mario Draghi, who looks to be committing his successor to negative interest rates and an open-ended

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Unsound Money, Unsound Economy

4 days ago

Most people who have undertaken a formal study of economics end up accepting such things as the necessity of a central bank to prevent or at least ameliorate recessions. They take as a given the need for government intervention in the economy, or if not as a given, as explained by countless historical incidents of injustice. Perhaps most of all, they regard anyone calling for an unregulated gold coin standard as so hopelessly backward and naïve that refutation seldom goes further than rolling one’s eyes.
[RELATED: “The Fed: Reality Trumps Rhetoric” by Shawn Ritenour]
Everyone “knows” the gold standard fostered those nineteenth-century panics, which high-minded bankers finally addressed by creating the federal reserve system in 1913. Under the federal reserve, the government was able to

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Using World War I to Prove the Incompetence of State Militaries

4 days ago

Bob Murphy uses some samples from Dan Carlin’s amazing podcast, Hardcore History, to illustrate the flaws with state-provided military services. Bob concludes that minarchists have nothing to fear, and they should embrace the full vision of a voluntary society with no institutional coercion.
Mentioned in the episode: Dan Carlin’s Hardcore History series on World War 1. Audio excerpts in this episode came from Parts IV and V in the series.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
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Like Most Government Central-Planning Schemes, Zoning Laws Raise the Cost of Living

4 days ago

In the classic video game Sim City, players acting as the mayor of a simulated city begin by allocating space by industrial, residential, and commercial zones. There is no option in the game to have overlapping districts, where a department store might sit next to a middle-class home. The very idea would seem absurd to modern minds, which typically accept city zoning as an intuitive and unquestionable element of city governance. But prior to the twentieth century, zoning did not exist in the United States.
Zoning laws grew out of a European city-planning movement pioneered by municipal socialists, such as the British Fabian Society members who advocated socialism by municipal governments. Various ideas for the aesthetic planning of cities were implemented in different countries, but zoning

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Negative Interest Rates and Financial Repression

5 days ago

We are repeatedly told that the unprecedented monetary stimulus by the Federal Reserve and other central banks is necessary to stimulate the economy, create jobs, and generate economic growth. The truth is that this scheme is designed to stealthily steal from the productive classes in order to enrich the unproductive financial class and the counterproductive political classes. It is a con game.
Financial Repression
With politicians and central bankers seemingly gone mad with their obsession for money printing and ultra low interest rates, it is nice to know that academic economists have a term (i.e., financial repression) for the policies that have created our current economic conditions.
However, it is not a new term. Its use dates back to at least 1973 when two Stanford University

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America After 9/11: The Terrorists Won

5 days ago

By: Ryan McMaken
In September 11, 2001, terrorists flew planes into the World Trade Center and the Pentagon. Hours later, more than 2,900 people were dead, the overwhelming majority of them in the civilian office buildings at New York’s World Trade Center.

Within 24 hours, the US government was doing what it does best. It demanded more power, and set to work coming up with schemes for using its enormous military and national security apparatus — a group of agencies which had received more than half-a-trillion dollars during that fiscal year.

When the US national security state failed on 9/11, not a single person with any significant level of responsibility lost his job.

Notably, the very same people who failed utterly to provide national security on September 11th were the same people

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The Broken Windows of America’s Foreign Policy

5 days ago

In our increasingly interconnected world, we frequently observe events and effects that result from seemingly unrelated causes and connections. In his famous essay on the broken window fallacy, Frédéric Bastiat used the example of a child who broke a shopkeeper’s window and the glazier who has been employed to fix it to illustrate his concept of “seen and unseen effects.” In Bastiat’s parable, the seen effect is a transfer of six francs to the glazier from the shopkeeper who now has his window restored while the unseen effect is what the shopkeeper would have done with those six francs had he not needed to spend them to repair his window. Therefore, the net effect of breaking windows and paying people to repair them is to make society worse off. The time and money spent pursuing one

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Robert Anthony Peters on Making a Movie with Will Smith and Creating “Tank Man”

5 days ago

Robert Anthony Peters is a professional actor as well as a promoter of liberty. His most recognizable film roles were appearances in The Pursuit of Happyness (with Will Smith) and Steve Jobs. His latest creation is the short film Tank Man.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
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The Central Banks Lift House Prices and Rents, But Not Everywhere

5 days ago

Since the outbreak of the global financial and debt crisis, real estate prices and rents, in particular in large cities around the world, have risen considerably. The monetary overinvestment theory of Friedrich August von Hayek helps to explain why large central banks have driven up real estate prices and rents, albeit with focus on economic centers.1
According to Hayek (1931), a central bank triggers an unsustainable upswing if it sets the key interest rates too low. As low interest rates signal high future consumption, a credit-financed investment boom sets in. Stock prices rise, as profits of enterprises and banks increase. Real estate prices rise, because real wages grow and people feel richer because of growing stock prices. The boom on the stock and real estate markets may become

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How the World Views Libertarianism

6 days ago

Ask ten libertarians for a definition of libertarianism, and one is likely to receive about ten different answers.
Indeed, libertarians have something of a reputation for internecine battles over who the “real” libertarians are.
Most of the world, however, couldn’t possibly care less about these battles over how to correctly slice and dice the different types of libertarians.
When it comes to use of the term libertarian out “in the wild” among mainstream, non-libertarian pundits, the use of the term is surprisingly consistent. It nearly always refers to an ideology that pushes for greater economic freedom in the form of less regulation of economic life, lower taxes, and freedom in trade.
Most writers on political and public policy matters, however, are not friendly to this sort of ideology

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The Fed: Reality Trumps Rhetoric

6 days ago

The Free Market 32, no. 12 (December 2014)
Throughout the existence of the Fed, its officers and intellectual supporters understandably asserted that the government’s movement toward central banking was a most beneficial evolution. In a 1948 issue of The Federal Reserve Bulletin, for example, Fed Chairman Thomas B. McCabe asserted that money production could not manage itself, so we need a central bank such as the Fed that acts for the public interest. Nearly three decades later, the venerable Arthur Burns claimed that the basic assets of the Fed are concern for the general welfare, moral integrity, respect for tested knowledge, and independence of thought.
The alleged benefits from a Fed-managed elastic money stock became the standard justification for the Fed in later propaganda. Again

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Modi’s Policy of Higher Taxes, Spending, and Inflation Make India a Growing Risk in Emerging Markets

6 days ago

By: Daniel Lacalle
India’s economy had an annual growth of 5.0 percent in the April-June quarter, the slowest in more than six years dragged down by weak consumer demand and private investments.

A Reuters poll of economists had forecast annual growth of 5.7 percent for April-June, compared with a 5.8 percent rise the previous quarter. For April-June 2018, India reported 8 percent growth.

Last year I commented about the risks for India here.

Governments always consider that economic problems come from lack of demand, and they assign themselves the task of “correcting” that wrong assumption by massively increasing deficits and using monetary policy well beyond any logical measure.

India’s rising populist policies are part of the nation’s current problems.

Recent data is quite

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The Trillion-Dollar Military Still Isn’t Enough for the War Party

6 days ago

Since the end of the Cold War in 1990, US defense spending has increased 182 percent in nominal terms, and 44 percent in inflation-adjusted terms. In inflation-adjusted terms, defense spending is now about equal with the all-time peak reached in 2011, and the White House’s Office of Management and Budget estimates that defense spending will reach an all-time high in 2020.

Source: Office of Management and Budget, Historical Tables, Table 3.2.
In 2018 dollars, defense spending hit approximately $942,198 — which includes “homeland defense” spending and spending on veterans. It can soon be expected to top a trillion dollars every year.

Source: Office of Management and Budget, Historical Tables, Table 3.2.
Thanks to Donald Trump’s budget deals with the Democrats, which paves the way for even

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Don’t Give Politicians Credit for a Growing Economy

6 days ago

“One of the amazing phenomena of the present election campaign is the way in which speakers and writers refer to the state of business and to the economic condition of the nation. They praise the administration for the prosperity and for the high standard of living of the average citizen ‘You never had it so good,’ they say, and, ‘Don’t let them take it away.’”

The above statement sounds like something Republicans say in supporting Donald Trump for reelection. The White House proclaims the successes of the Trump economy while those who side with the Democrats say that Obama should also be given credit for any current economic successes. Both sides give presidents too much credit for our standard of living.
However, the quote above comes from a speech that Ludwig von Mises gave in

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Learning About the State

7 days ago

[Originally published September 2008.]
What we’ve seen in the last week is the state at work — and by the state, I do not mean a particular set of leaders. If we watch carefully, we can gain insight into what the state is and why our fundamental problem extends far above and below the political party system.
The moment is complicated by the upcoming election, so some people are distracted by the circus of McCain vs. Obama and all the characters associated with that silly little battle. What they are looking at is really the veneer. It is a covering designed to prevent you from seeing what the state is and why it matters.
The party system and the elections lead us to believe that we live under conditions that Martin Van Creveld calls the personal state. (I’m relying here on his important

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Slowing Money Supply Growth May Trigger a Recession

7 days ago

A slight strengthening in the momentum of consumer expenditure has prompted many commentators to suggest that as long as the US consumer continues to spend there is no risk of a recession ahead. The yearly growth rate of consumer expenditure at current prices stood at 4.1% in July against 4% in June.
Notwithstanding still buoyant consumer expenditure, commentators have expressed concern due to a fall in the consumer sentiment index as compiled by the University of Michigan. The sentiment index fell to 89.8 in August from 98.4 in July and 96.2 in August last year.
In this framework of thinking, economic activity is depicted as a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first

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Trump Pauses the Government’s War Against Incandescent Lightbulbs

7 days ago

By: Gregory Morin
This past week Trump’s Energy Department announced a relaxation of a set of light-bulb energy efficiency standards ( EISA ) first implemented under George W. Bush and finalized under Obama. The standards were set to go into full effect in January 2020 (eliminating incandescent versions of three-way bulbs, candle-shaped, globe-shaped and reflector bulbs).

The autistic screeching from the corporate press and leftist “public policy” lackeys only underscores the lengths to which “ the Cathedral” will go to in order to maintain the hell-fire of climate alarmism. For Cathedral adherents the sky is quite literally falling. It is because of their prescient guidance that the rest of us are corralled into doing “the right thing” – namely spending $10 on a bulb to save $15 in

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Why Entrepreneurs Are Different

7 days ago

Many people think and talk about competition without a slight feeling of uneasiness. Often, it is only the entrepreneur who feels comfort about competition in the marketplace. Most people do not understand the sense of competitiveness the entrepreneur possesses. The saying goes, “If it ain’t broke, don’t fix it.” Not so for the entrepreneur.
In contrast, most people like the idea of comfort and predictability—don’t rock the boat! But there are times when change and something new are warranted — whether it’s making decisions in the marketplace, changing the allocation of resources to better suit consumer value, making better use of resources for products that are cost prohibitive, trying to make them better than what’s on the market. Many people accept that change will happen at some point.

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The Economic Theory of Costs Now in Paperback

7 days ago

By: Matthew McCaffrey
I’m happy to announce that the 2018 collection The Economic Theory of Costs: Foundations and New Directions, is now available in paperback at a substantially reduced price (see the post announcing its original publication here). This collection includes contributions from both leading and up-and-coming scholars working in the Austrian tradition. The contributors include many of the senior faculty members of the Mises Institute, as well as many of the younger fellows. It focuses especially on price theory, the unique feature of Austrian economics.

At the moment, the cheapest copies are available here and here.

The table of contents is as follows:

Introduction: “The Economic Theory of Costs in Perspective” Matthew McCaffrey

Cost and Choice

Chapter 1: “Contemporary

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The Myth of “Economic Power”

9 days ago

A very common criticism of the libertarian position runs as follows: Of course we do not like violence, and libertarians perform a useful service in stressing its dangers. But you are very simpliste because you ignore the other significant forms of coercion exercised in society—private coercive power, apart from the violence wielded by the State or the criminal. The government should stand ready to employ its coercion to check or offset this private coercion.
In the first place, this seeming difficulty for libertarian doctrine may quickly be removed by limiting the concept of coercion to the use of violence. This narrowing would have the further merit of strictly confining the legalized violence of the police and the judiciary to the sphere of its competence: combatting violence. But we

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How Anti-Trust Policy Hurts the Little Guy

9 days ago

Investigative journalist Ida Tarbell published her book The History of the Standard Oil Company in 1904. In it she claimed that John D. Rockefeller’s business model of owning the entire line of production, thereby cutting out contractors and eliminating inefficiency, was essentially unfair and allowed “predatory pricing.” Since then, the US has suffered from a pathological fear of “big business.” The US’ anti-monopoly regulation, called “anti-trust” and rooted in the legislative reaction to Tarbell’s book, purportedly promotes healthy competition in a free society. In general, though, it has the opposite effect. Further, whenever the anti-monopoly laws are exercised against private companies, those hurt are often the poorest and most vulnerable in society.
The most recent example, the week

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How to Know if Government Is Too Big

9 days ago

At least since the time of Socrates, teachers have asked questions of students to elicit critical thought, evoke ideas and expose presuppositions. That has been part of my professor toolkit as well. But with the current political environment, particularly the Democratic nomination follies, reminding me of Will Rogers’s quip that “If we got one-tenth of what was promised to us … there wouldn’t be any inducement to go to heaven,” I have found that asking one of my favorite public finance (economics of government) questions has become even more important.
The first point of the question is to get students to recognize that, to say anything useful, you must first ask, “What is the role of government?”
Once we take that step, I turn to a short but superb essay by Frédéric Bastiat — “Government”

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