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Thorsten Polleit

Thorsten Polleit



Articles by Thorsten Polleit

How All That Extra Stimulus Money Could Lead to Price Inflation

21 days ago

More money creation doesn’t necessarily mean higher consumer prices. But, if production is falling while consumers use their stimulus checks to buy food and clothing, we could see noticeable price inflation. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros. Original Article: “How All That Extra Stimulus Money Could Lead …

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How All That Extra Stimulus Money Could Lead to Price Inflation

22 days ago

In an effort to “fight” the consequences of the politically orchestrated “lockdown,” the Fed pumps vast amounts of money into the economy. It injects base money into the banking system. It also monetizes outstanding debt and finances the US administration’s deficit spending policy by issuing new money. This not only increases “excess reserves” in the …

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The Destructive Effects of the Coronavirus Relief Package

April 25, 2020

Governments and their central banks have put together mega–bailout packages. In the US, President Donald J. Trump has signed off on a $2 trillion “virus relief package” amounting to around 10 percent of the US gross domestic product. It is meant to provide massive financial support—in the form of loans, tax breaks, and direct payments—to large and small businesses as well as individuals whose revenue and income have been destroyed by the politically dictated “lockdown.”
What is more, the US Federal Reserve (the Fed) has provided a colossal “backstop” to financial markets. It injects ever higher amounts of central bank money into the financial system by buying up all sorts of credit instruments—not only government bonds, but also

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The Destructive Effects of the Coronavirus Relief Package

April 23, 2020

Central banks are at the heart of government mega–bailout packages. Their ongoing expansion of the money supply won’t end well. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros. Original Article: “The Destructive Effects of the Coronavirus Relief Package”

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The Destructive Effects of the Coronavirus Relief Package

April 23, 2020

Listen to the Audio Mises Wire version of this article. Governments and their central banks have put together mega–bailout packages. In the US, President Donald J. Trump has signed off on a $2 trillion “virus relief package” amounting to around 10 percent of the US gross domestic product. It is meant to provide massive financial …

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Why This Bubble Economy Keeps Going and Going

April 13, 2020

Current global bailouts may put off global busts for quite some time. But they will weaken output and employment gains. People’s standard of living will stagnate or even fall, even in the short term. With this comes impoverishment and perhaps even social unrest. Narrated by Daniella Bassi. Original Article: “Why This Bubble Economy Keeps Going …

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Why This Bubble Economy Keeps Going and Going

April 13, 2020

Listen to the Audio Mises Wire version of this article. Quite a few people may wonder why the global fiat money system has not yet collapsed. The fiat money system did not crash in the financial and economic crisis of 2008/2009, when a great many people feared the debt pyramid would come crashing down. And it has not gone …

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With Bailouts, Governments Are the Big Winners

March 24, 2020

The growing concerns about the consequences of the COVID-19 coronavirus have led to a global demand and supply shock: the demand for goods and services has collapsed, and because international production and value chains are now also disrupted, output slows down, and its former level can no longer be maintained. The demand and supply shock brings …

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The Era of Boom and Bust Isn’t Over

January 31, 2020

At the 2020 World Economic Forum in Davos, Bob Prince, co-chief investment officer at Bridgewater Associates, attracted attention when he suggested in a news interview that the boom and bust cycle as we have come to know it in the last decades may have ended. This viewpoint may well have been encouraged by the fact …

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The Wealth Redistribution Scam that Is “Inflation”

December 24, 2019

The world over people are told that central banks pursue “price stability” by making sure that consumer goods prices do not rise by more than 2 percent per annum. This is, of course, a big sham. If the prices of goods rise over time, it does not take that much to understand that prices do …

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Hyperinflation, Money Demand, and the Crack-up Boom

December 14, 2019

In the early 1920s, Ludwig von Mises became a witness to hyperinflation in Austria and Germany — monetary developments that caused irreparable and (in the German case) cataclysmic damage to civilization. Mises’s policy advice was instrumental in helping to stop hyperinflation in Austria in 1922. In his Memoirs, however, he expressed the view that his …

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Why this Boom Could Keep Going Well Beyond 2019

December 7, 2019

The Austrian business cycle theory offers a sound explanation of what happens with the economy if and when the central banks, in close cooperation with commercial banks, create new money balances through credit expansion. Said credit expansion causes the market interest rate to drop below its “natural level,” tempting people to save less and consume …

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The US Dollar Beast

October 1, 2019

John Maynard Keynes (1883–1946) explains very well how to predict the winner of a beauty contest successfully. You must, he noted, think along the following lines: “(…) each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors (…). …

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Negative Interest Rates

August 23, 2019

Those who had hoped that things could not get worse with the monetary policy of the European Central Bank (ECB) have been proven wrong. At its last meeting on 25 July 2019, the Governing Council of the ECB kept interest rates unchanged: the main refinancing rate was kept at 0.00% and the deposit rate at -0.40%. At the same time, however, ECB President Mario Draghi has prepared the ground to lower interest rates even further in the coming months. What is the reasoning behind that?
According to the ECB Governing Council, inflation is too low, and the euro area economy is too weak. It was precisely this assessment that signaled to the markets to expect a rate cut in the near future. It has now become very likely that the deposit

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The Disaster of Negative Interest Policy

August 22, 2019

Those who had hoped that things could not get worse with the monetary policy of the European Central Bank (ECB) have been proven wrong. At its last meeting on 25 July 2019, the Governing Council of the ECB kept interest rates unchanged: the main refinancing rate was kept at 0.00% and the deposit rate at …

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Facebook’s Fake Money

July 19, 2019

Starting in 2020, Facebook wants to offer its customers a global high-tech currency and infrastructure. The US IT giant says that this will provide many people around the world with easy and cost-effective access to the monetary and financial system. The new blockchain-based money is called “Libra.” Technically, it is something akin to a crypto-money-banknote covered by a basket of official fiat currencies (such as US dollars, euros, and the like). The heart of the Libra project is the “Libra Association” (LA). The non-governmental association, based in Geneva, Switzerland, is supported by founding members such as eBay, Facebook, Mastercard, PayPal, Spotify, Uber, Visa, as well as other renowned firms, and will be responsible for

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Facebook’s Fake Money

July 18, 2019

Starting in 2020, Facebook wants to offer its customers a global high-tech currency and infrastructure. The US IT giant says that this will provide many people around the world with easy and cost-effective access to the monetary and financial system. The new blockchain-based money is called “Libra.” Technically, it is something akin to a crypto-money-banknote …

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Central Banks’ Crusade Against Risk

May 16, 2019

Since the latest the crisis in 2008/2009, central banks around the world have been doing their best to expel risks from financial markets. By lowering interest rates, fixing them at extremely low levels, or issuing more credit and money, monetary policymakers make sure that ailing borrowers are kept afloat. In fact, central banks have put a “safety net” under the economies and the financial markets in particular. As it seems, this measure has been working quite effectively over the last ten years or so.
Investors do no longer fear that big borrowers – be it big governments or big banks and big corporates – could default, as evidenced by the low credit spread environment. Liquidity in basically all important credit market segments

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Central Banks’ Crusade Against Risk

May 16, 2019

Since the latest the crisis in 2008/2009, central banks around the world have been doing their best to expel risks from financial markets. By lowering interest rates, fixing them at extremely low levels, or issuing more credit and money, monetary policymakers make sure that ailing borrowers are kept afloat. In fact, central banks have put …

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Central Banks Are Propping Up Stock Prices

April 12, 2019

Financial markets seem to have a great deal of confidence in the effectiveness of central bank monetary policy — in the sense that by keeping interest rates low, or bring interest rates down, the economies will keep expanding and asset prices, in particular, will keep rising. There is, however, good reason for savers and investors …

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Central Banks Are Messing with Your Head

March 22, 2019

Human action and the interest rate People value present goods more highly than future goods. For instance, an apple available today is considered more valuable than the same apple available in, say, one month. This is expressive of time preference — which is an undeniable fact, a category of human action. The sentence “Humans act” …

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Central Banks Are Messing With Your Head

March 22, 2019

Human action and the interest rate
People value present goods more highly than future goods. For instance, an apple available today is considered more valuable than the same apple available in, say, one month. This is expressive of time preference — which is an undeniable fact, a category of human action.
The sentence “Humans act” is a logically irrefutable truth. It cannot be denied without causing a logical contradiction. By saying “Humans can not act”, you act and thus contradict your very statement.
From the true insight that humans act we can deduce that human action takes place in time. There is no timeless human action. Were it otherwise, people’s goals would be instantaneously reached, and action would be impossible — but

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Why Marx Loved Central Banks

February 9, 2019

In his “Manifesto of the Communist Party” (1848), published together with Frederick Engels, Karl Marx calls for “measures” — by which he means “despotic inroads on the rights of property” –, which would be “unavoidable as a means of entirely revolutionising the mode of production,” that is, bringing about socialism-communism. Marx’s measure number five reads: …

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The Fed Has Become Increasingly Dependent on Easy-Money Policy

November 30, 2018

“I think we have much more of a Fed problem than we have a problem with anyone else”, said US President Donald J. Trump on 20 November 2018. While the press, mainstream economists, and bankers cry wolf, the US President hits the nail on its head: The Fed is the source of significant economic and …

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Trump is Right: The Fed is a Big Problem

October 30, 2018

President Donald J. Trump has taken on the Federal Reserve (Fed), saying that Fed chairman Jerome H. Powell is threatening US economic growth by further raising interest rates. Mainstream economists, the financial press and even some politicians react with indignation: the president’s comments undermine the Fed’s political independence, potentially endangering the confidence in the US dollar. …

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The Fed Is Flying Blind

September 28, 2018

US interest rates keep creeping upwards, largely because the US Federal Reserve (Fed) is expected to ramp up borrowings costs further in the coming quarters. The Federal Funds Rate is now in a bandwidth of 1.75 to 2.0 per cent, and the yield on 10-year Treasuries has recently climbed slightly above the 3 per cent …

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Central Banks Enrich a Select Few

September 3, 2018

The message unanimously churned out by politicians, central bankers, and ‘mainstream’ economists is that central banks are there for the ‘greater good’. They provide the economy with sufficient money and credit, and they fight inflation, thereby supporting output and employment growth. What is more, central banks, are supposedly in a position to effectively fend off or at least mitigate financial and economic crises. However, unfortunately, nothing could be further from the truth.
Throughout history, central banks have been created, first and foremost, to fill governments’ coffers. To increase the king’s or elected government’s financial means through an inflationary scheme – usually too elaborate and too treacherous for most

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