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It is now time to move from a case where credits are given to producers to where consumers are being given credits. Indeed, the general effects of an increase of money via consumers' credits, which will result in an increased relative demand for consumers' goods compared to producers' ones...
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(This post is an attempt to formulate praxeological fundamentals according to how they make sense to me.) An action is an embarkation of a behavior for the achievement of a goal 1 which executes a deliberate choice 2 among potential behaviors. A goal is a possible future situation that is perceived as...
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This post is part of a series exploring Principles of Economics by Carl Menger. The following explores content from chapter 3 . Previously in this series: A Mengerian Solution to the Diamond-Water Paradox In section C of the chapter on value in Principles, Menger shifts from questions of quantity to...
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Paul Krugman wants to be our savior. Moreover, he wants to be a specific kind of savior: a magus of the scientific age, a blackboard prophet. The roots of this curious ambition can be seen in his recent profile in Newsweek : Krugman says he found himself in the science fiction of Isaac Asimov, especially...
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This post is part of a series exploring Principles of Economics by Carl Menger. The following explores content from chapter 3 . Previously in this series: Menger on Multi-Purpose Homogenous Goods Let us say two men want to make a trade. One man offers water, the other diamonds. The water seller has a...
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The importance that the adjustments of the price mechanism free of any external influences has in respect to a prospering economy is highlighted when we investigate the results of the “'natural' movement of prices” is disrupted by monetary policies. These may take the form of either...
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This post is part of a series exploring Principles of Economics by Carl Menger. The following explores content from chapter 3 . Previously in this series: Menger's Value Scale . In Section 2, Part B of his chapter on value, Menger discusses "the dependence of separate satisfactions on particular...
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Ludwig von Mises is credited with first formulating the Austrian Theory of the Business Cycle. But in the following much earlier passage by Eugen von Bohm-Bawerk (who was a great influence on Mises) one can see the theory shadowed forth. Bohm-Bawerk considers below what would happen if, for some reason...
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This post is part of a series exploring Principles of Economics by Carl Menger. The following explores content from chapter 3 . Previously in this series: Mengerian Marginalism A chief insight of Menger's value theory is the recognition that, it is not enough to simply ask the question, "which...
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Once again, as done in previous lectures, we shall analyze the results of a scenario where consumers decide to save, and accordingly invest a larger portion of their income than before; however, here we shall see the effects the price of goods will have on the entire structure of production. As in the...
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As most readers will know, a collection of damning quotes has surfaced recently, exposing Paul Krugman, the doyen of the economic left, as having been completely backward on the most material economic event in our generation: the housing bubble. My recent article on the subject, Krugman's Intellectual...
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Referring to the ideas presented in My Take on the ABCT (Simple Version) and My Take on the ABCT (Complex Version) , a Mises Forum member wrote... Wrong. What you're describing is a credit cycle. It implies that all the government needs to do is to keep interest rates low. During a boom/bust cycle...
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Business Cycle Stages 1. Money Supply Increase causes a general 2. (a) Credit Supply Increase and an ongoing (b) Purchasing Power of Money Decrease. 2(a) causes a general 3. Interest Rate Decrease , w hich causes a general 4. (a) Longer Term Investment Increase , and, aided by 2(b), a (b) Sharp Demand...
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Below is my take on the Austrian Business Cycle Theory. Stages 1. Money Supply Increase causes a general 2. Credit Supply Increase , which causes a general 3. Interest Rate Decrease , which causes a general 4. Longer Term Investment Increase , which causes a general 5. (a) Demand for Labor Increase and...
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Economics is seen by most as a something best left to the experts. But have so much trust when it becomes obvious that "the experts" are completely clueless? Almost every economist was completely by surprise by the development of the economic crisis. And the solutions they are offering don't...