Net present value (NPV) is a popular decision-making criteria used by firms to make key, crucial choices about how to allocate resources across an economy, but this can be misleading especially when interest rates are manipulated via inflation.
Most economists subscribe to a belief in “positive economics,” which means that economic theory flows from economic data. Thus, all theory can be tested for falsification at any time. Austrian economics, however, begins with economic theory, which is used to interpret the real world.
More statist orientation of people, combined with already-bloated government budgets and dangerous levels of national debt, and strong underlying demographic erosions in the form of declining birthrates would suggest a shift in trends toward higher interest rates into the future.
The US economy is hooked on easy money and artificially low interest rates. Huge credit expansions are not “stimulating” the economy; they are destroying it.
The US economy is hooked on easy money and artificially low interest rates. Huge credit expansions are not “stimulating” the economy; they are destroying it.
Mainstream economists are at a loss to explain why the current regime of inflation and central bank interventions have been so economically devastating. Understanding Cantillon effects is vital to making sense of the current madness.
Equilibrium is an imaginary construct that should be used only for analytical purposes. Unfortunately, mainstream economists have claimed it should represent a desired state of economic affairs.
The modern debt culture—underwritten by the Federal Reserve’s expansionary policies—is not only harms capital development, but it also encourages short time preferences, which diminishes the structure of production.
Ever since the Great Depression, most economists have claimed that the key to increasing economic growth is to lower unemployment. However, increasing the savings rate and building a capital structure are the keys to growth—and lower unemployment.
While some economists are celebrating the awarding of the Nobel Memorial Prize in Economics to three economists who are relatively friendly to free markets, we should not forget that most Nobel winners have been unrepentant statists and socialists.
