Central Banks & investors all over the world are flocking to gold. Is it telling us the market expects more US dollar inflation over the federal funds rate and/or that is seems very likely the US economy goes into recession or has some form of political instability?

Fiat holders would rather hold gold, then interest bearing USD treasuries, means fiat is probably gonna go further to shit. The fact that informed buyers believe that gold will maintain it's value bettter than a 4.X% rate of return on US dollars should be pretty scary for holders of USD or in general Americans.

I am fascinated that market economic behavior seems to be returning to fundamentals. I was 100% wrong on what the effects of QE would be after the Great Financial Crisis in 2008. I now wish I had focused more on econ at Uni than political economy.

My understanding is that QE works as follows:

• The Federal Reserve updates its balance sheet to increase its bank reserves.

• It uses these new reserves to balance out a new low-interest loan to one of its member banks.

• The member bank now uses the reserves received in this loan to increase its reserves, allowing it to make more loans.

Do I have that right?

And if I do, how is this different from what the Federal Reserve has done for its entire existence? Isn't that what it's doing when it's lowering interest rates? It's just lowering the rate of interest at which it will lend to its member banks. What is it that's so new and different about QE that it was considered a "new tool" following the '08 crisis?

Thank you in advance.

Let’s try something different today. What complaints do you have against the current economic system. Why is Austrian economic theory the solution? Or do you just want everything to burn because you hate it all. Like I do.

https://www.businesstimes.com.sg/international/global/china-consumer-price-gains-fade-industry-stuck-deflation

https://finance.yahoo.com/news/u-money-supply-doing-something-090600755.html

Hello

Wondering if there is anyone in manipal who run their own businesses and/or have a keen interest in finance, trading, economics.

I am tired of seeing party culture at parents' expense every single day around me and would love to have some positive company.

There will be considerably increased unemployment, that's obvious. However, how will the state deal with that?

I imagine there scenarios:

1. They do nothing.
2. They increase public debt to fund social programs for the unemployed.
3. They increase public debt to provide payroll loans and similar programs to companies to keep workers on.

I see three as most likely, but will California fund this, and inevitably go bankrupt, or will the federal government spread onto the whole country in some way? If so, what way?

What other scenarios am I missing? What are your predictions?

EDIT: I put minimum wage in quotations because the real minimum wage is the same everywhere throughout all of history: $0.

https://www.msn.com/en-us/money/markets/what-s-wrong-with-the-economy-it-s-you-not-the-data/ar-BB1l2EyY

"A recently released Brookings Institution study by Harvard University economist Stefanie Stantcheva sheds light on exactly how people think and feel about inflation. It found that half of respondents defined inflation correctly, as rising prices. The other half defined it incorrectly, mentioning such things as “price gouging” or “overpriced everything.” So, some people might conflate high prices with high inflation."

A topic I struggle with is this oft-mentioned stat from Austrians and many paleoconservatives that "since the US went off the gold standard in 1971, wages have stagnated". Another version of this is "because we went off the gold standard, both parents now have to work; it now takes dual incomes to survive in this economy". I feel like it's basically the conservative version or response to the progressive "since the Reagan era, deregulation, the curbing of labor unions, and failed trickle-down policies, wages have stagnated".

I consider myself an Austrian or a neoliberal at best, but I still don't understand the mechanics of this argument. Totally get how abandoning whatever link we still had to gold in '71 enabled even more money-printing, but how would that suppress wages exactly? As the Fed spits out more money, it will eventually raise not just the prices of consumer goods but also wages. I know there is a Cantillon effect/process to price increases, but that still would not *suppress* wages at the expense of all other items in the economy. It's not as if, in 1970, a manager would say "good work this year, prices are up 2% in the economy so you are entitled to a 2% merit increase", only for that same manager to say, in 1972 "so prices are up 7% this past year, but because we went off the gold standard, I'm still only able to give you a 2% raise. Sorry not sorry."

Then there are finally those on the more establishment Right (AEI, Hoover Institution, Cato) that attack both the progressive and Austrian arguments, saying that wages *have* increased just fine since 1971, ignoring hourly wages and instead pointing to median personal and household income stats from the Census Bureau (example below) that calculate a person's "full" wages by including benefits like healthcare contributions. They also point to data showing that, while the middle class is shrinking, it's because the upper-middle class is *growing*.

https://fred.stlouisfed.org/series/MEPAINUSA646N

https://thedispatch.com/newsletter/capitolism/the-annoying-persistence-of-the-income/

This more pollyannish view appears to rest on a key assumption: "CPI is accurate", which I know is also regularly critiqued by Austrians. Anyways, I'm rambling now, but just curious if anyone had insights in how to sort through all of this. I guess the ultimate question I have is how de-linking from gold would somehow magically suppress wages but not all other items/prices in an economy.

My therapist and psychology professor warned me that overly critical statements would not make people receptive and join your side. As I’m writing this I had an epiphany and I couldn’t agree more.

You see.

Austrians like to put a negative spin on everything. And point to it as reasons of a failing economy and failure of government policy.

Hmm?? the word “failure”

this word is negative on its own, and if something has failed then the logical conclusion a reasonable person would be to assume is that something is wrong or it’s broken.

Is there substance to these words? What is the proof that validates use of these negative words?

Austrians never bring a scientific paper to empirically prove there arguments. Just a hunch.

Hunch?

No liner algebra? No matrix equations? Statistical mathematics?

You can’t measure a system without learning calculus or algebra.

And economics is a system. So?? How are these conclusions reached?

*****random voice cries

But wait sir come back!!!! listen to my Milton freedman he won a Nobel prize he said inflation is a government phenomenon.

Milton freedman? You mean the guy who invented the modern economic policy and standard that the us government used to manage and maintain price stability at the central bank even to this day?

Yea he knew math too.

*****Random voice cries again

But wait sir a gold standard??? What about??…..

-My response

Ok??? What about what???

Fixed exchange? Balance of payments? the Breton wood’s agreement?

That way 50 years ago Johnny!!!!

The floating exchange rate… ahhh never mind Johnny you never went to college.

……

Studying is important…

don’t be like Jonny..

Johnny thinks he knows everything there is to know about economics but never even opened a college economic textbook. Johnny doesn’t understand it takes years to study something.

Johnny I just found out is illiterate.

Toodles

Which are the core books (in order) to read in order to grasp the majority of Austrian economics in its current state?

I am a Master's student of Financial Economics and I would like to pursue a PhD in order to later become a professor of Austrian economics. I have absorbed a very large amount of Austrian theory from podcasts and YouTube lectures, but I have only read Rothbards Libertarian Manifesto in full.

Is Tom Woods' book list from his Resources online page the best list of books to start with?

By democracy I mean formal, procedural democracy and the universal franchise, as distinct from forms of government that claim to pursue democratic ends like the common good.

I don't see a good counter to the argument that money corrupts electoral politics, leading to regulatory capture, crony capitalism, central banking and a parasitic oligarchy that uses government to redistribute resources from the productive class to both itself and an unproductive underclass.

It seems that free marketers should favor something closer to a kind of benevolent despotism, where a central authoritarian figure allies with the middle and provides a counterweight to the oligarchy.

I’m subbed to a couple of economic subreddits (r/fluentinfinance, r/inflation, r/the_everything_bubble) and I keep seeing the argument that “Well, without inflation, the rich would hoard all the wealth. And because the dollar is consistently decreasing in value, that incentivizes them to use their wealth to make more money, and that keeps the economy going.”

My response was that inflation is why the wealthy have bought up so much of the housing market - as a safe store of value AND a way to make money. So inflation is both directly responsible for the housing crisis through the decreased buying power of the weakening dollar and increased cost of living with salaries lagging behind, and indirectly responsible because the wealthy have bought up a lot of the housing market to make rentals.

So from where I’m sitting, it looks an awful lot like inflation has greatly contributed to the housing crisis. The person I said that to downvoted and moved on. I’m not crazy, that’s a reasonable conclusion isn’t it?

Also are there really that many people who actually think inflation is a good thing?

One of the suggested ways of dealing with debt, outside of restructuring or a huge industrial style revolution to boost productivity.....is to inflate it away.

Make the debt cheap so it's worth less such as in the US where the debt us US dollar-denominated so they can just print more dollars to pay it off.

But has this ever actually worked long-term? Because I am not understanding how it can. Let's say you continually do keep printing more dollars to service and even pay off a chunk of your debt. The new dollars you've created have created new private sector equity. You now have more inflation and you still have to keep spending on existing entitlements not to mention the cost of funding your military or your infrastructure has gone up because while the debt is worth less, so is the purchasing power of the government on what it's spending on. So now you have to spend more just to keep up on what you were spending on before even with some hypothetical austerity measures taken.

Basically, I see a feedback loop of debt -> inflating away that debt -> need to now spend more -> more debt. How can this possibly inflate away the debt then long-term?