CB -
The way I understand von Mises and Austrian economics, boom/busts are not caused by rational market activity but artificial market activity caused by government intervention....
My interpretation is to consider that the actual market economy is the primary focus, and the stock market is a secondary symptom. Also, the actual market economy is still making rational decisions, but the government is screwing up the traffic signals so that opposing directions sometimes will both see a green go signal.
...The problem with Austrian economics, like all libertarian ideas, is that no one really knows how they work because they've never been tried....
But most, if not all, of the alternatives have been tried, and have failed.
... The gold standard can't work when the exchange rate is regulated, and the exchange rate is always regulated.
If there were a real gold standard, there wouldn't be any other currencies to have exchange rates.
The problem you describe with regulated exchange rates seems to me to be exactly what will happen with the Euro. All the member states have fixed their currencies to the Euro and have given up the ability to pursue separate monetary policies almost as much as if they had tied their currencies to gold.
Regards, Don |
