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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: bull_dozer who wrote (191627)	9/9/2022 8:55:35 PM
From: fred woodall	2 Recommendations Recommended By maceng2 Maurice Winn Read Replies (1) \| Respond to of 217786

y Tightening Cannot Undo the Negatives of a Previous Loose Stance Full article here: zerohedge.com According to Ludwig von Mises, a tight monetary stance cannot undo the negatives of the previous loose stance. (In other words, the central bank cannot generate a “soft landing” for the economy.) The misallocation of resources due to a loose monetary policy cannot be reversed by a tighter stance. According to Percy L. Greaves Jr. in the introduction to Mises's The Causes of the Economic Crisis, and Other Essays before and after the Great Depression: Mises also refers to the fact that deflation can never repair the damage of a priori inflation. In his seminar, he often likened such a process to an auto driver who had run over a person and then tried to remedy the situation by backing over the victim in reverse. Inflation so scrambles the changes in wealth and income that it becomes impossible to undo the effects. Then too, deflationary manipulations of the quantity of money are just as destructive of market processes, guided by unhampered market prices, wage rates and interest rates, as are such inflationary manipulations of the quantity of money. A tighter interest rate stance, while undermining current financial bubbles, will also generate various distortions, thereby inflicting damage to wealth generators. A tighter stance is still intervention by the central bank, which falsifies the interest rate signal. A tighter interest rate stance does not result in the allocation of resources in line with consumers’ top priorities. Therefore, it does not follow that a tighter interest rate stance can reverse the damage caused by inflationary policy. If we accept that inflation is about increases in money supply, then all that is required to erase inflation is to seal off the loopholes for the generation of money out of “thin air” by the central bank. Policies aimed at stabilizing price increases actually produce economic upheavals. Observe that by February 2021, the yearly growth rate of our monetary measure for the USA jumped to almost 80 percent. Against the background of this massive increase, one should not be surprised that the yearly growth rate of the CPI has accelerated. Policies that aim at slowing the growth rate of the CPI rather than arresting the growth rate of money supply will likely undermine economic conditions. ConclusionAs long as life sustenance remains the ultimate goal of individuals, they will assign a higher valuation to present goods than future goods, and no central bank interest rate manipulation will change this. Any attempt by central bank policy makers to overrule this fact will undermine the process of wealth formation and lower individual living standards. It will not help economic growth if the central bank artificially lowers interest rates when individuals have not allocated adequate savings to support the expansion of capital goods investments. It is impossible to replace savings with more money and the artificial lowering of the interest rate because it is not possible to generate something from nothing. By raising interest rates the central bank cannot undo the damage from its previous easy interest rate stance. A tighter stance will likely generate various other distortions. Therefore, policy makers should leave the economy alone