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16 Comments
Just got the email on inflation well done. Under the system that Iām creating in my basement, every child born will increase the value of your currency..
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They ( Governments & their Central Bankers ) will now change the Term ' DEFICITS & DEBT ' to ' PRODUCTIVE SPENDING '. It sounds more appropriate & legal.
Dismantle Central Banks! Restore Glass-Steagall act!
I have suggested for years that we return the Fed to a single mandate of price stability. And further, we should link growth in the money supply to growth in GDP. Inflation is most often caused when the money supply grows faster than an economy (GDP) grows. The money supply only increases when the economy grows. And when the economy declines, the money supply remains constant which will have a somewhat stimulative effect….
leet Tengu Mask bro
I love Professor Peter's morning updates for two reasons. First for the great current and historical information and secondly to see what kind of shirt he has on.
How could a man like Hitler ever come to power…one may ask.
Love it. Separation of Money and State. This is how we drain the swamp in DC and the government does the work approved by the governed
Always Super Excellent…. Prof, you are the best…. thanks so much…
Will they ever stop printing money excessively?
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Of course fiat currency is not really money but currency theres a big difference.
Good summary. Ferguson's book When Money Dies (1975) reveals how even after hyperinflation ended the state did not understand what had caused it. The book contains diary entries by an ordinary middle class person that describes the day to day effect on citizens. Ironically, the only drop in the inflation numbers came when the printers went on strike.
The problem I find with this analysis, not just this hostās analysis but every one like it, is that it completely ignores that money is a political phenomenon. Itās the main neoclassical economic issue really.
Government spending is not the only influence on money creation. If the elected government doesnāt provide enough currency to support all of the economic activity in a growing country, then the growth will be fuelled by private debt. Either that or you just donāt grow and your economy sputters out, but more likely than not, if there is a potential for profit growth, the money will show up either through public or private debt.
The idea that cutting off the āmoney printersā will solve this problem is naive. The entire idea behind Volkerās rate hikes and Raeganās budget cuts was to reduce the deficit. Instead, it simply shifted the money creation onto the private sector, which is why you see private debt start rising dramatically starting in the late 1970ās.
Neoclassicals tend to think that public and private debt are basically the same thing when it comes to inflation. They blame the rise in private debt on the loose policies of the Fed, but they ignore the fact that decades of government cuts forced the Fedās hands in allowing for more private debt. All of their arguments about why the Fed is bad at this job are true, but they refuse to recognize that their other policy ideas force this reality.
But Peter, Stephanie Kelton says Deficits are just a myth and they don't matter haha!
Pluto's return . collapse