by Strigl
[Introduction and the Paradox of Interest Rates in the Crisis]: Strigl introduces the current global economic crisis, noting that monetary policy has become a central concern. He argues that the current crisis deviates from normal business cycles because interest rates, after an initial drop, have paradoxically risen again in many countries, preventing the typical recovery led by heavy industry and construction. [Price Rigidity and the Demand for Devaluation]: The author discusses the resistance of certain prices, specifically cartel prices and wages, to downward pressure during the depression. He analyzes the arguments of Keynes and Cassel regarding 'redeflation' and the abandonment of the gold standard, noting that proponents of devaluation seek to align rigid prices with a lower currency value rather than allowing nominal prices to fall. [The Critique of Monetary Intervention and Inflationism]: Strigl critiques the demands for low interest rates and price stabilization, identifying them as forms of inflation. He argues that such policies damage state credit, undermine economic rationality, and fail to address the root causes of high wages, as unions or market forces may simply push wages back up after a devaluation. [Monetary Expansion and Capital Destruction]: This section explains how monetary expansion distorts the production process. Strigl argues that new money enters the economy at specific points, creating artificial incentives for production that cannot be sustained without continuous inflation. This leads to 'greenhouse plants'—industries that fail once sound monetary conditions return—resulting in the permanent loss of invested capital and a weakening of the economy's real asset base. [Defining Inflation and the Failure of Recent Policy]: Strigl provides a broad definition of inflation as any artificial monetary stimulation, including keeping interest rates too low to prevent necessary price adjustments. He examines the recent actions of the US and UK central banks, arguing that their attempts to ease the crisis through rapid interest rate cuts and currency devaluation have actually prolonged the depression by preventing the necessary liquidation and structural adjustment of the economy.
Strigl introduces the current global economic crisis, noting that monetary policy has become a central concern. He argues that the current crisis deviates from normal business cycles because interest rates, after an initial drop, have paradoxically risen again in many countries, preventing the typical recovery led by heavy industry and construction.
Read full textThe author discusses the resistance of certain prices, specifically cartel prices and wages, to downward pressure during the depression. He analyzes the arguments of Keynes and Cassel regarding 'redeflation' and the abandonment of the gold standard, noting that proponents of devaluation seek to align rigid prices with a lower currency value rather than allowing nominal prices to fall.
Read full textStrigl critiques the demands for low interest rates and price stabilization, identifying them as forms of inflation. He argues that such policies damage state credit, undermine economic rationality, and fail to address the root causes of high wages, as unions or market forces may simply push wages back up after a devaluation.
Read full textThis section explains how monetary expansion distorts the production process. Strigl argues that new money enters the economy at specific points, creating artificial incentives for production that cannot be sustained without continuous inflation. This leads to 'greenhouse plants'—industries that fail once sound monetary conditions return—resulting in the permanent loss of invested capital and a weakening of the economy's real asset base.
Read full textStrigl provides a broad definition of inflation as any artificial monetary stimulation, including keeping interest rates too low to prevent necessary price adjustments. He examines the recent actions of the US and UK central banks, arguing that their attempts to ease the crisis through rapid interest rate cuts and currency devaluation have actually prolonged the depression by preventing the necessary liquidation and structural adjustment of the economy.
Read full text