The archive.

Gold owes its value not to mysticism but to the same considerations that price any economic good, utility and scarcity, and in extremity bread or shelter may matter more. With that correction to the goldphiles who preach the metal's eternal worth, Sennholz's March 2003 essay establishes gold's real monetary fitness: its marketability, durability, storability, and a stock so vast relative to annual production that supply shocks barely register. From there he reaches the political drama he cares about, governments coveting gold yet fearing its discipline, hoarding it, monopolizing the mint, at times criminalizing private use. The 1971 suspension of gold payments installed the dollar standard and freed the Federal Reserve to finance deficits by credit creation. Chronic depreciation, he concludes, could exhaust confidence in fiat money, leaving gold once more the implicit alternative.

The special characteristics which man ascribes to gold have made it the most marketable economic good of all, the popular medium of exchange and unit of economic calculation and account; they have made it man’s money.

When the Census Bureau reports falling median household incomes, rising poverty, and more Americans without health insurance, most readers see a distributional grievance; Sennholz sees capital consumption. Living standards, he argues, rise or fall with labor productivity, and productivity depends on capital per head, the tools, structures, and savings that make work effective. Read through that principle, declining income signals an impaired production structure rather than a mere failure of welfare administration. The culprits are fiscal and monetary: deficit spending at every level of government competes for savings, while household debt, mortgage expansion, tax rebates, artificially low interest rates, Federal Reserve money creation, and foreign purchases of Treasury debt sustain present consumption by drawing on future income. Apparent recovery, the essay warns, can mask a capital erosion that the statistics will register only after the credit boom fails.

When the present bubble finally bursts, the Census Bureau will keep us informed about falling household income.

The 2003 Medicare prescription-drug expansion arrives here not as health reform but as a move in a permanent struggle over who pays and who receives. Sennholz reads the parties' sudden role-reversal, Republicans now championing an entitlement they once resisted, as a clever maneuver rather than any conversion of principle, and he redescribes social insurance bluntly as public assistance. The projected $400 billion covers only a fraction of seniors' drug bills, and the uncovered remainder, he notes, is precisely what invites the next round of expansion. From there the essay forecasts a widening administrative war: rising costs bring investigation, price pressure, and regulation of pharmaceutical firms and physicians, so subsidy becomes supervision and supervision becomes stagnation. Carried far enough, Sennholz warns, entitlement conflict without end summons a supreme arbiter armed with emergency powers to enforce social peace.

Politics rarely listens to reason and economics; it is search after power masquerading as a contest of principle.

A giant inverted pyramid, $692 billion in Federal Reserve notes supporting some $8.9 trillion in bank deposits, governs Sennholz's picture of the American fiat system, an unstable construction that distorts production, erodes savings, and subsidizes government debt. Rapid monetary expansion need not surface in the consumer-price index, he argues, because official measures emphasize stable consumer goods while ignoring surging prices in real estate, commodities, and raw materials; meanwhile cheap imports from China, India, and Malaysia and foreign appetite for Treasury securities temporarily suppress both prices and interest rates. This arrangement, in which foreigners trade real goods for American promises, is historically exceptional and politically fragile. Should their willingness end, he predicts higher rates, a falling dollar, soaring prices, and another boom-bust cycle, and closes with the case for honest commodity money against a currency severed from market discipline.

The love of money, fiat money that is, is the root of much evil.

Never before, Sennholz observes, have monetary and fiscal policies been so stimulative while the economy remained so weak, and that paradox drives this catalogue of possible futures for the dollar. The essay's engine is the falsification of interest rates: when the Federal Reserve suppresses the market rate that coordinates saving and investment, business calculation is corrupted and debt-financed consumption swells beyond sustainable limits, down to households that converted home equity into fresh spending. He then lays out competing scenarios, continued foreign financing, a creditor withdrawal and crisis, abrupt stabilization, inflationary collapse, protectionist escalation, orderly adjustment, rejecting both complacency and total apocalypse. Asian central banks sustain the deficits for now, but their trust wears thinner daily. His preferred path is gradual, painful discipline: balanced budgets, restored market interest, and ultimately a gold-backed dollar to rebuild international confidence.

The Federal Reserve’s utter disregard of the market rate of interest, which guides the efficient employment of all factors of production according to consumer choices, is bound to do great harm to the economic structure.

Justice once meant rendering each person what is due; modern "social justice," Sennholz argues, quietly rewrites that standard into a mandate for state-managed welfare, making officials the superior judges of individual rights. Tracing the term from Plato and Aristotle through biblical ethics and Aquinas, this classical-liberal critique watches a moral and juridical idea harden into administrative redistribution. His economic objection turns on capital: confiscating or forcing the liquidation of productive assets does not merely shift purchasing power but erodes the capital structure on which wages and employment depend. Welfare economics, progressive taxation, Social Security, and Medicare become engines of dependency, bureaucracy, and envy, dividing society into providers, recipients, and administrators, and closing, with Benjamin Franklin, on the corruption that follows when a people can no longer master itself.

A "social justice" society is a conflict society which locks beneficiaries and victims alike in a struggle without end.

Germany's early-2000s stagnation, on this diagnosis, is no passing downturn but the accumulated weight of decades of welfare-state expansion, heavy taxation, labor-market rigidity, and subsidy. Beginning with German opposition to the Iraq War, the essay reads Schroeder's antiwar stance chiefly as electoral maneuvering that distracts from unemployment and malaise. The history runs from the freer conditions of the postwar Wirtschaftswunder through the Social Democratic turn after 1968 to Kohl's accommodation with intervention and the fiscal burden of reunification; the Red-Green coalition appears not as rupture but as another stage on the same trajectory, its tax cuts outweighed by energy levies, union power, and pension obligations. What Germany lacks, Sennholz concludes, is not technical knowledge but the political capacity to dismantle privilege and recover the market freedom he ties to the postwar miracle.

The official German position must be viewed in the light of politics, which is simple strife of party interests masquerading as a contest of principles.

Uncompromising conviction and intellectual humility seem unlikely allies. In this article, Israel M. Kirzner explains why he regards both as essential to the Foundation for Economic Education’s commitment to freedom. His bridge is entrepreneurial discovery: people not only lack knowledge but can notice opportunities they never knew existed. The same insight that explains how market participants discover and correct errors becomes, for Kirzner, a reason to resist coercive direction and to teach without browbeating. The distinctive tension lies in his claim to certainty about knowledge’s limits. Readers can examine how an economist’s account of alertness supports an educational ethic of courtesy and restraint—and whether humility can sustain the uncompromising principles Kirzner asks it to justify.

Falling prices, the popular story runs, are an economic abyss, the mirror of inflation but worse, paralyzing output and employment. That fear is precisely what this 2003 essay overturns. Inflation, Sennholz insists, originates in monetary expansion by the Federal Reserve and the banking system; what looks like deflation is often the corrective aftermath of that expansion, or simply the effect of a rising demand to hold money in fearful, stagnant times. When uncertainty swells cash balances, official stimulus loses force and the Fed is pushing on a string. Easy money lures firms into unsustainable ventures whose eventual liquidation is painful but wholesome, while low rates that no longer signal real saving merely prime fresh malinvestment. Japan's slump, he argues, was prolonged not by deflation but by the interventions meant to cure it.

Declining prices do not call for ever more Federal Reserve money and bank credit.

Interest rates should arise from market forces, not political or central-bank manipulation, because they coordinate entrepreneurial decisions across time; so this compact essay maintains. Sennholz defines the gross market rate as three components: the pure rate rooted in time preference, the inflation component reflecting currency depreciation, and the debtor's risk premium. Against this stands the Federal Reserve, whose rates held below market levels expand borrowing unsupported by genuine saving, inflate stock and real-estate prices, and let people mistake paper gains for wealth. The boom is thereby recast as capital consumption masked by rising asset values, and the ensuing downturn as the market's forced correction of falsified signals. Central bankers may ignore the market rate, he concludes, but they cannot abolish it.

But, in the end, there is general impoverishment.

Not all borrowing is alike, and the distinction is where this October 2003 essay begins. Sennholz separates productive debt—which finances investment that earns future income and raises labor productivity—from consumptive debt, which finances spending and leaves no capital behind once the good is gone. Rising American household, mortgage, and federal obligations, he argues, reflect a love of spending propped up by artificially low Federal Reserve rates that distort entrepreneurial calculation and conceal the true burden. His chain of consequences is bleak: cheap credit invites malinvestment; public deficits invite currency depreciation as a hidden tax on creditors; depreciation threatens the dollar's reserve role; and debt-driven transfer politics corrode civil peace until, he warns, a society that can no longer cooperate submits to a strong president armed with emergency powers.

Private debtors may find it difficult to pay for bread that has been eaten.

Over twelve days in 1951, at the Foundation for Economic Education, Mises reconstructed his whole system aloud — from the epistemology of human action to Marxism, money, and the trade cycle — in lectures transcribed verbatim and offered here in a German translation of the 2004 English edition. The free market, he argues, is a rational order of purposeful action, prices, and monetary discipline; its enemies are pseudo-sciences that promise social control while ignoring calculation and scarcity. Economics is a science of action, not an experimental discipline, and it stays neutral about ultimate ends. Socialism fails not merely as coercion but as an intellectual impossibility: abolishing private ownership abolishes the prices planners would need. Inflation he defines causally, as an expansion of money outrunning the demand for cash balances, and the gold standard he defends as a curb on political manipulation.

Was sie wirklich brauchen, ist das Kapital. Was fehlt, ist der Kapitalismus.

English translation: “What they really need is capital. What is lacking is capitalism.”