Published Wednesday, February 21, 2007 by Thorsten Polleit
The Austrians' great concern, writes Thorsten Polleit, is that a government-dominated money-supply regime would ultimately lead to economic and therefore political disaster; the objective of price stability would not alter such a dismal prediction. Even if a central bank succeeds in stabilizing a targeted price index, it would — by an ideologically motivated increase in credit and money supply — generously increase credit and money supply. It thereby distorts the economy's price mechanism, promotes malinvestment and initiates subsequent economic downturns. And it is actually the latter with which the trouble really starts.
(Original Text)
The Fateful Wish for Price Stability (2.63 MB)