By James E. Miller There has been a lot of speculation recently on whether or not gold is in a bubble. With Federal Reserve chairman Ben Bernanke announcing "Operation Twist" last month, gold and other commodity prices have fluctuated erratically. Immediately following the "Twist" announcement, prices of both plummeted. Gold then stabilized a few days later. To make sense of these phenomena, one must utilize Ludwig von Mises's lesson that history must be interpreted with logic and rational deduction rather than empirical evidence alone.
As the Austrian business-cycle theory teaches, artificially cheap credit, not backed by real savings, creates intertemporal discoordination in production involving scarce resources that ultimately results in malivestment. As Roger Garrison explains,
“An artificial boom is an instance in which… (Read more)
Source: Mises.org
No comments:
Post a Comment