At least since 2008, the financial world has been in a financial spiral caused by central banks’ growing monetary impression. As a consequence, key economic concepts (e.g., that business cycles are caused by credit expansion, and higher prices by monetary expansion) started to be considered just “old ideas” and their defenders prophets of the apocalypse. Some economists, especially the modern monetary theory (MMT) defenders, attempted to substitute these ideas with new ones. Their new analytic framework resulted in a countless number of enterprises claiming to be part of a new economic era.
Even though the MMT narratives are beautiful and can thrill the most unsuspecting, reality always buries impossible dreams in the end. In the market process that deals with scarce resources and inexhaustible ends, there is a filter which over time selects the practices that generate the greatest returns.
And how did we get here? Men answer to incentives, and the incentives of the last decade have distorted the economic and social processes. The Austrian school has long pointed out the importance of time preferences in market processes and how the manipulation of currency affects individuals. People become more present oriented and immediatist.
R&I – txpAT
AuntiE
Article URL : https://mises.org/wire/corporate-fairy-tale-dying-economic-reality-sets