This was the century in which the banking system merged with the State. (Location 594)
In 1694, England showed a possible way out of this dilemma: the establishment of the Bank of England was one of the first systematic attempts to cover the government’s debt requirements with “capitalistic” means. (Location 603)
government debt securities are commingled with private sector ones, and serve as the foundation upon which a pyramid of fiduciary media is erected. (Location 609)
The expansion of fiduciary media should thus rapidly increase the risk that the issuing banks will become insolvent. (Location 614)
The people behind these measures were in reality intellectual pioneers of socialism, who were dreaming of a centralized economy under the dictates of industrialists and engineers. (Location 649)
[T]he founders of modern socialism also did much to give Continental capitalism its peculiar form; “monopoly capitalism,” or “finance capitalism,” (Location 651)
In 1867, the bank collapsed, ruining itself as a result of speculation in Austrian government bonds, but the monetary revolution had been completed. (Location 680)
Earlier financial systems had been confined to employing what had been saved in the past and was made available in the present. (Location 685)
Without the war, however, it may still have been possible to put the economy on a more realistic foundation and to mitigate the urge to amass debt. (Location 692)
been talking about a monetary revolution in the previous (Location 1115)
Adherents of the Austrian School emphasize that exchange is not only the primary function of money, but also its origin. (Location 1121)
The most obvious commodities for accumulating wealth appear to have been those that are useful such as clothing or jewelry. (Location 1191)
How the history of the Fed and the dollar will evolve can, apart from the precise timing, be forecast with considerable certainty. (Location 1481)
these additional claims can never be paid back, unless all debtors repay their debts. (Location 1506)
In this context, the Federal Reserve is focused on the so-called core inflation rate, which does not take the prices of food and energy into account. (Location 1588)
Originally, deflation denoted a decrease in the quantity of money in circulation. (Location 1617)
In figure 5.4, it can be seen that total credit market debt relative to US economic output has been in decline since 2008. (Location 1636)
As a result, the behavior of commercial banks is decisive in whether an inflationary expansion or a deflationary contraction of the money supply takes place. (Location 1649)
In many cases, balance sheet totals are also decreasing because loans that are paid back are no longer replaced with new ones. (Location 1694)
In addition to this, bank regulations have become subject to stricter guidelines that are set to be tightened even further until 2018. (Location 1713)
that has an effect that is very similar to an actual change in the money supply is what monetarists refer to as the velocity of money. (Location 1714)
This is currently raising the tectonic pressure on the deflationary side. (Location 1717)
its decline may simply represent the fact that central banks are creating a lot of new money, while economic activity concurrently remains (Location 1719)
Normally excess reserves are very small. (Location 1749)
Not too long ago – prior to the collapse of Lehman Brothers – there were in effect no excess reserves at all. (Location 1751)
This ratio between achieving a consumable return and the duration of production can be imagined as a triangle, which becomes deeper and flatter. It is called a Hayekian triangle, after Austrian economist Friedrich A. Hayek. (Location 1860)
A lengthening of the production structure by means of employment of additional capital goods will as a rule produce a higher output. (Location 1869)
A higher return can however also consist of an increase in the quality of consumer goods. (Location 1871)
An inverted yield curve expresses the expectation that the normally high rate of money supply expansion is coming to an end. Contrary to a normal yield curve, it is usually not as steep as shown in the schematic depiction below. (Location 4664)
Moving averages for instance reflect a market’s general trend. Are we still in a strong or a weak trend? From a sober perspective, the breaking of a trend line does not necessarily signal the end of a trend. (Location 4765)
Sentiment indicators can also provide useful support for the decisions of the “Austrian” investor. They show the extent of optimism or pessimism prevailing in a market. (Location 4768)
Commercial hedgers often take positions that do not depend on price trends, because they either hedge inventories in the actual underlying financial instruments or commodities, or hold offsetting over-the-counter derivatives. In the futures markets, they should mainly be seen as liquidity providers, whose (Location 4777)
Wicksellian Differential (Location 4783)
Aubrey attempts to integrate Wicksell’s differentiation between the natural and the money rate of interest in an investment strategy that anticipates important turning points (peaks and troughs) in the economy’s trend at an early stage. (Location 4786)
account the possibility of human error, political pressure and other factors. Investors tend to lose more money in the category of bonds sporting triple A (AAA) ratings than in any other – as unpleasant surprises are often lurking in this segment. (Location 4821)