Wednesday, April 25, 2012

Global Macroeconomic Communism is Here

We live under global macroeconomic communism. One of the most important market prices, the one responsible for the intertemporal coordination of production - that is, the interest rate - is not determined by the rate of social time preference (dependent on the totality of individual decisions of market participants regarding how much of their income to spend and how much to save), but by the edicts of the monetary central planning bureaus known as central banks. Likewise for the magnitude of money supply.

It cannot be overstressed that this type of communism is infinitely more insidious, and hence, in an important sense, more dangerous, than the crude type known from the Soviet Union and its satellites. The former assumed all the external appearances of a market economy - it is like a wolf in sheep's clothing or like a ripe, beautiful apple with a drop of deadly poison inside, whereas the latter looked like a plain wolf or like a rotten apple all along.

Hence, playing on people's envy and ignorance, its commissars (the central bankers and their cronies) can easily blame global economic distortions, caused by their manipulations of interest rates and the money supply, on "deregulation", "capitalism", "greed", or any other hackneyed bogeyman in the world, thus receiving even more political power from the hands of the befuddled masses and triggering a vicious circle of ever wider politicalization and socialization of the economy.

Thus, always be ready to educate those around you about the reality behind the veil and the ways to make the veil fall.