The Free Market Center Journal
The voice of Free Markets
The most important fundamental activity, after production and consumption, consists of exchange. The process of exchange allows producers to extend the range of their consumption beyond the limits of their own production. Exchange, therefore, benefits all actors engaged in exchanges. When left free and voluntary, the exchange process benefits everyone in what we broadly refer to as markets.
In free markets, we have what I have dubbed balance. I use the term balance advisedly because I want to connote the idea that the market always adjusts to the changes in the behavior of buyers and sellers. I want to distinguish between balance, which I used to note dynamic adjustment, and the frequently used … Continue reading Intervention vs. Balance
Balancing Production and Consumption Before I continue discussing the allocation of resources in a free market, I would like to recap some of the points that I have made in the last few blog posts. I started by explaining the concept of consumer sovereignty, which means that the whole purpose of production and markets consists … Continue reading Resource Allocation
I have described the importance of consumers in the operation of free markets. All production and distribution exist to serve consumers. Consumers ultimately determine all market pricing. But, from where do these all-important consumers come? How do consumers get "created?" According to common usage, we call people who spend money in the economy "consumers." Consumers, … Continue reading Creating Consumers
Now that we have a precise definition of the word “price,” we can discuss price determination (or priced discovery) of what we refer to as “market price.” We can understand the determination of an individual price by understanding the previously discussed definition of “price.” The individual price results simply from the agreement between buyer and … Continue reading Price Determination—Part Two
The determination of prices represents another piece in the free market puzzle. As frequently as you hear people refer to prices, I find it surprising how many misconceptions people have about prices. How do you define “price.” What factors determine price? What role do prices have in resource allocation? In this article, I will address … Continue reading Price Determination—Part One
Bashing billionaires seems to have become quite popular these days. Most of the current Democrat candidates attack billionaires in one way of the other. Led by Bernie Sanders and followed by the rest of the candidates, including the two billionaires, they all want to tax billionaires in order to support their favorite causes. According to … Continue reading Free-Market Billionaires
I recently read Austrian School for Investors[1], because I have been a student of investing for many years, and I know a group that has read the book for discussion. Although I began the book with the anticipation of a clear explanation of the application of Austrian methodology to investing, I finished the book with … Continue reading Review: Austrian School for Investors
Nation-states have no resources of their own. They redistribute the resources of their citizens. Nation-states can neither win nor lose when they play with other people's resources. Tariffs and other weapons of trade wars disrupt normal trade; helping one group at the expense of another. Illusion of Trade Deficits The concept of trade wars begins … Continue reading Nations Cannot Win or Lose Trade Wars
No one can build a model to either determine or predict prices, despite the useful information that prices provide. Attempts to predict prices will always prove fruitless. Knowing prices in advance would prove useful to owners and managers in all businesses. Imagine the profitability a company that could accurately predict the future prices of its … Continue reading A Pricing Model
President Trump’s threat to impose tariffs on steel and aluminum has triggered a blizzard of articles for and against the proposal. Instead of parroting what has been said by others — mostly empirical evidence, I want to give you the tools with which to understand the issue behind the proposed tariffs: “trade deficits.” Definition To … Continue reading Trade Deficits: An Introduction