Consumers

Creating Consumers

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

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Price Determination—Part One

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

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Crazy Markets

In my post titled “Money Tree,” I explained in a general way how the addition of “non-market money[1]” distorts market prices, which in turn leads to a misallocation of resources. In this post, I will build a hypothetical model to show how that process works in more specific conditions. I will follow two different market … Continue reading Crazy Markets

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Developing the Money Tree

As an experiment I have posted (below) a video version of the diagram I used to develop the Money Tree Post. If this experiment works, I might use videos such as this (only a little slicker) to enhance the explanation of additional points related to free markets. https://videopress.com/v/9l7qqCXZ?preloadContent=metadata Let me know what you think of … Continue reading Developing the Money Tree

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The Money Tree

We have seen a lot of craziness in the financial markets recently. A small group of investors, known as the Reddit investors, bid up several low-priced stock prices, squeezing short-sellers. Many people have applauded this activity depicting it as the small guy outsmarting the big guy — in this case, hedge funds. But, there is … Continue reading The Money Tree

Money Supply and Bank Reserves

Introduction The fact that we perpetuate false or inaccurate theories causes at least one problem for understanding money and its role. For years economic classes have taught that the Federal Reserve controls the supply of money. When they buy government bonds from banks, they pump reserves into the banks’ reserve accounts, and that addition to … Continue reading Money Supply and Bank Reserves

Climate, Freedom, & Money

Introduction “Climate change” represents the crisis de jure. We have no choice but to accept that human activity has created a crisis level of change in the climate of the world. To deal with this crisis, we must implement an unprecedented level of government intervention. The complexity of this subject boggles the mind. How do … Continue reading Climate, Freedom, & Money

Disrupting the Money Cycle

Artificial changes in the money supply always disrupt the money cycle and cause price disruptions that lead to production problems in otherwise normally functioning markets. Introduction The complexity of large markets makes the diagramming of market processes difficult at best. One must take great care in not overstepping the bounds of logic and systems thinking. … Continue reading Disrupting the Money Cycle

The Dangers of Modern Monetary Theory

At the core of Modern Monetary Theory (MMT) lies the implicit premise that the acquisition of money represents an end of itself. MMT bases its argument on what some people refer to as a "missing premise." They present a proposition that contains an unstated premise that they assume everyone accepts. Give people more money, created … Continue reading The Dangers of Modern Monetary Theory