Friday, February 14, 2014

Richard Branson Understands Airlines...Economics? Not So Much.

By, Chris Rossini

Richard Branson, the billionaire that we all know has a strong fascist streak, also has an issue with the non-problem known as "hoarding":

With all his billions, you'd think Branson could pick up a copy of Rothbard's "What Has Government Done To Our Money?". He could even get a digital copy for FREE if the $5 is just too much.

There's no reason for me to re-invent the wheel, so I'll let Rothbard take it from here:
The image is conjured up of the selfish old miser who, perhaps irrationally, perhaps from evil motives, hoards up gold unused in his cellar or treasure trove--thereby stopping the flow of circulation and trade, causing depressions and other problems. Is hoarding really a menace?
I love that Murray used gold as the monetary unit. What a beautiful touch!
In the first place, what has simply happened is an increased demand for money on the part of the miser. As a result, prices of goods fall, and the purchasing power of the gold-ounce rises. There has been no loss to society, which simply carries on with a lower active supply of more "powerful" gold ounces.
Even in the worst possible view of the matter, then, nothing has gone wrong, and monetary freedom creates no difficulties. But there is more to the problem than that. For it is by no means irrational for people to desire more or less money in their cash balances.
Continue here to see how Murray put this non-problem to rest.

The bottom line in Branson's case? You can have billions of paper dollars (or electronic digits) and still not understand the economics of money.

Chris Rossini is on TwitterFacebook & Google+


  1. Branson, like Buffett, is adept at accumulating capital without understanding the economics that makes it all possible.

    Rothbard also noted that being ignorant about the dismal science is fine; making public proclamations and attempting to influence policy based on erroneous economic thinking is not.

    1. What makes capital accumulation possible is that you buy something for X dollars and sell it for X+Y dollars. If X+Y is less than X due to deflation, you're not accumulating capital. Y = LOSS and YOU = out of business.

    2. As usual, you're confused. You are conflating deflation with falling prices. They are not the same, nor is it impossible to be profitable during an era of falling prices.

      Witness the likes of Rockefeller, Carnegie, Ford. They accumulated mountains of wealth in a period of falling prices because of higher productivity levels. It was that productivity that ushered in rising standards of living for a growing middle class.

      All of this was made possible by relatively free markets, low taxation/regulation and the use of real money. We have none of those things anymore. Is it any wonder the economy is stagnating and hooked on QE?

    3. LMFAO! Jerry shows the danger of what happens when you try to use linear models to describe extremely complex systems. Uh, Jerry markets go in cycles (ie not linear), every businessman that is worth his salt knows this. There is something called hedging that is done in all volatile markets. Ask a farmer. Jeez louse Jerry!