Thursday, July 31, 2014

Mises Makes It to the Front Page of

A column by EPJ friend, Rafi Farber, written for mentions Mises' Regression Theorem in relation to the crisis in Argentina:
In order for an economy to function on the most basic level, prices have to mean something. They have to make sense -- calculate values of scarce resources accurately in order to allocate them in the most efficient way. In order for them to make sense, they have to relate to something that represents the actual market. So Argentina will have to peg to the dollar once again. More precisely, it will have to peg to something with a recognized value, or its economy will not function. It can't just hand out new pesos and say "Whatever." Nobody would know what to do with them.
Austrian School economist Ludwig Von Mises called this the Monetary Regression Theorem. In order for a money to work, there has to be an existing array of prices recognized for that money in the market already. Otherwise, nothing would make any sense. You can't just have a Master of Coin from the government, go ahead and declare what prices are for everything and start handing out tickets. If that were to work at all, his price declaration would have to reflect an array already in existence. It can't be conjured out of sheer government will.
Emails Rafi:
 I wasn't expecting them to put it on the front page. But hey, I take what I can get.
Rafi's full essay is here.

Ludwig von Mises was a key architect in what has become known as the Austrian School of Economics.


1 comment:

  1. I hate to post the same message on 2 posts, but this is a perfect example of how Ron Paul's message has crept back into the hallowed halls from which it had been banished.

    Millions of millennials are quietly working their way into media positions, pushing the economic truths that they learned from Dr Ron. They must be careful, even slipping in Austrian critique at the margin.

    NPR, The Boston Globe,, WSJ, Forbes...all have posted positive articles about Rothbardian libertarianism in the last few months. I hope Murray, Ludwig and Fred are toasting champagne- they won.