By Richard J. Maybury
The most free-market of all the economic viewpoints today. The origin was in Vienna, Austria, but the country where Austrianism is most popular today is probably the U.S. Austrian economics sees the economy not as a machine, but as an almost infinitely complex ecology made of biological organisms – humans. Austrians believe government control beyond enforcement of "The Two Laws" (See legal terms) wrecks this ecology, and they worry greatly about inflation of the money supply and malinvestment.
Economic bubbles occur when prices in a segment of the economy are bid up artificially high. That is, the prices do not reflect the actual value of the items being traded. The Austrian viewpoint says that bubbles are formed when the new money created by the Federal Reserve pours into a market. This new money bids up the prices, creating the bubble.
An economic and political system in which the guiding principle is liberty, or the individual's rights to his or her life, freedom and property. In most capitalist models, the government's role is limited to national defense and enforcing the two fundamental laws. (See the legal Terms)
A hot spot. An area into which money is flowing in large quantities, and firms are placing plants, equipment, and workers to tap into these flows.
According to Marxists, the final, utopian stage of economic development in which there is no government, and everyone works according to their abilities and is paid according to their needs. True communism has never existed except among small groups such as hippie communes and religious monasteries. The "communism" of the Soviet Union was actually socialism.
A reduction in the value of a currency due to an increase in the quantity of the currency.
The correction period following an inflation of the money supply. Usually includes a lot of business failures and unemployment as the malinvestment is shaken out.
Nickname for the Federal Reserve System.
Federal Reserve System
The central bank of the U.S. called "the Fed" for short. The Fed's primary purpose is to control interest rates and the supply of money, by controlling tightness and looseness. “Tightening” means restricting the money supply, which drives up interest rates. “Loosening” means expanding the money supply, which causes rates to fall. This is because interest is the price of renting money. When the supply is tight, the price rises. When it is loose, the price falls.
Money that has been made up out of nothing. It has no gold backing, or any other reason to be valuable, other than that government officials have declared it so.
Great Economic Calamity, The
A term coined by Richard Maybury, refers to the economic crisis that began in August 2007. The name draws attention to the root cause: malinvestment created by fiat money.
The extreme case of runaway inflation. Money supply and/or velocity increases so fast that prices rise daily or hourly.
The Federal Reserve pouring new money into the economy.
The changes that occur on Wall Street (the financial world) and/or Main Street (where most of us live and work) when the government injects new money into the economy. The creation of cones.
Originally the economic philosophy of John Maynard Keynes. Today a kind of compromise, or middle road, between socialism and capitalism. Keynesians want broad government controls on economic activity, especially manipulation of the money supply.
French for "leave alone". According to legend, in 1680, French finance minister Jean Baptiste Colbert asked a group of businessmen how the government could improve the economy. The businessmen discussed the question, then returned to Colbert saying that to improve the economy the government must "laissez nous faire" — leave us alone.
Investment that should not have happened. It is the economic disorganization often created by increases in the supply of a currency.
One who believes inflation of the money supply causes rising prices. Monetarism is also called the Chicago School. Their leading light is Milton Friedman. Monetarists have more faith in free markets (capitalism) than Keynesians, but do allow limited expansion of the money supply, and tend to ignore malinvestment.
The government’s behavior in increasing or decreasing the money supply.
An individual's or organization's collection of investments.
The beginning of a depression that never went all the way.
The corrections during a recession or depression in which the malinvestment is eliminated by the market, usually in a wave of bankruptcies and/or mergers and acquisitions.
According to Karl Marx, the transitional stage between capitalism and communism. In socialism, the means of production, distribution and trade are owned by a large, powerful government that controls virtually everything and everyone. The individual's rights to his or her life, freedom and property are sacrificed to the government's plans.
The speed at which money changes hands. A measure of the demand for the currency.
(You can find an in depth explanation of velocity here)
The system for discovering and applying the Natural Laws that determine the results of human behavior. The system for discovering and applying the Natural Laws that govern the human ecology. The body of definitions and precedents growing from the two fundamental laws that make civilization possible.
To intrude on the person or property of another. Implies crossing a line.
A body of law higher than any human law.
A belief in Natural Laws that are higher than any government’s law.
The rules that govern the operation of the universe and everything and everyone in it. Natural Law sometimes appears capitalized in the same way as the Ten Commandments.
The legal privilege of backing one’s decisions with violence or threats of violence. The legal privilege of encroaching on the life, liberty, or property of a person who has not harmed anyone. This privilege is what sets government apart from all other institutions.
One who believes in a large, powerful, activist government that has the privilege of forcible intervention in the economic and private lives of citizens and foreigners.
Two Laws, The
The two fundamental laws on which all major religions and philosophies agree. (1) Do all you have agreed to do and (2) do not encroach on other persons or their property. Formulated into 17 words and copyrighted by Richard Maybury, these laws are necessary for a civilization to develop and advance.
A word coined by Richard Maybury in 1992, meaning the Land of Chaos. The area from the Arctic Ocean to the Indian Ocean and Poland to the Pacific, plus North Africa, this is the most important area that never developed legal systems based on the two fundamental laws (See "Two Laws" under legal terms).
The political philosophy that is no philosophy at all. Assumes truth is unknowable, so right and wrong are unknowable; ergo, do whatever appears necessary, no exceptions, no limits. Symbolized by the fasces, fascism is derived from the law of the Roman Empire.
Having no political or economic relations of any kind with other countries. Not the same as non-intervention.
Similar to neutrality. Refusal to meddle in the affairs of another nation, or in a dispute or war. Permits trade, tourism and other private interaction, but no political connections.
The New Axis
New Axis is a term coined by Richard Maybury in 1996 to refer to Washington’s then 9 known enemies. Now it is at least 15: the governments of Iran, North Korea, Serbia, Syria, Libya, China, Chechnya, Sudan, Venezuela and Uzbekistan, plus sizable groups in Russia, Pakistan, Belarus, Iraq and Afghanistan. Some hate each other, but they hate Washington more, and in operations against Washington they are known to assist each other.
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