No Way Out Central Banks Bubble Machine vs. Mises & OODA Economics
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Nov 20, 2025 Frank Shostak, an Austrian economist and founder of AAS Economics, dives into how central bank policies create bubbles through unearned money. He explains the journey of money from barter to fiat and how low-interest rates mislead entrepreneurs into malinvestments. Frank argues that true innovation requires real savings, highlighting that current tech booms mirror past bubble bursts. He connects economic theories to the importance of understanding human choices, urging a reevaluation of government roles and market dynamics.
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Tightening Removes Bubble Oxygen
- Persistent money growth sustains widespread bubble activity until policy reversals remove the "oxygen".
- When central banks tighten, the inflated sectors that relied on new money must unwind.
Savings Build The Subsistence Fund
- A subsistence fund of saved consumer goods funds capital formation and future production.
- Printing money destroys that fund by enabling consumption without prior production or savings.
Interest Rates Are Signals Not Magic
- Interest rates signal time preference and available real savings, they don't create real capital.
- Central-bank rate cuts without savings cause malinvestment by stealing resources from genuine producers.
