Friday, June 05, 2015

Austrian School Economist Carl Menger Said It 140 Years Ago, But Society Needs To Keep Re-Learning It:
"Money Emerges from
A Free Market Economy,
Not From Government Decree"
"The free market provides the prospect of an escape from the fiscal police state that seeks to stamp out the use of cash [financial repression] through either depreciation of central-bank-issued currency combined with unchanged currency denominations or direct legal limitation on the size of cash transactions. As Carl Menger, the founder of the Austrian School of economics, explained over 140 years ago, money emerges not by government decree but through a market process driven by the actions of individuals who are continually seeking a means to accomplish their goals through exchange most efficiently. Every so often history offers up another example that illustrates Menger’s point. The use of sheep, bottled water, and cigarettes as media of exchange in Iraqi rural villages after the U.S. invasion and collapse of the dinar is one recent example. Another example was Argentina after the collapse of the peso, when grain contracts priced in dollars were regularly exchanged for big-ticket items like automobiles, trucks, and farm equipment. In fact, Argentine farmers began hoarding grain in silos to substitute for holding cash balances in the form of depreciating pesos."
- Dr. Joseph Salerno, The Mises Institute
LINK HERE to the article
Carl Menger: "Money Emerges from a Free Market Economy,
Not from Government Decree"

1 comment:

Anonymous said...

Stepping Up to the Plate

US Government data unquestionably prove speculators are setting the price of silver on the COMEX to the exclusion of actual silver producers and consumers and that is so far from the intent and spirit of US commodity law as to be inexplicable. There is no reason to expect silver industrial consumers and fabricators to complain about artificially depressed prices because they have benefitted from the existing price-setting regime. But, it’s about time that silver producers questioned the single most important factor to their financial health – the price of their principle product. For being first to step up to the plate, here’s a tip of the hat to Keith Neumeyer.

Rather than an end, Neumeyer’s petition to the regulator is a start to a process that should have begun long ago. Will it play out as I hope it will? Who knows? But it certainly could. First and foremost, it will do no harm in bringing the question of manipulation to a potentially broader audience. After all, it’s not as if speculators on the COMEX can control and dictate prices any more than they do already, so First Majestic’s petition can’t be considered as emboldening the speculators further.

The big potential payoff is that First Majestic’s petition may set off a process that heretofore has not been allowed to exist, namely, an open and honest debate as to how prices are set on the COMEX. Specifically, how can the price discovery process on the COMEX be considered fair and within the spirit of commodity law if it, effectively, excludes actual producers and consists of only speculators? And how can there be a legitimate economic explanation for why COMEX silver has the largest concentrated short position of all regulated commodities, particularly with prices at or below the average primary cost of production?