Ludwig Von Mises Theory of Money and Credit (Pt 4, Chapter 1 🧵 3(b)/(b)/3):

The Emergency Argument for Inflation:
Here Mises refers to a political argument for inflation that requires "special analysis".amd is resorted to only in books and speeches.
1/7

https://twitter.com/Zero_Analyticz/status/1897482376269246811

It's supporters he says, "fully accept the teachings of the sound-money doctrine" and do.not share the same errors as "inflation quacks".

In full awareness of the "evils" of inflation they believe that emergencies exist which "peremptorily require or at least....
2/7

Ludwig Von Mises Theory of Money and Credit (Pt 4, Chapter 1 🧵 3(a)/(b)/3
The Ful Employment Doctrine:

Inflationists present their doctrines in several varieties. But there remains one essential element.The most naive version being the "alleged insufficient money supply".
1/18

https://twitter.com/Zero_Analyticz/status/1897132814036066309

When entrepreneurs posit that their sales are slow because their customers don't have enough money, Mises' (rightly) points that what they mean is they want an increased money supply for their customers whilst their remains...
2/18

Ludwig Von Mises Theory of Money and (Part 4 Chapter 1: The Principle of Sound Money 🧵 2/3):

On the alleged shortcomings of the gold Standard:

The allure of the gold standard stems from the fact that "it renders the determination of the monetary unit's...
1/20

https://twitter.com/Zero_Analyticz/status/1896928980114313532

...purchasing power independent of the policies of the government". Gold can only be inflationary when there's an exponential and surprises increase in its supply, as in California and Australia in the mid 19th century.

When that happened there were calls for...
2/20

Ludwig Von Mises Theory of Money and Credit Part 4 Monetary Chapter 1: The Principle of Sound Money 🧵 1/3

The chapter kicks of with the "Classical Idea of Sound Money,which was the principle that guided 19th century policies, and a product of Classical Political Economy.
1/14 And also an essential part of the liberal doctrine developed in the 18th century social philosophy.

The doctrine sees the market as the best "even possible only, system of economic organizing society". Private ownership of the means of production are controlled...
2/14

Ludwig Von Mises Theory of Money and Credit Part 3 Chapter 6 🧵 3 (b)/3:

Returning to Gold Currency:

Returning to Gold Currency would have effects that are "scarcely welcomed. "it would lead to a rise in the price of gold or, what is the same thing,...
1/17

https://twitter.com/Zero_Analyticz/status/1895695845884109214

...to a fall in prices of commodities". The gold standard he said would be reproached with depressing prices, or an increased exchange value of money (gold), forcing interest rates up.

This he said would lead to agents calling for a "modification" of the gold standard...
2/17

Ludwig Von Mises Theory of Money and Credit Part 3 Chapter 6 🧵 2/3):

The Nature of Discount Policy:

Every credit-issuing bank is obliged to fix the rate of interest it charges for loans in a certain conformity with that of the other credit-issuing banks."

1/22

https://twitter.com/Zero_Analyticz/status/1895311501080322387

The rate cannot be allowed to sink below this level, for that would increase the sums of money needed by the bank's increasing clientele in such a fashion that the bank's solvency would be jeopardized.

It is by rasing the discount (or interest) rates that the...
2/22

Ludwig Von Mises Theory of Money and Credit (Part 3 Chapter 6 The Problem of credit Policy 🧵 1/3):

Policies adopted by governments since the time of the currency school, with regards to fiduciary media has been guided by the idea that it is necessary to...
1/17 ...impose some sort of restrictions upon banks in order to prevent them from extending fiduciary media to the extent that it causes a rise in prices (or fall in the objective exchange-value of money) that culminates in an economic crisis.

But these policies have...
2/17

@orekelewa_etc on Managing the FX induced Inflation.

She argues that; the govt should be more focused on taking measures to lower domestic inflation, alongside strengthening the country's FX market infrastructure for efficiency.

https://twitter.com/orekelewa_etc/status/1894803361590899148

This involves complementary credible fiscal policies geared towards economic growth.

Points;
1. "The marginal benefit of appreciation for local inflation is several orders lower than the benefit of stabilising the currency and preventing further depreciation. "
2/&

Ludwig Von Mises Theory of Money and Credit (Part 3 Chapter 5: Credit and Interest. 🧵 4/4):

Influence of Interest Policy of Credit Issuing Banks on Production:

Now it's established that it is within the powers of banks to stimulate the...
1/13

https://twitter.com/Zero_Analyticz/status/1894780464784699403

...demand for capital by reducing interest rates barring limitations imposed on them by the Central Bank. And that one credit issuing bank induces the rest to do the same.

However like earlier mentioned in previous notes, and earlier chapters,...
2/13

Ludwig Von Mises Theory of Money and Credit (Part 3 Chapter 5: Credit and Interest. 🧵 3/4);

Connexion between Equilibrium Rate and Money Rate of Interest:

An increase in money supply due to fiduciary media causes a displacement...
1/12

https://twitter.com/Zero_Analyticz/status/1894776200993608122

...of social distribution of property in favor of the issuer. Meaning issuers (Banks) employs additional wealth tht it receives solely for productive purposes.

This is done either directly (carrying out the production process) or indirectly (lending to producers).

2/13

Ludwig Von Mises Theory of Money and Credit (Part 3 Chapter 4: The Redemption of Fiduciary media 🧵 2/2):

The Redemption Fund:

"A person who holds money-substitutes and wishes to transact business with persons to whom these money-substitutes are unfamiliar and...
1/15

https://twitter.com/Zero_Analyticz/status/1890659689425141929

...therefore unacceptable in lieu of money is obliged to change the money-substitutes into money".

So whoever issues these money substitutes is never able to "put more of them into circulation than will meet the needs of his customers"...
2/15

Ludwig Von Mises Theory of Money and Credit (Part 3 Money and Banking - Chapter 4: The Redemption of Fiduciary Media):

Money-substitutes have a value as great as the sums of money to which they refer. however there have been banks whose...
1/15 ....solvency weren't called into question "even the day before it's collapse.

And as long as these events aren't erased from memory, "it must evoke some difference between the valuation of money and that to claims of money payable at any time".
2/15

Part 3, (Chapter 3: Fiduciary Media and the Demand for Money: The Elasticity of Credit Circulation based on Bills, especially Commodity Bills) 🧵 2/2.

The doctrine of the elasticity of fiduciary media – their automatic adjustments to...
1/16

https://twitter.com/Zero_Analyticz/status/1888291589992202648

...the needs of the market at any given time—"stands in the very center of banking theory". Mises intended to show tht this doesn't correspond with the facts, in the form in which it is generally understood.

Tooke, Fullarton and Wilson taught that it...
2/16

...money or money substitutes".
However a tendency for the reduction in the objective exchange-value of money arises.

The development of fiduciary media also has the same effects. However it wasn't left to market forces, as intervention took place...
2/13 ...with the objective of "furthering the expediting process."

Shifting from Commodity to Fiat (and Credit) Money:

The classical school Adams and Ricardo were the first I suggest the use of notes as a a less costly means of payment, continuous use of...
3/13

Zero Equilibrium Markets Weekly 🧵

Precious Metals:

Gold futures catching up with Gold spot, and rising faster indicates is bullish for the metal. Uncertainty, rate cut expectations and growth concerns continue to push the yellow metal to historic highs,...
1/16

https://twitter.com/Zero_Analyticz/status/1888271664682512710

...as it looks set to test the $3,000 level next.

Silver rose to about $33, midweek and then gave up gains to close unchanged from last week. The $32 level could be maintained if markets close above that mark for a second time in a row next week.
2/16

Ludwig Von Mises Theory of Money and (Part 3, Chapter 3: Fiduciary Media and the Demand for Money):

Here Mises miles a comparison between Clearinghouse credit systems and Banking,.I'm relation to their effect on demand,.supply and value of money.
1/14 Clearing house systems reduces the demand for money in the broader sense as "part of its exchanges made with the help of money can be carried through without the actual physical circulation of money or money substitutes".

He pointed out a tendency for the reduction...
2/14

Ludwig Von Mises Theory of Money and (Part 3 Chapter 1: The Business of Banking):

The Business of Banking falls into two distinct categories that are inextricably linked. Credit negotiations of deposited fund, and granting of credit through the issue of fiduciary media.
1/22 This connexion of both functions is founded on the "peculiar nature of the business of banking".

These acts of borrowing and lending should be kept strictly apart as it is essential for understanding their nature and functions.
2/22

Ludwig Von Mises Theory of Money and Credit (Chapter 8: Monetary Policy of Etatism Continuing and Last 🧵 of the Chapter):

Balance of Payments Theory as Basis for Currency Policy:
Here Mises attacks the view that "Metallic Money money moves freely between countries.
1/9

https://twitter.com/Zero_Analyticz/status/1887007888456970725

Under a purely metallic monetary system, the metals which perform the function of money will be distributed according to the intensity demand for each State's money.

This however is judged by the intensity of the demand for their products (all economic goods including...
2/9

Ludwig Von Mises Theory of Money and Credit (Chapter 8: Monetary Policy of Etatism):

Etatism refers to the doctrine of the omnipotence of the State and as a policy in an attempt to regulate "all mundane affairs by authoritative commandment and prohibition"
1/12 There is no room, he says, for independent enterprise, and prices are to be regulated authoritatively —as opposed to the market forces.

In this system, there is no speculation, or room for innovation except decreed by the State who directs and supervises everything.

2/12

Ludwig Von Mises Theory of Money and Credit Part 2 Chapter 7 🧵 2(b)/(b)/2 : Reductionism/Deflationism.

This refers to the policy that aims to increase the objective exchange-value of money also called "Restrictionism".

1/19

https://x.com/Zero_Analyticz/status/1885545287072067637?t=haEmcJB_PAkfzVXBKHKi7w&s=19

The idea is to not increase the money supply when demand increases or not increasing it by as much as demand, as a way of increasing the value of money.

The proposal of this is to stop further increases in Money supply and wait out the effects on the...
2/19

Ludwig Von Mises Theory of Money and Credit Chapter 7: Monetary Policy 🧵 2 (a)/2:

Limitations to Monetary Policy:

From the understanding that increases in the money supply leads to decreased in the value of money, it becomes quite possible to...
1/15

https://twitter.com/Zero_Analyticz/status/1885350872663589280

...imagine a scenario of money diminishing in blue in a geometrical series –i.e., over years. But that logical imagination doesn't necessarily mean we have the ability to create one.

This is true as we can only observe and forecast but the former does us no good...
2/15