Money and Banking (Hans Hoppe)

Mises University, 2004

http://www.youtube.com/user/misesmedia
http://mises.org/

LUDWIG VON MISES INSTITUTE - CREATIVE COMMONS ATTRIBUTION 3.0

Category:

Education

Tags:

• hans
• hoppe
• money
• banking
• mises
• university
• 2004
• federal
• reserve
• gold
• standard

[MrRDGriggs]

Who could possibly give this a negative thumbs-down rating? You two people do know that this is one of the most prominent economists of our time, right?

[Nielsio]

Yes, it is indeed. Hans Hoppe is a scholar at the Ludwig von Mises Institute. Von Mises is one of the most famous Austrian economists. Peter Schiff also gave a talk at the Mises Institute a year ago. You can find it by searching for 'why the meltdown should have surprised no one' on Youtube.

[Lingerfoot]

Is this Austrain Economics like Peter Schiff studies? Peace!

[ccarterc1984]

For residential loans: the most popular ARM's were 3 year and 5 year. However Fannie Mae and FHA offer rates currently that are still extremely low allowing borrowers to refinance. The problem is really overpriced real estate not merely the price of interest. A big problem which lags behind residential is commercial. Most commercial loans have always been short term: 1 years to 3 years fixed. That has been the norm for commercial prop for hundreds of years.

[ccarterc1984]

The increase in money supply went into housing. Capital good prices were bid up. This caused costs in other sectors of the economy to increase beyond what would have occurred had there been no artificial increase in money supply. If the increase in credit were the result of real savings, it would be a signal to developers that consumers were willing to forgo consumption today for consumption tomorrow. Truth is consumers were never willing to forgo consumption today, thus overconsumption.

[ccarterc1984]

The problem was not a lack of credit unless you are saying that credit is synonymous with savings. Credit in our system is a mixture of fiat and real savings. Increasing the money supply does not increase the pool of real resources in the economy. FED low interest rates were a false signal to developers which caused them to build too many houses. The increased amount of money was a false signal to consumers causing overconsumption. Resources went to houses that could have gone to other sectors.

[ccarterc1984]

The increase of a loan balance means that you are talking about a negative amortization loan which has nothing to do with adjustable rates. You can have negative Amortization ARM's, but it has always been pretty rare.

[KraljevicPavle]

Sorry for late reply. In short, due to the fact that the actual level of savings is lower than the signal sent out to businesses previously (low rate), when banks discover the error, they raise their prices, and the higher rates tend to cause long-term investments susceptible to this less affordable, such as housing, causing a cleansing recession to occur. It helps to think of the interest rate as essentially the price charged by lenders for savings, and low rates discourage savings further.

[mlndstream]

Makes sense,thanks again

[theoriginalanomaly]

And then there is Commercial real estate. Is the same going to happen to it? It kind of already is, but it doesn't seem to be Bursting.... just deflating. Of course business' usually keep higher savings then consumers.