<blockquote>'..the expression “free market” is shorthand for the somewhat long-winded “social cooperation conditioned by the respect of private property rights,” the meaning of inflation is that it extends the nominal money supply through a violation of property rights..'
- Jörg Guido Hülsmann (
The Ethics of Money Production - '..the care of souls.' - 'The point is to return to a universal respect for property rights.')</blockquote>
'..they reflect a self-congratulatory delusion that by distorting asset markets, central bankers themselves can be credited for having created “wealth” for their nation.'<blockquote>'Before the current yield-seeking bubble implodes, I expect, in the same manner as every prior speculative episode across history, it’s worth examining the key conceit of the central bankers that produced it. The misconception is straightforward, and is the same notion that ultimately produced the yield-seeking mortgage bubble that imploded into a global financial crisis less than a decade ago. It is the false belief that “wealth” is embodied in the price of an asset, rather than the stream of cash flows it delivers over time. That belief is quietly reflected in every reference by central bankers to “wealth effects.” It is equally reflected in memory-impaired statements suggesting that, in response to recovering home prices, families should begin extracting some of that “wealth” as a way to finance more spending.
I use the word “conceit” for these views because they are more than just ideas. Rather, they reflect a self-congratulatory delusion that by distorting asset markets, central bankers themselves can be credited for having created “wealth” for their nation.
..
In short, the belief that Fed-induced speculation creates “wealth” is a conceit that rests on the delusion that “wealth” is embodied in the price of an asset, rather than the stream of cash flows it delivers over time. It is a dogmatic misconception of self-congratulatory central bankers that even the deepest economic downturn since the Great Depression was incapable of shaking. This lesson will be reiterated again, and again, until investors learn it, and until Congress properly restrains the Fed's wildly activist abandonment of systematic policy rules (remember also that the global financial crisis was the result, not the origin, of the Fed's activism). At present, we observe the combination of offensive overvaluation, the most extreme “overvalued, overbought, overbullish” syndromes we identify, and importantly, continued deterioration in market internals. In my estimation, and from any extensive evaluation of financial history, the delay of negative consequences has not eliminated them, but has instead made the likely eventual outcomes worse.'
- John P. Hussman, Ph.D.,
The Conceit of Central Bankers and the Brief Illusion of Wealth, August 28, 2017</blockquote>
Context<blockquote>
'Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.'Entrepreneurship - '..the calculation problem is much more general than has usually been realized.' - Dr. Peter G. Klein'..Bubble Economy Maladjustment – on an unparalleled global scale..'