Top 5 Mises Quotes

1. "Used to the conditions of a capitalistic environment, the average American takes it for granted that every year business makes something new and better accessible to him. Looking backward upon the years of his own life, he realizes that many implements that were totally unknown in the days of his youth and many others which at that time could be enjoyed only by a small minority are now standard equipment of almost every household. He is fully confident that this trend will prevail also in the future. He simply calls it the American way of life and does not give serious thought to the question of what made this continuous improvement in the supply of material goods possible."

2. "Full government control of all activities of the individual is virtually the goal of both national parties."

3. "The meaning of economic freedom is this: that the individual is in a position to choose the way in which he wants to integrate himself into the totality of society."

4. The first condition for the establishment of perpetual peace is the general adoption of the principles of laissez-faire capitalism.

5. "Not mythical 'material forces', but reason and ideas determine the course of human affairs. What is needed to stop the trend towards socialism [i.e., social capitalism] and despotism is common sense and moral courage."



P.S. It is important to note that the Austrian theory does not imply, as some have interpreted it, that we are witnessing the results of "overinvestment." Austrians do not contend that the Fed really has put more gas in our car! Since the Fed produces no capital goods, this obviously could not be the case. Rather, we suffer from malinvestment, as we have spent time and resources on projects that we cannot actually complete, and which we would not have undertaken if we had had an accurate reading on our gauge.

As Mises put it, " A further expansion of production is possible only if the amount of capital goods is increased by additional saving, i.e., by surpluses produced and not consumed. The characteristic mark of the credit-expansion boom is that such additional capital goods have not been made available." [...] The Fed, the pediatrician of our analogy, feels it can improve on this natural state. It doesn't alter any of the real inputs to this process, such as capital currently available or the willingness to save. Instead, it fidgets with the economy's "hormonal levels" by adjusting the interest rate. When it makes credit easy, the economy's apparent growth speeds up. In fact, what has occurred is that certain visible manifestations of growth have accelerated, while other, equally necessary but less visible growth processes have suffered as a result. Without the necessary "nutrients" being present, this sort of "growth" is built on a foundation of sand. The "bones" weaken and cannot support the body.

The central bank, fearing a collapse, then tries to reduce the rate of growth through tightening credit. This in no way undoes the damage done during the period of credit expansion, but, rather, adds a new set of distortions to those already present. Of course, once the central bank has engaged in credit expansion, it is foolish to blame it for reining in the boom. The only alternative is eventual economic collapse in what Mises called "the crack-up boom," or hyperinflation and the breakdown of the exchange economy. (Source: Mises.org)