Missing Balance

Today is the birthday of Ludwig Von Mises (September 29)- the Austrian economist-philosopher who was a prominent figure of the Austrian School of economics (the group of economists who challenged the views of Keynes) and Libertarian movement.

Astrologers love to look at associations not just of dates and numbers but more importantly at the symbolic connections between events, people, ideas and the heavens.

This birthday commemoration of Ludwig Von Mises becomes very meaningful if seen against the background of what is happening in the USA right now, his economic theories as well as his zodiac sign. Being a Libra, which is symbolized by the weighing scale, it pays to head Von Mises’ views on balance – in the economy that is. Achieving balance is very important for a Libra and because of this pre-occupation to achieving equilibrium in their lives they can be considered as experts in spotting something that is excessive. In economics, Von Mises had this observation:

“Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.”

On the day that the U.S. Congress will decide on the passage of a law that will allot $700 billion of taxpayers money to buy bad debt, it is but prudent to re-read the words of a man who taught without being properly compensated but whose followers had been awarded the Nobel Prize in Economics.

“Depression is the aftermath of credit expansion.”


Mises taught that the root cause of a bust phase– in economic cycle lies at the heart of the monetary policy that was instituted during the boom phase. Credit expansion, if abused is the root of recession.


Mises Insisted on non-inflationary gold standard

A Libra is also concerned about fair value in commercial transactions and seeing the importance of gold in establishing fair value he became an advocate of the non-inflationary gold standard.

An increase in the purchasing power of money is disadvantageous to the debtor and advantageous to the creditor; a decrease in its purchasing power has the contrary significance.

According to Murray N. Rothbard of the Ludwig Von Mises Institute:

In his monetary theory, Mises revived the long forgotten British Currency School principle, prominent until the 1850s, that society does not at all benefit from any increase in the money supply, that increased money and bank credit only causes inflation and business cycles, and that therefore government policy should maintain the equivalent of a 100 percent gold standard.



To know about my weekly observations and views about the stock market please visit my other blog www.astro-ipo.blogspot.com