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Professor Antal E. Fekete explains Austrian Economics and why current Stimulus is Deflationary and not Inflationary

(0513-12) His theories fall into the school of economic thought led by Carl Menger. His support of the gold standard has similarities to Austrian Economics; however, Fekete's treatment of fractional-reserve banking, capital or time preference theory of interest, real bills and quantity theory of money is different from that of Murray Rothbard and Ludwig von Mises.

Post-Mises Austrian economics has ceased to be a fund of ideas to criticize and correct the mainstream, or to draw up the blueprint for the new economic order following the collapse of the present global experiment with irredeemable currency. The reason is that it deviated from or abandoned the philosophy and methodology of its founder, Carl Menger (1840-1921).

Menger was the first to realize that economic analysis should have its foundation in terms of ‘spread’ as opposed to ‘price’. The price of a good itself does not exist as a monolithic entity but is composed of a spread itself: the bid-offer spread.

The basis has its origin in the agricultural commodity market. A high and rising basis was indicative of plentiful supplies, a low and falling basis the opposite. The extension of these concepts to the bullion markets was first espoused by Professor Antal Fekete.

Accordingly the reason why the current economic stimulus remain deflationary is the simultaneous contraction of fractional banking system requiring additional banking reserves. With this there is no money available for the borrowers - and the old fact that Asia still has dirt cheap labor does not help either.. More of this and other related issues are shown in the enclosed video.

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