By admin
November 8, 2026
Writes Murray Sabrin:
The Nobel Prize for Economic Sciences awarded for research on economic stability ("Americans win Nobel for economic stability work," Oct. 13) raises a question: Why have economists largely ignored Ludwig von Mises, who explained the causes of boom-and-bust cycles more than a century ago?
In his 1912 The Theory of Money and Credit, followed by countless essays, books and monographs, including his 1949 magnum opus, Human Action: A Treatise on Economics, Mises identified monetary manipulation as a fundamental source of economic instability.
Mises explained that when central banks push interest rates below market levels, they create artificial booms by encouraging borrowing, speculation and investments unsupported by genuine consumer savings. As he wrote, artificially lowering rates below the natural rate distorts investment decisions. Eventually, economic reality intervenes, exposing malinvestments and triggering a bust.
Today's Federal Reserve continues this destructive process, fueling speculation in stocks, real estate and other assets while distorting the signals entrepreneurs need to make sound decisions. In a genuine free market, profit and loss guide investment. Entrepreneurs who anticipate consumers' needs succeed, improve living standards and earn profits. Those who misjudge the market bear the losses and release resources for more productive uses.
Rather than attempting to manage the economy through monetary manipulation, policymakers should heed Mises: End central banking's distortion of interest rates and let markets - not bureaucrats - coordinate economic activity.