The Present Monetary System Is Heading for a Breakdown

Many economists incorrectly assume a growing economy also requires a growing money stock, assuming that economic growth gives rise to a greater demand for money. It is held that failing to increase money to facilitate increased trade will lead to a decline in prices of goods and services, destabilizing the economy and leading to an economic downturn.

Frank Shostak: Is GDP an Accurate Measure of Reality?

To gain insight into the state of an economy, most economists rely on a common statistic named the Gross Domestic Product (GDP). The GDP looks at the value of final goods and services produced during a particular period, usually a quarter or a year.

Using this measurement statistic assumes that what drives the economy is not the production of goods and services, but rather consumption. In GDP, what matters is the demand for final goods and services. Since consumer outlays are the largest part of the overall demand, it is commonly held that consumer demand is the key productive factor in the economy. Because the supply of goods is taken for granted, this framework ignores the various stages of production that precede the emergence of final goods.

Frank Shostak: The Regime’s War on Cash Could Destroy the Economy

According to some “experts,” there is an urgent need to remove cash from the economy. It is held that cash provides support to the “shadow economy” and permits tax evasion. Another justification for its removal is that, in times of economic shocks, which push the economy into a recession, the run for cash exacerbates the downturn—it becomes a factor contributing to economic instability. Moreover, it is argued that, in the modern world, most transactions can be settled by means of electronic funds transfer. Money in the modern world is allegedly an abstraction.