Fundamentals of Economic Analysis: A Causal-Realist Approach

We have today a hybrid of two forms of banking — loan banking (non-inflationary) and deposit banking (inflationary if not 100% reserve holdings). The cause of booms is the credit expansion by central banks that is not backed by pools of private savin... more

In the history of money, bartering was awkward because wants were not divisible. Direct exchange depended upon a double coincidence of wants. Demand for a medium of exchange grew until a general medium of exchange emerged, like gold and silver.

A m... more

Competition can mean rivalry or freedom. All firms must serve the preferences of consumers in order to exist. Monopoly has historically been an artificial privilege granted by the state.

Monopolies do not last for long in free markets unless mainta... more

Causal-realist analysis allows imaginary constructs like the ERE — Evenly Rotating Economy — in order to isolate certain factors like interest.  There would be no profit or loss in the ERE, because those can only exist under conditions of uncertainty... more

Time preference says that individuals prefer satisfaction now to later, present to future. This explains the loan market. In the structure of production, the capitalist pays wages now, despite the fact that he himself does not get paid until the fina... more

As with all government intervention, price controls do not achieve what their originators think they will. Trying to maintain a supply of milk by putting a price control on it will cause shortages, which are the very situations the price manipulators... more

Factors of Production are economic goods: scarce means used to achieve an individual’s ends. They are land, labor and capital. Each is examined. Incomes are earned by factor owners as production takes place. There is no separated production and distr... more

All action is really exchange. What the actor prefers less is exchanged for something he prefers more, including gift giving. It is a fallacy to say that the goods exchanged have equal value.

Salerno also covers elastic and inelastic demand.

The ... more