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22 sats \ 2 replies \ @Rothbardian_fanatic 19 May \ on: Interest Rate Caps Won’t Solve America’s Debt Problem. Here’s What Will econ
Oh, back to ye ol' command economy, are we? They never learn, do they? It has never worked and will never work. Setting prices by central command brought the Soviet Union to their knees and it looks like China is going the same way. Do we need to join them?
Putting caps and floors on the interest rate of credit cards will just get the very same results as caps and floors on any other price. The only difference is this is about the price of money, which is usually determined, in a laissiz-faire market, by the time-preference of all the individuals in society. Thus, determining the clearing price of savings vs. borrowings (the supply and demand of money). Will they ever learn?
Didn't the Soviets try not having any prices at first?
IIRC, that failed miserably and swiftly, so they started copying the prices from neighboring market economies. That let them gradually descend into poverty, rather than just rapidly collapse.
I remember there being some Soviet quote from Stalin or some other leader about how they would ultimately have to allow at least one small market economy to exist, just so they could use the price information. Weird admission.
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Yes, the Bolsheviks tried it at first, until Lenin came to some senses (not many, just some).
Actually, it was Lenin and his New Economic Policy (NEP) of 1921. Where he freed up the markets to cause the economy to stabilize. Mises did a great hatchet job on socialism and the pricing impossibility in command economies called the economic calculation problem in one of his books and Hayek finished the job in his Pretense of Knowledge speech.
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