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Chapter 6: Capitalism's information system
Prices carry information about scarcity and demand, and interest rates are the price of time. Drawing on Hayek and Mises, the author argues that when a central bank sets interest rates, it distorts the signal that coordinates saving and investment, which he sees as the root of boom-and-bust cycles. He presents sound money as a way to let prices, including the price of time, form freely.
Summary in our own words, not a quote from the book. The author's arguments, not investment advice. Book · Author's course
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Video
▶ Watch on YouTube · Privacy-enhanced player (youtube-nocookie). Video in English.
Key ideas
- Prices as signals
- Interest rate as the price of time
- Austrian business cycle theory (one school among several)
Check yourself
- What information does a price carry?
- Why does the author call the interest rate the price of time?
- What causes boom-and-bust cycles in the author's view?