This is the third consecutive article defending Mises from Fekete’s arguments as publicized recently in The Daily Bell.
The thing is, Fekete is not alone here. Much of what he says is what they teach you in the mainstream. Especially this one, that high interest rates are bad.
Antal Fekete: I am merely pointing out that it is absurd to suggest, as Mises does, that rising interest rates do not increase the marginal productivity of capital, read: render a large amount of existing capital submarginal. In other words, rising interest rates put a lot of producers out of business indiscriminately.
Devil’s Advocate: Man, that Mises really wants us all to starve to death. There he is, putting a lot of producers out of business indiscriminately, getting all their workers laid off, decreasing employment and production, and for what? So some fat cat banker can get a higher interest rate? Dave, we’re taking it to the streets on this one. There will be riots, mark my words. Give me lower interest rates so I can make a living, or give me death!
Smiling Dave: Makes you wonder, is anyone actually paying those high interest rates? Or is everyone going out of business, because they cannot borrow the money to keep on trucking?
DA: Well, of course someone is paying, otherwise, by the laws of supply and demand, the bankers will have to lower the rates. But only the best, most efficient, most profitable businesses can afford a high interest rate. The stumble bums and slobs who don’t know what the public wants, and thus don’t make what the people need, and thus make very little profits, will go out of business. Their workers and factories will be bought up by the efficient ones, and…oh.
SD: And you remember from the previous article [in the section on 100 gold standard] what will happen if we give everybody, even the inefficient, plenty of free, low interest, money.
DA: Dave, I’m beginning to detect a common theme here. let the free market stay free and it will take care of itself. Mess with it, and you make the economy worse off.