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The central banking system paradox

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dc.contributor.authorEspinosa, Victor I.
dc.contributor.authorAlonso-Neira, Miguel A.
dc.contributor.authorHuerta de Soto, Jesús
dc.date.accessioned2024-05-16T21:12:09Z
dc.date.available2024-05-16T21:12:09Z
dc.date.issued2023
dc.description.abstractThe conventions of monetary theory assume the central banking system (CBS) as the starting point for achieving the stability and efficiency of the financial system. This paper stresses the stability-efficiency thesis based on the Austrian business cycle theory (ABCT). It argues that the stability-efficiency thesis under CBS poses a paradox for two main reasons. First, central banks' interest rate handling causes business cycles, yielding the intertemporal discoordination of the money and goods markets. Second, a central bank's lender-of-last-resort role is an incentive to call for further interest rate handling, making the chance of smooth business cycles difficult or impossible. This paradox is empirically analyzed and discussed through the True Money Supply (TMS) performance in the United States's business cycle phases between 1975 and 2022. Consistent with the ABCT, the research results unlock the paradox by showing that CBS causes business cycles. Some policy implications are outlined for further research and revision of monetary theory.
dc.description.versionVersión publicada
dc.format.extent17 p.
dc.identifier.citationEconomics and Sociology, 16(4), 56-72
dc.identifier.doihttps://doi.org/10.14254/2071-789X.2023/16-4/3
dc.identifier.urihttps://hdl.handle.net/11447/8809
dc.language.isoen
dc.rightsAtribución-NoComercial-CompartirIgual 3.0 Chile (CC BY-NC-SA 3.0 CL)
dc.rights.urihttp://creativecommons.org/licenses/by-nc-sa/3.0/cl/
dc.subjectInterest rate
dc.subjectCentral Bank
dc.subjectInflation
dc.subjectBusiness cycle
dc.subject100 percent reserve requirements
dc.subjectBanking ethics
dc.titleThe central banking system paradox
dc.typeArticle
dcterms.accessRightsAcceso abierto
dspace.entity.typePublication
relation.isAuthorOfPublicationa2f43ad0-38d4-4223-beaf-ddaeb44dfb8b
relation.isAuthorOfPublication.latestForDiscoverya2f43ad0-38d4-4223-beaf-ddaeb44dfb8b

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