Via the Adam Smith Institute on YouTube, Detlev Schlichter explains the thesis of his recent book, Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown:
Amongst other things, Detlev is a Senior Fellow of the Cobden Centre, which I co-founded. I should very much like to believe his thesis is incorrect, but it seems to me consistent with both the literature of the Austrian School and the views of those economists I met in Salamanca in the Autumn of 2009. Most believed that fiat money was in its final stages.
I regret that the same economists who failed to see the crisis coming and then failed to predict even the general pattern of events are those economists who seem to be directing policy today. It ought to be obvious by now that there is something wrong with their theoretical framework. It is, above all, a failure to properly consider time, particularly in relation to the origin of interest rates and the structure of capital goods. I wrote more along these lines here.
The Austrian-School economist Ludwig von Mises wrote:
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
This is the central problem of our socio-economic system today. I shall be astonished if the Chancellor mentions it in tomorrow’s statement.
A primer on a better way of thinking about social cooperation through exchange is available here.