by Nick Hankoff
The Federal Reserve’s zero interest rate policy and industry bailouts threaten more than just the fragile economy. The very foundation of the social order risks permanent fracturing under this system of moral hazard.
In Human Action, Ludwig von Mises defined society as “joint action and cooperation in which each participant sees the other partner’s success as a means for the attainment of his own.” Without social trust, there is no society. Private property and the division of labor, the hallmarks of a civilization, arise out of cooperation.
In a strictly economic sense, all the malinvestment and capital destruction the Federal Reserve can muster can be overcome in the medium term. Capital gets restructured.