Quote note (#176)
A king owned the territory and could hand it on to his son, and thus tried to preserve its value. A democratic ruler was and is a temporary caretaker and thus tries to maximize current government income of all sorts at the expense of capital values, and thus wastes. […] Here are some of the consequences: during the monarchical age before World War I, government expenditure as a percent of GNP was rarely higher than 5%. Since then it has typically risen to around 50%. Prior to World War I, government employment was typically less than 3% of total employment. Since then it has increased to between 15 and 20%. The monarchical age was characterized by a commodity money (gold) and the purchasing power of money gradually increased. In contrast, the democratic age is the age of paper money whose purchasing power has permanently decreased. […] Kings went deeper and deeper into debt, but at least during peacetime they typically reduced their debt load. During the democratic era government debt has increased in war and in peace to incredible heights. Real interest rates during the monarchical age had gradually fallen to somewhere around
2½%. Since then, real interest rates (nominal rates adjusted for inflation) have risen to somewhere around 5% — equal to 15th-century rates. Legislation virtually did not exist until the end of the 19th century. Today, in a single year, tens of thousands of laws and regulations are passed. Savings rates are declining instead of increasing with increasing incomes, and indicators of family disintegration and crime are moving constantly upward.
All familiar, to a sedative degree, to those here, of course. Except, crucially, the interest rate stuff — which is remarkably dissonant with our contemporary situation. Since Hoppe’s expectation — based on a long-term, fairly consistent trend — is the rational one, it suggests that the present collapse of interest rates is intriguingly anomalous. Is there a sharp, big-picture analysis of the phenomenon out there somewhere?
Interest rates go down as you approach the speed of light.
— Ossipago (@ad_proelium) July 31, 2015