After a couple of months' hiatus, the Masters of Economics series finally continues. In this article, Hayek draws some triangles on a blackboard in 1931, stunning attendees at the London School of Economics.

Between 1820 and 1900, real GDP per capita in the United States grew eightfold. No welfare state. No central bank. No income tax. The federal government consumed less than 3% of GDP for most of that period, and the results speak for themselves. Secure property rights, contract enforcement, and a commodity-backed dollar created the conditions where capital formation exploded. Entrepreneurs knew that what they built, they kept. John D. Rockefeller drove kerosene prices from 58 cents per gallon in 1865 to under 8 cents by 1885, delivering affordable light to millions of ordinary households, not through government mandate but through relentless productive competition. Real wages for manufacturing workers doubled between 1860 and 1890. Immigration surged because workers across Europe calculated, correctly, that their labor earned more in Philadelphia or Pittsburgh than anywhere in the old world. Markets made that signal clear. Critics point to inequality, child labor, and dangerous working conditions, ignoring that mass poverty preceded industrial capitalism. Andrew Carnegie's Pittsburgh was brutal, but it was also dramatically better than the subsistence farming the workers' grandparents had endured. The railroad network grew from 9,000 miles in 1850 to over 160,000 miles by 1890, financed almost entirely by private capital once you exclude the genuinely corrupt land-grant subsidies, which free market thinkers condemned at the time. State intervention produced scandals; private lines produced the freight. Minimal government produced the fastest sustained material improvement in recorded human history to that point.

Noam Chomsky, the "Father of modern linguistics," looked at evidence of industrial-scale murder and decided the real problem was Western media bias. By 1977, Pol Pot's Khmer Rouge had already killed roughly 1.7 million Cambodians through execution, forced starvation, and slave labor. Chomsky, writing with Edward Herman in "Distortions at Fourth Hand," treated survivor testimony and refugee accounts as State Department fabrications, preferring the far lower body counts published in sympathetic leftist sources. The intellectual gymnastics required to reach that conclusion were extraordinary. Chomsky dismissed Father Ponchaud's firsthand reporting, questioned Francois Ponchaud's credibility directly, and leaned on a 1977 State Department document to suggest deaths numbered in the thousands, not hundreds of thousands. He applied maximum skepticism to anti-communist sources and near-zero skepticism to anything that cut against American foreign policy narratives. The methodology was selective to the point of being fraudulent. Chomsky was not a fringe figure typing in a basement. He held an MIT professorship and commanded enormous intellectual authority among Western leftists. When he cast doubt on Cambodian atrocity reports, journalists and academics listened. Real people died while influential intellectuals debated whether their deaths were sufficiently well-sourced. Collectivist ideology requires enemies to function. When the Khmer Rouge built their agrarian utopia by emptying Phnom Penh at gunpoint and executing anyone wearing glasses, Chomsky's instinct was to protect the ideological project by attacking the messengers. Ideology over corpses.

Headlines say fusion reactors could end gold's scarcity. So we ran the numbers. Matching one year of mined gold would take 730 gigawatts of fusion, nearly TWICE the world's nuclear fleet, and the grid has none today. Our new Sound Money Report, written by @Handre. Read below.

While Scottish gambler John Law printed the notes that wrecked France, an Irish banker in Paris watched from the inside and took notes of his own. Richard Cantillon was born in the 1680s into a landowning family from Ballyheigue, County Kerry, that fought for James II and lost its land for it. He spent time in Spain, then came to Paris in 1714 to work for a second cousin's bank, and when the cousin went bankrupt in 1716, Cantillon bought the bank with backing from Matthew Decker. He built a business moving money between Paris and London, serving exiles from the British Isles. That put him right next to Law's Mississippi Company, and he judged the scheme unsound. He bought shares early anyway and sold at a large profit, then collected on the Company's debt at high interest after the crash. Shares fell almost 90%, and the losers, including James Brydges, blamed Cantillon. His debtors chased him with lawsuits and even murder plots until he died in London in May 1734 under murky circumstances. Around 1730, he wrote the Essai sur la Nature du Commerce en Général. French censorship held it back, and it appeared in 1755, twenty-one years after his death. Economists consider it the first complete treatise on economics. Its sharpest idea came straight out of Law's wreckage. New money doesn't spread evenly. It enters the economy at specific points, and the first people to receive it get to spend it before prices rise, while everyone further down the line pays higher prices on wages that haven't moved. Printing money transfers wealth from the last recipient to the first. Economists call this the Cantillon effect, and it is why money is never neutral. In France, the people nearest the bank cashed out, and ordinary savers held the paper when it collapsed. He also gave economics the entrepreneur as risk-bearer. Adam Smith cited him, and Hayek drew on him. Jevons rediscovered the Essai in the late 1800s, after nearly a century and a half of neglect.

Scottish gambler John Law was born in Edinburgh in 1671, the son of a goldsmith banker. His father died when he was a boy, and Law grew up to trade his inheritance for the card tables of London. In 1694, he killed a man named Edward Wilson in a duel, received a death sentence, and broke out of prison to flee to the Continent. He spent the next two decades gambling across Europe and studying banks. Scotland rejected his plan to fund the country with paper money. France said yes. Louis XIV died in 1715 and left the crown buried in debt, and in 1716 the Regent, Philippe d'Orléans, let Law open a bank that issued notes. Law then folded Louisiana trade, tax collection, and the royal mint into the Mississippi Company and sold shares on promises of colonial riches that nobody had found. To keep buyers coming, the bank printed notes. Shares climbed from about 500 livres in 1719 to about 10,000 by early 1720, and the word "millionaire" entered the language. Then the state enforced the fiction. After converting to Catholicism, Law became Controller General of Finances, banned most payments in gold and silver, and made it a crime to hold coin above a small sum. Citizens who wanted out of paper lost the right to leave. When holders rushed to cash in, the bank had printed far more notes than it held in coin. In May 1720, the government decreed a cut in the value of notes and shares, panic forced a reversal within a week, and crowds fought in the rue Quincampoix. Law lost his post that spring and fled France in December. He died broke in Venice in 1729. The recipe never changes: print to fund the favored project, lock the exits, and punish anyone who tries to leave with their savings.

The financial media runs on a protection racket, and you are the mark. Peter Schiff has been predicting hyperinflation and dollar collapse every single year since 2009. Seventeen years. The dollar is still the world's reserve currency. Schiff still sells gold funds and books interviews on CNBC. Nobody fires the guy. Nobody even interrupts him. This persists because bad forecasters carry no skin in the game. A surgeon who botches operations loses patients, then loses his license. A market pundit who botches calls loses nothing. He collects his appearance fee, pivots to "the collapse is coming, just delayed," and books his next podcast. Confidence is rewarded over accuracy. Media platforms compound this by optimizing for engagement, not truth. A loud, dramatic prediction of imminent catastrophe generates clicks. A sober probability-weighted assessment of capital allocation generates yawns. Networks select for the wrong trait aggressively and repeatedly. There is also what Nassim Taleb ironically calls the "no skin in the game" problem. When a commentator manages no real capital, faces no audit trail, and bears no fiduciary duty to anyone watching, accountability simply has nowhere to land. Ironically because he is one of the worst offenders in the space. Sadly, audiences do not track prediction records. You watch a pundit in October 2026 and form impressions based on his current confidence, not his track record since 2019. He exploits your memory gap completely. Demand a track record with dates. Every call, every outcome. Forecasters who survive that scrutiny deserve your attention. The rest are selling you certainty because certainty sells. Here are people with excellent and honest track records to follow: @LukeGromen @RonStoeferle @saifedean @LynAldenContact @ThomasEWoods @porterstansb @LawrenceLepard @TaviCosta @NickHudsonCT @CorySwan @SantiagoAuFund @MacleodFinance @profstonge Who would you add? And who are your worst offenders?

Fiat money is a government permission slip to slowly steal from you, and every central bank on earth runs one. Here is how the mechanism works. Governments spend beyond what taxation can cover. Rather than default honestly, they instruct their central bank to create new currency units, purchase government debt, and inject the proceeds into the financial system. As of late 2026, the Federal Reserve held $7 trillion in assets, most of it acquired through this process. The new dollars dilute every dollar you already hold. Your purchasing power falls. Nobody ever announces the heist. Mises called this the "crack-up boom," the terminal phase where currency creation accelerates until the public loses confidence entirely. Germany 1923. Zimbabwe 2008. Venezuela throughout the 2010s. Each collapse followed the same script: politicians facing fiscal pressure chose the printing press over honest accounting. They always do. This also causes another problem: Prices carry information, specifically the relative scarcity of goods and the preferences of millions of people acting voluntarily. When a central bank manipulates the money supply, it corrupts that signal. Entrepreneurs invest based on distorted interest rates, build factories the real economy cannot support, hire workers for projects that only pencil out at artificially cheap credit. Then the correction comes, and you watch your portfolio, your job, your neighborhood absorb the damage that Washington's balance sheet avoided. Sound money, whether gold or a hard-capped digital currency, removes this lever from political hands. Governments hate this removal because it strips them of the power to inflate.

In 1961, eight central banks agreed to suppress the gold price, and markets spent seven years proving that governments cannot repeal scarcity. The London Gold Pool launched in 1961, assembling the United States, Britain, West Germany, France, Italy, Belgium, the Netherlands, and Switzerland into a coordinated intervention scheme. The goal was simple: keep gold trading at $35 per ounce, the price fixed by Bretton Woods since 1944. The mechanism was also simple: When private demand pushed gold above $35, the Pool sold from member reserves into the London market to crush the price back down. This worked while the dollar retained credibility and stopped working when it didn't. The United States ran growing budget deficits through the 1960s, financing both the Great Society and Vietnam simultaneously. Dollars flooded Europe. Foreign governments and private traders converted those dollars into gold at $35, understanding that the dollar supply was expanding faster than Fort Knox's gold supply. France, under de Gaulle, became particularly aggressive about redemptions, shipping dollars back to Washington and demanding bullion in return. He called dollar hegemony an "exorbitant privilege," and he was correct. By 1967, the Pool was hemorrhaging reserves. The British pound devalued in November, triggering a speculative panic. In March 1968 alone, speculators demanded 1,000 tonnes of gold. The Pool collapsed on March 17, 1968. Members suspended operations over a frantic weekend and introduced a two-tier system: official transactions at $35, private markets free to find their own level. You know where this ends. Nixon closed the gold window entirely on August 15, 1971, defaulting on America's international obligations and unleashing the inflationary decade that followed. The London Gold Pool was seven years of governments lying about how much money they had printed, enforced by selling other people's gold until the vault ran dry.

The diamond industry runs a private court system, and it works better than anything a state has built in centuries. The New York Diamond Dealers Club, founded in 1931 on West 47th Street, handles disputes through binding arbitration between members. No lawyers required. No docket delays stretching three years. Traders submit evidence, appointed arbitrators (themselves experienced dealers) render judgment, and the loser pays within days. The entire process costs a fraction of civil litigation. This functions because the industry enforces its own judgments through reputation. Expulsion from the club destroys your business. Every dealer on 47th Street talks to every other dealer. You defect on an arbitration ruling, and you cannot buy or sell in New York, Antwerp, or Tel Aviv. The social cost of cheating exceeds any short-term gain a bad actor calculates. What the state calls "the rule of law" relies on police, bailiffs, and coercive enforcement. The diamond market relies on something cheaper and more effective: the knowledge that your word is your bond, because your bond is your livelihood. Contracts without government enforcement, dispute resolution without judges and restitution without prisons. The whole apparatus the political class insists you cannot live without runs quietly inside a midtown Manhattan building. Free market thinkers have pointed at exactly this kind of spontaneous order for generations. Statists usually respond with an awkward silence followed by a change of subject.

War is the health of the state, and every treasury minister in history has known it. Governments that could never justify a peacetime income tax extracted one the moment artillery started firing. Britain imposed its first income tax in 1799, not through principled fiscal debate, but because William Pitt needed to fight Napoleon. The tax was supposed to expire at Waterloo. It came back in 1842 and never left. The people paid for one war and funded a permanent bureaucracy. The pattern repeats with mechanical consistency. Woodrow Wilson signed the Federal Reserve Act in 1913, and within two years the new institution was monetizing war debt on an industrial scale. The inflation tax is the craftiest version of this theft because you never receive a bill. The purchasing power simply drains from your savings while politicians point at commodity markets and shrug. Weimar Germany printed to fund World War One reparations. The Continental Congress printed Continentals to fund the Revolution until "not worth a Continental" became a folk saying about government paper. Rome clipped coins for centuries of military expansion, debasing the denarius from nearly pure silver to a bronze coin with a silver wash. Every episode follows the same logic. Direct taxes provoke visible resistance. Printing money diffuses the pain across every currency holder, spreading the theft thin enough that most victims never identify the thief. Inflation is taxation with superior public relations. War simply gives the state permission to accelerate what it does in peacetime, only faster and without public consent. When you hear the words "emergency powers," you know you are about to be robbed.

Anyone who lives in South Africa knows these so called inflation numbers are completely made up nonsense. Everything in this country is twice as expensive as it was before covid, yet we are supposed to believe inflation figures of 2-5% per year😂 It’s laughable that they present these figures with a straight face.

The entire left-right political spectrum is a lie designed to keep you arguing about the wrong things. Both "far left" and "far right" share one defining feature: the total subordination of the individual to collective power. The Soviet Politburo murdered kulaks for holding grain. The National Socialists murdered Jews for holding capital. Different scapegoats, identical mechanism: the state deciding who deserves to exist and on what terms. The conventional model places maximum government on both ends and freedom somewhere in the center. This model is geometrically incoherent. A line with tyranny at both poles and liberty in the middle tells you nothing about the actual variable being measured, which is the concentration of coercive power. The only axis worth mentioning runs from zero coercion to total coercion. Mao's China and Hitler's Germany sit centimeters apart on that axis. Venezuela under Maduro and Mussolini's Italy were structurally identical in their economic controls, even as their ceremonial aesthetics differed wildly. What passes for "far right" in media coverage today often means nationalism plus market skepticism, which is state capitalism with a flag. What passes for "far left" means internationalism plus market abolition, which is state capitalism with a committee. You get robbed either way; the paperwork just differs. The prefix "far" does no analytical work. It signals emotional distance from a speaker's preferred center, nothing more. A government that controls prices, conscripts labor, and criminalizes dissent is totalitarian. The color of its flag is insignificant.