The archive.

By March 2001, as the dot-com boom collapsed, the Federal Reserve had become the object of a cult, with Wall Street, journalists, and politicians alike crediting Alan Greenspan's guidance for a decade of prosperity. Against that reverence stands this Austrian polemic, which reverses the usual causal story: central banks do not merely fail to prevent busts, they manufacture the preceding booms by issuing fiat money and credit that falsify interest rates and lure entrepreneurs into malinvestment. Rate cuts cannot turn bad investments into sound ones; recession is the painful liquidation of accumulated error. Keynesians, Supply-Siders, and Monetarists are each faulted for retaining a central monetary authority, and the classical gold standard is invoked as the obstacle to heedless spending that fiat money removed, even as every organized interest keeps demanding more credit, not less.

Ideas control the world, and monetary ideas shape monetary institutions.

Aggressive Federal Reserve rate cuts, rapid dollar money growth, a yawning trade deficit, and still, in 2001, the dollar climbed as no other currency shone so brightly. Sennholz explains the paradox first through the euro cash changeover, which drove holders of old European notes, tax evaders and criminal organizations among them, to liquidate quietly into dollars. The deeper account is Austrian: the dollar sits at the narrow base of an inverted pyramid of bank credit, securitization, derivatives, Eurodollar markets, and foreign Treasury purchases, so that crises abroad only strengthen it. Reserve-currency privilege is thus both power and vulnerability. Defending inflated asset prices and mortgage credit, he warns, will bring renewed inflation, rising yields, and a deeper recession beneath the bright surface.

Recessions, after all, are the corrections of the preceding excesses and maladjustments; they may be delayed for a while, but cannot be avoided once the harm has been done.

Beneath America's rhetoric of surpluses and fiscal restraint, Sennholz finds chronic deficit spending disguised by raided Social Security trust funds and debt ceilings suspended through Treasury maneuver, creative financing, as he dryly names it. His method is demystification: surplus becomes hidden deficit, the dollar safe haven becomes a mortgaged harbor carrying the biggest debt on earth, and Treasury wealth becomes capital already consumed. The reserve currency, unlike gold, costs almost nothing to issue and rests entirely on belief; on that base banks, offshore lenders, and foreign central banks pile expanding layers of dollar credit. Low Federal Reserve rates inflate housing and tempt owners to extract equity, the domestic face of the wider pyramid. Should confidence break, liquidation could sink the dollar and equities alike, leaving military overreach after September 11, and a looming Iraq war, resting on a fragile financial base.

Many a victory has been suicidal.

A brief 2002 tour of a few Russian towns becomes the occasion for an Austrian diagnosis of why the passage from command socialism to markets stayed slow, painful, and morally confused. Sennholz reads post-Soviet Russia through Ludwig von Mises's socialist-calculation argument: without private ownership and market prices, the USSR was not merely mismanaged but structurally incoherent, and seventy years of institutional and psychological habit could not be shed by decree. He follows Yeltsin's price liberalization, voucher privatization, and land and housing reform against the resistance of the Duma, subsidy expectations, and inflationary finance, distinguishing formal ownership from real capitalism. The economy, he argues, hovers between command, market, and black-market orders, while oligarchs gain wealth through political connection. Prosperity, he concludes, waits on a change in economic thought toward freedom.

The distance from Communism to democratic freedom and a market order is greater by far than the distance from the poorest market economy to the most productive and prosperous country.

When the dot-com boom collapsed, Alan Greenspan pleaded that no central banker could know a bubble existed or prick one without triggering recession. Sennholz reverses both claims. The 1990s, he argues, furnished abundant warning—extreme price-earnings ratios, debt-financed mergers, stock buybacks, collapsing savings, swelling consumer debt—and the Fed held concrete instruments to restrain the mania: margin requirements, reserve requirements, the discount rate, open-market operations. Greenspan preferred popularity and accommodation to discipline. But the polemic reaches past one man to the institution itself: a politically created fiat-money monopoly that, by holding interest rates below market levels, inevitably breeds speculation, malinvestment, and cyclical collapse. Sennholz extends the postmortem to housing, Treasuries, and precious metals, warning that fresh rate cuts merely relocate the fever rather than permit the liquidation recovery requires.

Economic bubbles have plagued the American economy ever since the First United States Bank opened its doors in Philadelphia in 1791.

Neither historical grievance nor military force can by itself produce peace: that is the organizing claim of this classical-liberal reading of Arab-Israeli enmity. Sennholz's central target is restorationism—the demand that political arrangements be returned to some earlier moment—whether in the Palestinian right of return, which he says would dispossess later inhabitants and invite renewed war, or in appeals to the pre-1967 map. He faults Arab governments, militant movements, and international aid systems for preserving refugee camps as a permanent political indictment, and asks whether Oslo-era Israeli concessions strengthened militant expectation rather than moderation. Against repression and welfare-state controls alike, he proposes an order of private property, equal protection, civil rights, and free exchange, placing moral burdens on both peoples. Violence persists, he argues, where historical claims, ethnic discrimination, and economic closure dominate public life.

The wars did not bring peace; they generated ever more hatred which breeds more wars.

Years of rate cuts and rapid credit expansion had failed to dispel recession, leaving the Federal Reserve, in this September 2002 essay, genuinely trapped. Further ease might undermine the dollar and estrange foreign creditors; yet with firms insolvent, debts liquidating, and households hoarding cash, cheaper money might accomplish nothing. The dilemma, Sennholz argues, is the Fed's own handiwork—an abused, overleveraged credit market turned unmanageable after long manipulation. He grants the dollar a unique privilege as the world's reserve currency, yet insists that privilege rests on foreign confidence increasingly spent on Treasury debt rather than productive enterprise. Recession, he notes, can mask inflation as distress sales push prices down even while the money stock swells. Japan supplies the warning; a looming Iraq war, he predicts, would only postpone the reckoning.

The Federal Reserve System may have run out of room to maneuver.

Medicare's crisis, Sennholz insists, is not demographic but ideological and moral—a program misdiagnosed when blamed on baby-boom retirement rather than on the doctrine that elevates the state into universal provider. This December 2002 essay traces federal health policy from German and British social insurance through Roosevelt, Eisenhower, Johnson, Reagan, and Clinton, then turns to the machinery of supervision: HCFA reviews, the Benefit Integrity Unit, the HHS Inspector General. Subsidized demand cannot abolish scarcity, he argues; when market allocation is displaced, rationing returns as rule, review, and decree. Administrative terms like aberrant and medically necessary become instruments of normalization, and official education becomes intimidation that exposes physicians to fines, imprisonment, and ruin while pushing the ablest to opt out and contract privately. Reform, he predicts, will change the form of coercion more than its substance.

The welfare state breeds insoluble political and social conflict.

A reputation for defending markets is not, for Hoppe, proof of a commitment to market freedom. This one-page introduction to the 2002 “Chicago vs. the Free Market” symposium challenges the Chicago School’s familiar identification with free-market economics, contrasting its Nobel prestige with the scrutiny Hoppe believes its positions deserve. He announces a critical assessment of six economists, including Friedman, Coase, and Becker, without presenting the individual cases here. The piece offers a concise statement of the symposium’s polemical purpose: to test whether celebrated market advocates differ in principle, rather than merely in degree, from economists Hoppe calls interventionists.

A weakly mandated president and a divided Congress could agree on little in 2002, except the pleasure of spending, which swiftly turned projected surpluses into deficits through defense, farm, and countless other outlays. That bipartisan appetite is the essay's real subject. Federal Reserve money creation is cast as the hidden enabler, adding no real resource but issuing fresh purchasing-power claims against existing goods, falsifying capital signals, and priming boom and bust. A political sociology sorts Congress into four spending blocs, social-need advocates, parochial district-servers, Keynesian full-employment stimulators, and cost-wary conservatives, who converge in a guns-and-butter front weighted toward the butter. Entitlements and mandates, in the closing movement, divide the nation into a provider class and a dependent class, trading natural rights and self-reliance for claims on government.

Stone walls do not prisons make; they are houses of care and dependency.

Argentina stood near civil conflict in March 2002, with banks frozen, presidents falling in quick succession, and protesters dead in Buenos Aires. The catastrophe, this essay contends, sprang not from too much market reform but from reforms that stopped short of the root: Menem's 1991 convertibility plan tied the peso to dollar reserves and tamed inflation, yet left Peronist transfer politics, chronic deficits, and IMF-financed debt untouched. The bank freeze becomes the breaking point where fiscal insolvency turns into open assault on property. Sennholz's remedy is contractual monetary freedom, citizens free to hold and contract in dollars, euros, pesos, or gold, with creditors and debtors renegotiating without new controls, taxes, or compensatory schemes, and a labor market where the unemployed may accept work on freely chosen terms after political devices have failed.

The freedom to work is an economic necessity and a moral imperative.

On the first day of 2002, roughly 300 million Europeans traded their national currencies for a common medium of exchange, and Sennholz reads the changeover as a vast political experiment rather than a technical convenience. He credits the euro's real gains, lower transaction costs, price transparency, sharper competition, then turns an Austrian critique on the European Central Bank, whose mandate defines price stability as consumer-price growth of less than two percent a year. The ECB, he insists, is a political creation bound by the same incentives as every central bank before it: pressure to rescue failing institutions, accommodate welfare-state finance, and loosen money whenever recession threatens. Statutory independence cannot withstand them. Weighing dollar pegs, commodity baskets, and gold, he concludes that no anchor a mandate alone can furnish will hold.

Unfortunately, throughout the long history of central banking no central bank has ever managed to achieve the illusive goal of price stability.