LA FALACIA DE LOS IMPUESTOS BAJOS EN ESPAÑA

LA FALACIA DE LOS IMPUESTOS BAJOS EN ESPAÑA

Fernando Bernad: Bestinver, Value Investing y Escuela Austríaca de Economía

Fuente

Charla de Fernando Bernad en el VII Encuentro Rankia from Rankia on Vimeo.


Charla de Fernando Bernad en el VII Encuentro Rankia (II) from Rankia on Vimeo.


Charla de Fernando Bernad en el VII Encuentro Rankia (III) from Rankia on Vimeo.


Charla de Fernando Bernad en el VII Encuentro Rankia (IV) from Rankia on Vimeo.


Charla de Fernando Bernad en el VII Encuentro Rankia (V) from Rankia on Vimeo.


Charla de Fernando Bernad en el VII Encuentro Rankia (VI) from Rankia on Vimeo.

Rentabilidad media anual del 20% dejaría las siguientes revalorizaciones..
A 10 años multiplicas el dinero invertido por 6 veces.
A 20 años multiplicas el dinero invertido por 38 veces ( te has hecho rico). Ejemplo bestinver lleva 18 años con una rentabilidad del 18%,
A 30 años multiplicas el dinero invertido por 237 veces.
La única corriente de inversión que ha superado al mercado con resultados auditados a largo plazo es el Value investing.

10 Consejos para tener éxito en la vida, a partir del minuto 41

Todos los vídeos aquí

¿Es posible perderlo todo en bolsa con una inversión a largo plazo?

Si una empresa quiebra pierdes todo lo que hayas invertido en ella. Lo que sucede es que las probabilidades de que te suceda esto en un blue chip son bajísimas.

Y las probabilidades de que quiebren todos los blue chips españoles a la vez son prácticamente nulas. Voy más allá, si eso llegara a suceder seguramente lo que menos te importaría serían tus inversiones, y no te librarías de un cataclismo así invirtiendo en cualquier otra cosa como deuda del Estado o inmuebles. Sería una situación apocalíptica que no podemos prever.

Mirando casos extremos (como guerras) del pasado el activo que mejor resiste normalmente son las acciones. Lo primero que se suele hacer al acabar una guerra (y perderla) es anular la deuda pública y los billetes, cuentas y depósitos. La "garantía del Estado" en esos casos suele ser 0. Generalmente se crea una nueva moneda que se reparte entre la población de formas impredecibles. A veces se le da a cada persona una fracción mínima de lo que tenía y otras se da una cantida fija a todo el mundo. 

Por ejemplo, creo que en Alemania tras la Segunda Guerra Mundial se anuló todo el dinero y se dió a cada alemán 50 marcos nuevos.

Pero los que tenían acciones de la Volkswagen, la Mercedes o el Deutsche Bank las siguieron teniendo (las mismas, claro, el que tenía 100 acciones antes de la guerra siguió teniendo 100 acciones despues) y fueron los que primero recuperaron su patrimonio.

En la Gran Depresión de los años 30 en USA las empresas siguieron repartiendo dividendos, y de hecho esta fue la estrategia (salvo traders superbuenos, que alguno habría) que mejor funcionó durante todos esos años.

Si ves otras guerras suele suceder lo mismo, lo peor es tener billetes, depósitos, cuentas o deuda pública. A veces se anulan directamente y de un día para otro se pierde el 100% y otras se entra en un período de hiperinflación en el que se tarda unas pocas semanas o meses en perder el 99,99999% del valor del dinero.

¿Por qué son las bolsas el activo mas rentable que existe?:

En primer lugar las empresas que producen bienes o prestan servicios, suelen trasladar los procesos inflacionarios a los precios de sus productos y servicios. Si no fuera asi, se agotaria la producción. Por lo tanto es la mejor forma de luchar contra la perdida de poder adquisitivo por la subida de la inflación

En segundo lugar la rentabilidad del S&P 500 desde 1926 a 2002 ha sido del 10,2% descontado la inflación del poco mas del 3% de ese periodo nos da una rentabilidad neta del 7,1% ( En España con su entrada en la Union Europea en 1986 ha obtenido unas rentabilidad media del 10-11% descontado la inflación).Y en ese periodo (1926-2002)hemos de tener en cuenta una Gran Depresión, una Guerra Mundial, crisis del sistema monetario, crisis energéticas, burbujas tecnológicas y atentados terroristas. Digamos que ha pasado un poco de todo y aun así, de haber invertido en el S&P 500 habríamos obtenido una rentabilidad compuesta anual real del 7%.

En otras palabras, si invertimos en una cartera con las mayores empresas del país y no logramos rentabilidades atractivas, significará que muy mal estará la economía del país. Y en ese contexto, aun cuando sacaras todo tu dinero de la bolsa, pocas oportunidades tendrías en cualquier otro lado. Si la Bolsa va mal durante muchos años, pocas cosas o nada irá bien.
Recuerden compren Blue Chips.


En la bolsa de Japón . Siempre se pone como ejemplo de que la inversión a largo plazo no siempre funciona pero en aquellos momentos eran precisamente los inversores de largo plazo los que advertían de que aquello era una locurta insostenible y los que recomendaban no comprar.


Por dar algunas referencias a finales de los 80 el precio de las viviendas en Japón se establecía en centimetros cuadrados (no metros), lo que da idea de la sobrevaloración a la que llegaron. Los terrenos en los que está el palacio imperial tenían un valor estimado superior al de todo el terreno del estado de California (que es mayor que España) con sus inmuebles incluídos. En cuanto a las empresas lo normal era que tuvieran un PER de varios cientos de veces.

Es decir, el conjunto de los activos inmobiliarios y financieros tenía una sobrevaloración totalmente disparatada y sin comparación con la situación actual de Europa y USA. Es lógico que tarden muchas décadas (incluso varias generaciones) en corregir esa sobrevaloración, pero nosotros no hemos vivido nada parecido a eso en Europa y USA. Nuestras burbujas inmobiliarias no tienen comparación posible con la japonesa y el conjunto de la Bolsa no está caro ni mucho menos desde un punto de vista histórico, más bien lo contrario.

Lo más parecido que hemos vivido nosotros a la burbuja de Japón de finales de los 80 fue la burbuja de internet del año 2001. Jazztel, por ejemplo, alcanzo un máximo en Enero de 2001 de 22 euros aproximadamente. Desde un punto de vista fundamental ese precio era una sobrvaloración irracional. Actualmente Jazztel cotiza a unos 3,5 euros aproximadamente y lo más probable en mi opinión es que en el año 2026 (25 años despues de su máximo) siga cotizando por debajo de aquellos 22 euros, incluso muy por debajo. No es descartable en absoluto que Jazztel nunca vuelva a alcanzar aquellos 22 euros, y mucho menos si los actualizamos con la inflación, que es lo que se debe hacer.



CONCLUSIÓN: En situaciones de riesgo extremo y en cualquier situación lo menos arriesgado son las acciones.


¿ Donde meto mis ahorros?

¿ Como invertir en Bolsa?
Principio value: La renta variable es el activo más rentable a largo plazo

Segundo principio value: La renta variable es el activo menos arriesgado a largo plazo

El poder de la capitalización

Artículo interesante Fuente

Mi primera entrada no es extensa, pero no por ello poco importante. Más bien todo lo contrario: el éxito de una buena inversión va ligada al asombroso poder de la capitalización. Os comentaba en mi presentación que los tres pilares de una buena inversión son: el ahorro, la paciencia y la inversión en valor. La primera va en la genética, y poco puedo hacer yo desde aquí para cambiar un perfil consumista. Quizá sólo un consejo: si te gusta consumir, sólo una buena inversión te garantiza un mayor consumo el día de mañana. La tercera, la inversión en valor, será la temática de las próximas entradas del blog y a ellas me remito. Hoy os hablaré de la segunda.

Sólo os pido que ahorréis 150 euros al mes durante 20 años, invirtiendo a final de año el ahorro acumulado (1.800 €). A partir de ahí, os planteo cuatro escenarios:

1. Utilizáis los billetes para potenciar el plumaje de vuestro edredón
2. Acudís al banco más cercano, ingresáis cada mes el importe y pactáis una rentabilidad del 3,5%
3. Invertís en bolsa replicando al S&P 500 (rentabilidad media de los últimos 17 años: 7,60%)
4. Invertís en valor (por ejemplo, en el fondo Bestinfond de Bestinver, cuya rentabilidad histórica -17 años- es del 17%)

Veamos ahora, gracias a una simple hoja de Excel, los resultados de vuestra decisión al cabo de esos 20 años:

1.  36.000 euros
2.  53.000 euros
3.  85.000 euros
4. 274.000 euros

Si el horizonte temporal de la inversión lo alargamos hasta los 30 años, entonces los resultados serían:

1.     54.000 euros
2.     96.000 euros
3.   204.000 euros
4. 1.364.000 euros!!!!

Vale, que a lo mejor no somos tan buenos como los de Bestinver, y que “sólo” somos capaces de batir al S&P 500 en un 5%, obteniendo así una media del 12,60%. Ok. Fijemos ahora un horizonte temporal de unos 25 años para la jubilación. Al cabo de esos 25 años, nuestros 150 euros mensuales de ahorro se habrán convertido en casi 300.000 euros. Podremos, entonces, retirar nuestro dinero de la Bolsa, depositarlo en un banco (el médico y nuestro corazón nos piden un escenario menos volátil…), pactar una rentabilidad del 3,5% y retirar todos los meses 1.500 euros durante un plazo de veinte años, con un remanente de más de 60.000 euros al cabo de esos veinte años.

Y sólo por 150 euros al mes… y un chapuzón en las aguas del valor.

¿Para qué sirve el dinero?

Hubo una entrevista de una hora en CNBC con Warren Buffett, la segunda persona más rica del mundo, quien donó $31 mil millones de dólares para caridad. He aquí algunos aspectos muy interesantes de su vida: 

1.- Compró su primera acción a los 11 años y se lamenta de haber empezado demasiado tarde! 
2.- Compró una pequeña granja a los 14 años con sus ahorros provenientes de repartir periódicos. 
3.- Todavía vive en la misma pequeña casa de 3 cuartos en Omaha que compró luego de casarse hace 50 años. Él dice que tiene todo lo que necesita en esa casa. Su casa no tiene ningún muro o reja. 
4.- Él maneja su propio carro a todas partes y no anda con chofer o guardaespaldas. 
5.- Nunca viaja en jet privado, a pesar de ser el dueño de la compañía de jets privados más grande del mundo. 
6.- Su compañía, Berkshire Hathaway, es dueña de 63 compañías. Él le escribe sólo una carta cada año a los CEOs de estas compañías, dándole las metas para el año. Nunca convoca a reuniones o los llama regularmente. 
Él le ha dado dos reglas a sus CEOs: 
• Regla número 1: No perder nada del dinero de sus accionistas. 
• Regla número 2: No olvidar la regla número 1. 
7.- Él no socializa con la gente de la alta sociedad. Su pasatiempo cuando llega a casa es prepararse palomitas de maíz y ver televisión. 
8.- Bill Gates, el hombre más rico del mundo, lo conoció apenas hace 5 años. Bill Gates pensó que no tenía nada en común con Warren Buffett. Por esto, programó la reunión para que durara únicamente media hora. Pero cuando Gates lo conoció, la reunión duró diez horas y Bill Gates se volvió un devoto de Warren Buffett. 
9.- Warren Buffet no anda con celular ni tiene una computadora en su escritorio. 
10.- Su consejo para la gente joven: Aléjese de las tarjetas de crédito e invierta en usted.   
RECUERDE: 
A. El dinero no crea al hombre, sino que fue el hombre el que creó el dinero 
B. La vida es tan simple como usted la haga. 
C. No haga lo que los otros digan. Escúchelos, pero haga lo que lo hace sentir mejor. 
D. No se vaya por las marcas. Póngase aquellas cosas en las que se sienta cómodo. 
E. No gaste su dinero en cosas innecesarias. Gaste en aquellos que de verdad lo necesitan. 
F. Después de todo, es su vida. ¿Para qué darle la oportunidad a otros de manejársela? 
G. Si el dinero no sirve para compartirlo con los demás, entonces ¿para que sirve? 
AYUDE AUNQUE NO PUEDA HACERLO; SIEMPRE HABRÁ BENDICIÓN PARA AQUELLOS QUE SABEN COMPARTIR.   
H. No gaste el dinero que no tiene. El Credito, Prestamos, etc. fueron inventados por la sociedad de consumo.

I. Antes de comprar algo, piense: ¿Que me pasará si no lo compro? Si la respuesta es 'Nada', no lo compre; porque no lo necesita.

 'Nada hemos traido al mundo, ni nada nos vamos a llevar…'

En Bolsa el dinero está más seguro sobre todo en crisis y cuando quiebra un país

Presentación del Informe Recarte II

Inversión a Largo plazo, para los q no saben cuando vender o comprar

Si has comprado buenas empresas a muy largo plazo estas aumentan su dividendo y por ende su cotización tambien aumentará. Esta claro, si yo tengo una muy buena empresa cotizando a 10€ y reparte un dividendo anual de 10€... no hace falta ser muy listo que sus acciones subiran hasta que se iguale oferta y demanda y vuelva a cotizar a precios razonables en basea sus perspectivas futuras y dividendos acorde.

Por ejemplo Coca Cola en el año 1988 (corregido por splits) cotizaba a 4.5$ y repartia un 3% de dividendo, 4 dividendos de 3.75 cents. si hubieses comprado por valor de 10000$ el año 1988 hubieses comprado sobre unas 2222 acciones, las cuales ahora te estarian pagando 1.76$ cada una, por lo que ahora anualmente estarias cobrando 4000$ anuales. Esto es un 40% ANUAL sin reinvertir los dividendos. Y evidentemente la cotización de Coca Cola no esta por los 4.5$ de entonces, porque estaria dando un 40% anual de dividendos

La unica razón para vender es si eres lo suficientemente bueno para saber cuando la empresa no va a ser buena o esta cara ( estilo value) o si piensas que a corto puedes sacar mas que dejandolas.


Un ejemplo real con Telefónica


Mi primera compra de acciones: 84000 pts en TEF 
año 1995 compro 84.000 pts de TEF, más una ampliación del 98 que me cuesta 25.000 pts. Osea 655 euros invertidos en aquellos años.(ampliaciones liberadas, Ssplit por medio, etc etc.. EN EL AÑO 2010 HAN DADO EN DIVIDENDOS 278,1 EUROS (1.35 euros acción), bueno, eso calculo yo, 

¿Crees que me arrepiento de no haberlas vendido cuando TEF valía 30 euros la acción?.... piensalo y saca tus conclusiones... 


¿Crees que me arrepiento de haber comprado casi todos los años otro paquete?, tengo hasta de 24 euros, de 15, de 17, de 8.. pues mientras dé estos dividendos, para nada (ya estaba contento con las liberadas. con que ahora más.

Pues eso cuando dicen que la bolsa de japón ha estado 20 años sin subir, hay que pensar para la persona q no sabe cuando comprar o vender que debe fijarse en empresas que de dividendos constantes y se olvide de lo otro sino sabe.

En resumen....si no eres profesional... sólo el largo plazo te dará más posibilidades de ganar que de perder (siempre sabiendo dónde metes el dinero) y deberíamos dejar de mirar las cotizaciones diariamente... con una vez al mes... suficiente.

No sé lo que pasará dentro de 20 años, pero sí sé lo que metí hace 15 .. y me arrepiento de no haber tenido el 80 % en bolsa, en vez de el 20 %. 

Saludos

Último principio value: “Entender que la paciencia es la principal virtud del inversor exitoso”

Según los “12 Principios del Value Investing”, de Bestinver AM

El último principio, el número 12, del value investing de los 12 Principios de Bestinver AM dice que hay que entender que la paciencia es la principal virtud del inversor exitoso. Y es que, según Francisco García Paramés, director de inversiones de Bestinver AM, “lo más fascinante del value investing es que el tiempo siempre juega a tu favor”.

Durante los últimos 25 años ha habido 181 posibles periodos de 10 años. En cualquiera de esos periodos el inversor que hubiera estado invertido en el mercado de renta variable habría obtenido rentabilidades positivas. Sin embargo, considerando periodos de 1 año, el inversor habría perdido dinero en el 25% de las ocasiones.

Las acciones son activos ideales para hacerse rico a largo plazo. Pero exigen la cualidad menos común entre los inversores: la paciencia. Para obtener un rendimiento satisfactorio en bolsa es necesario tener el aguante suficiente para mantenerse invertido, incluso en ocasiones incómodas. Hay que tener presente que la bolsa americana ha proporcionado retornos positivos a 5 años en el 97% de las ocasiones. El mercado recompensa al inversor paciente que se mantiene fiel a su estrategia de inversión, dicen en Bestinver.

El Value Investing depende más del sentido común, el trabajo diario y la paciencia que de particulares fuentes de información o de la predicción de acontecimientos futuros. Su correcta aplicación minimiza la posibilidad de pérdidas permanentes en la cartera y ha producido resultados positivos a largo plazo, batiendo de media la rentabilidad del mercado.

La guía “12 Principios del Value Investing”, de Bestinver AM, termina con una frase de Albert Einstein que dice que "todo debería hacerse de la manera más sencilla posible, pero no más sencillo".

Fuente:“12 Principios del Value Investing”, de Bestinver AM

Principio value número 11: “No intentar predecir el movimiento de la bolsa a corto plazo”

Según los “12 Principios del Value Investing”, de Bestinver AM

El principio número 11 del value investing de los 12 Principios de Bestinver AM dice que no hay que intentar predecir el movimiento de la bolsa a corto plazo. Y es que, según el legendario inversor estadounidense Walter Schloss (1916), “la timidez generada por los fracasos del pasado provoca que la mayoría de los inversores se pierdan los mercados alcistas más importantes”. Y según un estudio realizado del IESE sobre 15 mercados, perderse los mejores 10 días genera rentabilidades un 50% más bajas.
Como describe Peter Lynch en su libro “One up on Wall Street”, a finales de 1972, cuando la Bolsa estaba a punto de sufrir una de las peores caídas de la historia, el optimismo estaba en su punto más alto (el 85% de los asesores eran alcistas según la información de Investor´s Intelligence). Al comienzo del rebote del mercado en 1974, el 65% de los asesores temían que lo peor estaba aún por venir. De nuevo, antes de la bajada de la bolsa en 1977 el 90% de los asesores eran alcistas. Al comenzar la gran subida que tuvo el mercado en 1982, más de la mitad de los asesores predecían bajadas y justo antes del crash de 1987, el 80% pensaban que el mercado seguiría subiendo. Lynch ilustra perfectamente lo difícil que es predecir el movimiento de los mercados bursátiles.
A pesar de que el rendimiento a largo plazo de cualquier mercado de valores se aproxima a un constante 10%, los rendimientos de la bolsa a corto plazo son asimétricos. Una tendencia muy común de los inversores es abandonar su plan de inversión saliendo del mercado con la esperanza de volver a entrar cuando el entorno sea más favorable, lo que supone un error a tenor de los siguientes gráficos.

Fuente: "12 Principios del Value Investing”, de Bestinver AM

Décimo principio value: “No dejar que las emociones guíen las decisiones de inversión”

Según los “12 Principios del Value Investing”, de Bestinver AM

El principio número 10 del value investing de los 12 Principios de Bestinver AM dice que no hay que dejar que las emociones guíen las decisiones de inversión. En este mismo sentido, acerca de las dificultades de mantenerse fiel a una filosofía, Benjamin Graham (1894-1976), economista e inversor y precursor del value investing, dijo una vez que “conseguir rendimientos satisfactorios es más sencillo de lo que la gente piensa. Obtener rendimientos sobresalientes es mucho másduro de lo que la gente imagina”.

Y todo, porque entre los mayores retos de un inversor está el poder mantenerse fiel a su filosofía de inversión, sin dejar que las emociones dicten sus decisiones. Y es que suelen hacerlo en el peor momento, ignorando el célebre consejo de Buffet: “Sé temeroso cuando otros son codiciosos y vuélvete codicioso cuando todo el mundo tenga miedo”.

En este sentido, las estadísticas son reveladoras: en los últimos 20 años, la ganancia media de los fondos americanos de bolsa se encuentra en el 11,6% y, sin embargo, la ganancia media del inversor de fondos de renta variable americana es tan sólo de un 4,5%. Uno de los casos más paradójicos es el del famoso Magellan Fund de Peter Lynch, cuyos inversores ganaron de media un 5% anualizado, cuando el rendimiento que tuvo el fondo a lo largo de 14 años fue del 29% anual.

Las causas del “comportamiento auto-destructivo” del inversor son múltiples: dejarse guiar por el miedo o la ambición, invertir en los sectores de moda o no mantenerse fiel a su filosofía. Pero por encima de todos destaca la tendencia general que tiene el inversor a tratar de adivinar el movimiento a corto plazo de la bolsa.

Fuente: “12 Principios del Value Investing”, de Bestinver AM

¿Es tan difícil invertir o lo hacemos difícil?

Fijaros en esto de este excelente articulo y pensar:

Siempre me ha parecido extraordinario que existan multitud de estudios sobre el comportamiento de los precios y el volumen, materia de los chartistas. ¿Podéis imaginar comprar un negocio completo simplemente porque su precio ha subido la semana pasada y la anterior? La razón de que muchos estudios se realicen sobre las variables de precio y volumen, es que ahora, en la era de los ordenadores, se dispone de un sin fin de datos sobre ellos. Pero dichos estudios no tienen utilidad alguna; es simplemente que los datos están ahí y los académicos han trabajado duro para aprender a manejarlos. Una vez que estas habilidades son adquiridas, parece “un pecado” no usarlos, incluso si el uso no tiene utilidad o todavía peor, si su uso es contraproducente. Como dijo un amigo, a un hombre con un martillo, todo le parece un clavo.

The Superinvestors of Graham and Doddsville es un articulo de la revista de la Columbia Business School basado a su vez en una transcripción de una charla que tuvo lugar en la Universidad de Columbia en 1.984 conmemorando el quincuagésimo aniversario del libro escrito por Benjamín Graham y David L. Dodd “Security Analisis”. El artículo se reproduce en muchos libros de Buffet y en ediciones de “El inversor Inteligente”. Como señala el editor, el ensayo de Buffet ofrece un fascinante estudio de cómo los discípulos de Graham han utilizado el estilo “value” para alcanzar un fenomenal éxito en el mercado de valores. Michael Jensen profesor de la universidad de Rochester firme partidario por aquellas fechas, como buena parte del sector académico, de la teoría eficiente de los mercados, afirmaba que batir a los mercados es simplemente una cuestión de azar. Aceptando el desafío Buffet utiliza el azar como punto de arranque para refutar la teoría eficiente de los mercados y defender el “value investing”. Me gustaría aclarar que la traducción que a continuación se expone y que utilizaré en el libro que actualmente estoy preparando, es una adaptación personal y no se corresponde ni a su sentido literal ni al texto original completo. El texto original en ingles puede consultarse aquí.

Buffet: ¿Buscar valores con un importante descuento (“margen de seguridad”) respecto a su valor, es a día de hoy (1984) una manera de abordar el mercado o por el contrario se trata de un sistema caduco? Muchos de los sectores académicos consideran que se trata de un sistema pasado de moda. Argumentan que el mercado de valores es eficiente; esto es, que los precios de las acciones en cada momento ya reflejan todo lo que se conoce acerca de las expectativas de una empresa y sobre el estado de la economía. No hay acciones infravaloradas, argumentan estos teóricos, porque hay buenos analistas de acciones que utilizan toda la información disponible para garantizar indefectiblemente que los precios son los correctos. Los inversores que parecen superar al mercado año tras año lo consiguen porque tienen suerte. Si los precios reflejan toda la información disponible, este tipo de técnica de inversión debe ser descartada”, escriben algunos de los académicos. Tal vez. Pero yo quiero referirme a un grupo de inversores que, año tras año, han superado el índice Standard & Poor's 500. La hipótesis acerca de si esto es, o no, pura casualidad merece por lo menos un examen más detenido. Es fundamental para valorar este análisis tener en cuenta el hecho de que estos inversores que han superado a los índices y posteriormente citaré, eran conocidos míos desde hace más de quince años y en su momento ya los había identificado como inversores superiores a la media. Antes de comenzar este análisis, me gustaría que imaginéis un concurso nacional de lanzamiento de moneda al aire. Asumid que vamos a llegar hasta 225 millones de estadounidenses mañana por la mañana y les vamos a pedir, a todos, que apuesten un dólar. Los que acierten ganan un dólar que les pagaran los que no aciertan. Cada día los perdedores abandonan y al día siguiente las apuestas hechas por todos los ganadores se ponen de nuevo en marcha. Después de diez lanzamientos al aire tendremos, aproximadamente, 220,000 personas en EEUU que habrán acertado consecutivamente en los diez lanzamientos. Este grupo probablemente empezará a sentirse un poco “crecido”. Es lo que tiene la naturaleza humana. Tratarán de ser modestos pero en las fiestas, ocasionalmente, señalaran a atractivos miembros del sexo opuesto su técnica y las maravillosas ideas que ellos aportan al campo de los lanzamientos de moneda. En otros diez días tendremos 215 personas que habrán acertado sus 20 lanzamientos de moneda de forma consecutiva y que en consecuencia, cada uno habrá convertido su dólar inicial en poco más de un millón de dólares. 225 millones de dólares se pierden, 225 millones de dólares se ganan. Para entonces, este grupo ganador “perderá la cabeza” .Probablemente escribirán libros sobre “Cómo convertí un dólar en millones en veinte días trabajando treinta segundos por la mañana”. Peor aún, probablemente empezarán a impartir seminarios por todo el país sobre eficiencia en el lanzamiento al aire de las monedas y a enfrentarse a escépticos profesores con, “¿ si no puede hacerse, por qué hay 215 de nosotros que lo hemos conseguido?”. Pero entonces algún profesor de alguna escuela de negocios señalará que el resultado sería el mismo si en lugar de personas hubieran sido 225 orangutanes los que hubieran participado en el ejercicio. 215 orangutanes seleccionados al azar conseguirían los mismos 20 aciertos consecutivos. Me gustaría argumentar, sin embargo, que hay algunas diferencias importantes en los ejemplos que voy a presentar. Por un lado, si (a) Había 225 millones de orangutanes distribuidos más o menos entre la población de EE.UU; si (b) Si quedaron 215 ganadores después de veinte días; y si ( c) Si coincide que 40 de los orangutanes procedían de un único zoo en Omaha, se podría concluir con bastante seguridad que has dado con algo. En consecuencia, es probable que pidas al cuidador del zoo que te comente lo que les está dando de comer, si realizan ejercicios especiales, qué libros leen, y quién sabe qué más. Esto es, si te encontrases con cualquier otra concentración realmente extraordinaria de éxito, es posible que desees analizar si podrías identificar alguna característica inusual en ese grupo. Toda investigación científica sigue un patrón. Si se trata de analizar las posibles causas de un tipo raro de cáncer - por ejemplo 1500 casos en un año en EEUU- y se encuentra que 400 de ellos ocurren en algún pequeño pueblo minero en Montana, interesaría centrarse en el agua de allí, o el tipo de trabajo de los afectados, u otras variables. Está claro que no es azar que 400, de entre un grupo de 1500, procedan de un área pequeña. No se conocen necesariamente los factores que ocasionarían la enfermedad pero si se sabe dónde buscar. Hay formas de buscar el origen de estas “rarezas” que son distintas que la puramente geográfica. Además del aspecto geográfico existe lo que llamo el origen intelectual. Encontrar un desproporcionado número de aciertos al lanzar una moneda al aire en el mundo de la inversión y que un alto número de ellos proceda de un pequeño “pueblo intelectual” que podría llamarse GRAHAM Y DODDSVILLE, no puede explicar que una concentración tan significativa de ganadores tenga su origen en la suerte. Ahora supongamos que vives en una sociedad fuertemente patriarcal y cada familia en EEUU está compuesta por diez miembros. Si asumimos que la cultura patriarcal en ese pueblo era tan fuerte que cada miembro de una familia se identificaba con lo que decía el padre, al final del periodo de veinte días, tendrías 215 ganadores, pero te darías cuenta que proceden solamente de 21,5 familias puesto que todos los miembros de una familia han actuado siguiendo los dictados marcados por el padre. Algunos ingenuos pueden decir que los aciertos se deben a un importante factor hereditario, pero esta cuestión sería irrelevante porque simplemente significaría que realmente no tenías 215 ganadores individuales, sino más bien 21,5 familias distribuidas al azar y dirigidas por su respectivo patriarca que son los que realmente serían los ganadores. En este grupo de inversores de éxito (“familia”) que quiero considerar, ha habido un patriarca intelectual común, Ben Graham. Pero en este caso “los hijos” que abandonan la casa de este patriarca intelectual han encaminado “sus lanzamientos” de una manera muy distinta unos de otros. Han ido a diferentes lugares y compraron y vendieron diferentes acciones. Sin embargo han tenido, en su conjunto, un historial que simplemente no puede explicarse por razón de la suerte o del azar. El éxito conjunto no puede explicarse por el hecho de que todos ellos están realizando los lanzamientos de forma idéntica porque un líder les estuviera indicando, exactamente, como hacerlo. El patriarca simplemente se ha limitado a establecer el esquema intelectual en la toma de decisiones pero cada estudiante ha decidido aplicar la teoría a su manera. El esquema de pensamiento común de los seguidores de Graham-and Doddsville es éste; buscan discrepancias entre el valor total de un negocio y el precio en el mercado. Esencialmente aprovechan esas discrepancias ignorando la teoría del mercado eficiente o si las acciones se compraron el lunes o jueves, o si es enero o julio, etc... Cuando los hombres de negocios compran empresas -que es justamente lo que están haciendo los seguidores de Graham & Dodd a través de acciones- dudo que se decidan a comprar en función del día de la semana o el mes. Si a la hora de comprar un negocio completo no se hace ninguna diferencia en si está siendo comprado un lunes o un viernes, me desconcierta como los académicos invierten tiempo y esfuerzo en analizar si existe alguna diferencia cuando lo que se compra son acciones , es decir parte de ese negocio. Los inversores que siguen a Graham y Dodd, huelga decir, no entran a discutir “la beta”, patrones de precios o la covarianza de los rendimientos entre los valores. Esas son cuestiones que no les interesan lo mas mínimo, es más, muchos de ellos tendrían problemas hasta para definir esos conceptos. Los seguidores de Graham & Dodd se centran simplemente en dos variables; precio y valor. Siempre me ha parecido extraordinario que existan multitud de estudios sobre el comportamiento de los precios y el volumen, materia de los chartistas. ¿Podéis imaginar comprar un negocio completo simplemente porque su precio ha subido la semana pasada y la anterior? La razón de que muchos estudios se realicen sobre las variables de precio y volumen, es que ahora, en la era de los ordenadores, se dispone de un sin fin de datos sobre ellos. Pero dichos estudios no tienen utilidad alguna; es simplemente que los datos están ahí y los académicos han trabajado duro para aprender a manejarlos. Una vez que estas habilidades son adquiridas, parece “un pecado” no usarlos, incluso si el uso no tiene utilidad o todavía peor, si su uso es contraproducente. Como dijo un amigo, a un hombre con un martillo, todo le parece un clavo”. A continuación Buffet realiza un repaso en la rentabilidad obtenida por los compañeros que trabajaron con él entre 1954 y 1956 en Graham-Newman Corporation y otros colegas conocidos. El análisis se refiere a datos obtenidos por ellos en diferentes periodos entre 1957 y 1984. y se nombra a inversores legendarios como Walter Shloss, Tom Knapp (Tweedy Browne Partners), Bill Ruane (Sequoia Fund), o Charlie Munger.
Buffet aclara que : “…entre ellos apenas hubo duplicidad en sus carteras, unos tenían carteras muy concentradas como Munger y otros como Shloss muy diversificadas. Pero todos tienen un punto en común; seleccionar las acciones basándose en las discrepancias entre valor y precio. Unos con formación económica y otros como Munger o Rick Guerin, sin ella”.

Además destaca Buffet: “…es muy importante entender que este grupo ha asumido un riesgo mucho menor que la media, en muchos casos durante años en los que el mercado tuvo un comportamiento muy malo. Aunque entre ellos difieren en el estilo, todos mentalmente, actúan como si estuvieran comprando negocios, no comprando las acciones. Algunos de ellos, en ocasiones, han comprado el negocio en su totalidad pero a menudo simplemente se han limitado a comprar pequeñas partes de un negocio a través de acciones. Lo destacable es que su actitud, ya sea comprando la totalidad o una pequeña parte de un negocio, es siempre la misma; todos aprovechan la diferencia entre el precio del mercado y su valor intrínseco. Estoy convencido de que hay mucha ineficiencia en el mercado. Todos estos inversores, seguidores de Graham and Doddsville, lo que han hecho es explotar con éxito las diferencias entre precio y valor. En “value investing” si compras un billete de dólar por 60 centavos, es más arriesgado que si lo compras por 40 centavos, pero paradójicamente la expectativa de recompensa es mayor en el último caso. Cuanto mayor es el potencial de revalorización en la cartera de valores, menor será el riesgo existente”.

A continuación utiliza como ejemplo para explicar porque al comprar más barato el riesgo disminuye, a la Compañía The Washington Company: “Con una valoración estimada de 400 millones de dólares, la empresa se vendía en el mercado en 1974 por 80 millones. Si la hubiéramos comprado por ese precio y posteriormente baja hasta 40 millones de dólares, su beta hubiera aumentado. A la gente que piensa en la beta como medida de riesgo y teniendo en cuenta que la beta habrá aumentado al bajar el precio, esa beta les llevará a la conclusión de que la acción tiene más riesgo si se compra a 40 millones que si se hace a 80 millones. Esto es realmente Alicia en el País de las Maravillas. Nunca he sido capaz de averiguar la razón por la cual es más arriesgado comprar 400 millones en propiedades por 40 millones de dólares que hacerlo por 80 millones de dólares. Pero para que todo esto funcione es necesario tener los conocimientos necesarios para ser capaz de estimar la valoración del negocio y a continuación aplicar lo que Ben Graham llama tener un margen de seguridad. No trates de comprar negocios que valen 83 millones de dólares por 80 millones de dólares. Tienes que darte un gran margen. Cuando construyes un puente insistes en que pueda aguantar 30.000 libras cuando realmente solo van a pasar camiones de 10.000 libras. Ese mismo principio funciona también en la inversión.”

Buffet concluye explicando las razones por las que pone a disposición de los demás sus conocimientos y experiencias: “Algunas personas con visión muy comercial pueden preguntarse porque escribo este artículo. Atrayendo a muchas personas al estilo “value” necesariamente se estrecharán los márgenes entre precio y valor. Únicamente puedo decir que el “secreto” ha estado ahí fuera durante 50 años (ahora serían 75 años), desde que Ben Graham y Dave Dodd escribieron “Security Analysis”, sin embargo no he visto una tendencia hacia el estilo “value” de inversión en mis 35 años de actividad. Parece que existe alguna perversa característica en el ser humano por la que le gusta complicar las cosas. En cualquier caso el mundo académico se ha apartado durante los últimos 30 años de la enseñanza del “value investing” . Es probable que continúe de esa manera”.

Han pasado otros 25 años y definitivamente el verdadero “value investing” ha seguido prosperando y batiendo sistemáticamente al mercado. Como ejemplo de inversores “value” que en los últimos años, con diferentes aproximaciones, han batido claramente al mercado, 
Los mejores de la “década perdida” según Mornignstar. Fuente: Morningstar De 1-1- 2000 a 16-11-2009 Índice de referencia Bruce Berkowitz +13,02% -0,39% Jean Marie Eveillard +12,5% -0,88% Donald Yachtman +11,97% -0,39% Charlie Dreifuss +11,98% -0,39% 
Otros grandes gestores. Fuente : Gurufocus De 1-1- 2000 a 31-12-2009 Índice de referencia Martin Whitman +10,3% -8,1% Robert Rodriguez +12,4% -8,1% Warren Buffet +12,2% -8,1% Cristopher Brown +4,7% -8,1%

Incluso en España Fuente Bestinver De 30-10-2001 a 30-10-2010 Índice de referencia Bestinfond +14,5% -3,8% Best. Internacional +9% -2,2% 
Para los que piensen que superar al mercado por 15 o 20 puntos de media durante 10 años no es para tanto, les aconsejo que se pongan unos números en una hoja de cálculo y mediten la diferencia. Afortunadamente para los que creemos en este modelo de inversión las cosas no han cambiado demasiado en los últimos 25 años ni entre los inversores ni en el mundo académico. Según Wikipedia en un estudio realizado en el año 2004 de 23.000 documentos elaborados en el ámbito universitario solo hay 20 referencias a alguna publicación relacionada con Warren Buffet, sin duda el mejor inversor en acciones (y probablemente empresario) de las últimas generaciones. Muchos en ese mundo lo siguen considerando una pura cuestión de suerte. Pero ya lo dijo Buffet en 1984 y los datos anteriores confirman que sus manifestaciones se encuentran plenamente vigentes: “los barcos navegarán alrededor del mundo, pero los partidarios de que la tierra es plana continuarán floreciendo. Mientras, en el mercado, seguirán existiendo amplias discrepancias entre precio y valor, y quienes lean a Graham & Dodd continuarán prosperando". 
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Saludos

Carta trimestral octubre 2010 de Bestinver

Carta trimestral octubre 2010 de Bestinver

El otro gran negocio de la familia Entrecanales: Bestinver

El otro gran negocio de la familia Entrecanales: Bestinver

El capitalismo hace posible que los niños no tengan que trabajar

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Libro completo de Bestinver: Los 12 Principios del Value Investing

Value Inverstors Legendarios
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El capitalismo aumenta el nivel de vida por Thomas Woods Jr.

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Conferencia del Profesor Huerta de Soto en la London School of Economics

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Video:

LSE Hayek Lecture 2010: Professor Jesús Huerta de Soto from Cobden Centre on Vimeo.

Texo:
Economic Recessions, Banking Reform, and the Future of Capitalism

Jesús Huerta de Soto writes: It is a great honor for me to have been invited by the London School of Economics to deliver this Hayek Memorial Lecture. To begin, I would like to thank the school and especially Professor Timothy Besley for inviting me, Professor Philip Booth and the Institute of Economic Affairs for allowing me to also use this as an opportunity to introduce my most recent book, entitled Socialism, Economic Calculation, and Entrepreneurship, and finally Toby Baxendale for making this whole event possible.

Today I will concentrate on the recent financial crisis and the current worldwide economic recession, which I consider to be the most challenging problem we as economists must now face.

The Fatal Error of Peel's Bank Act

I would like to start off by stressing the following important idea: all the financial and economic problems we are struggling with today are the result, in one way or another, of something that happened precisely in this country on July 19, 1844. What happened on that fateful day that has conditioned up to the present time the financial and economic evolution of the whole world? On that date, Peel's bank act was enacted after years of debate between Banking and Currency School theorists on the true causes of the artificial economic booms and the subsequent financial crises that had been affecting England especially since the beginning of the Industrial Revolution.

The Bank Charter Act of 1844 successfully incorporated the sound monetary theoretical insights of the Currency School. This school was able to correctly discern that the origin of the boom-and-bust cycles lay in the artificial credit expansions orchestrated by private banks and financed not by the prior or genuine savings of citizens, but through the issue of huge doses of fiduciary media (in those days mainly paper banknotes, or certificates of demand deposits issued by banks for a much greater amount than the gold originally deposited in their vaults). So, the requirement by Peel's bank act of a 100 percent reserve on the banknotes issued was not only in full accordance with the most elementary general principles of Roman Law regarding the need to prevent the forgery or the overissue of deposit certificates, but also was a first and positive step in the right direction to avoid endlessly recurring cycles of booms and depressions.

However Peel's bank act, notwithstanding the good intentions behind it and its sound theoretical foundations, was a huge failure. Why? Because it stopped short of extending the 100 percent reserve requirement to demand deposits also (Mises 1980, pp. 446–448). Unfortunately, by Peel's day, some ideas originally hit upon by the Scholastics of the Spanish Golden Century had been entirely forgotten. The Scholastics had discovered at least 300 years earlier that demand deposits (which they called in Latin chirographis pecuniarium, or money created only by the entries in banks' accounting books) were part of the money supply (Huerta de Soto 2009, p. 606). They had also realized that, from a legal standpoint, neglecting to maintain a 100 percent reserve on demand deposits is a mortal sin and a crime — not of forgery, as is the case with the overissue of banknotes, but of misappropriation.

This error of Peel's bank act, or rather, of most economists of that period, who were ignorant of something already discovered much earlier by the Spanish Scholastics, proved to be a fatal error: after 1844 bankers did continue to keep fractional reserves, not on banknotes of course, because it was forbidden by the Bank Charter Act, but on demand deposits. In other words, banks redirected their activity from the business of overissuing banknotes to that of issuing demand deposits not backed by a 100 percent reserve, which from an economic point of view is exactly the same business.

So, artificial credit expansions and economic booms did continue, financial crises and economic recessions were not avoided, and despite all the hopes and good intentions originally put into Peel's bank act, this piece of legislation soon lost all of its credibility and popular support. Not only that, but the failure of the bank act conditioned the evolution of financial matters up to the present time and fully explains the faulty institutional design that afflicts the financial and monetary system of the so-called free-market economies, and the dreadful economic consequences we are currently suffering.

When we consider the failure of Peel's bank act, the evolution of events up to now makes perfect sense: bubbles did continue to form, financial crises and economic recessions were not avoided, bank bailouts were regularly demanded, the lender of last resort or central bank was created precisely to bail out banks and to permit the creation of the necessary liquidity in moments of crisis, gold was abandoned, and legal-tender laws and a purely fiduciary system were introduced all over the world. So as we can see, the outcome of this historical process sheds light on the faulty institutional design and financial mess that incredibly is still affecting the world at the beginning of the second decade of the 21st century!

The Healthy Process of Capital Accumulation Based on True Savings

Now it is important that we quickly review the specifics of the economic processes through which artificial credit expansions created by a fractional-reserve-banking system under the direction of a central bank entirely distort the real productive structure — and thus generate bubbles, induce unwise investments, and finally trigger a financial crisis and a deep economic recession. But before that, and in honor of Hayek, we must remember the fundamental rudiments of capital theory, which up to the present time and — at least since the Keynesian revolution — have been almost entirely absent from the syllabus of most university courses on economic theory. In other words, we are first going to explain the specific entrepreneurial, spontaneous, and microeconomic processes that in an unhampered free market tend to correctly invest all funds previously saved by economic agents. This is important, because only this knowledge will permit us to understand the huge differences with respect to what happens if investment is financed not by true savings but by the mere creation out of thin air of new demand deposits, which only materialize in the entries of banks' accounting books.

"What is required is the full privatization of the current paper base money, and its replacement with a classic, pure gold standard."

What we are going to explain now is nothing more and nothing less than why the so-called paradox of saving is entirely wrong from the standpoint of economic theory (Hayek 1975, pp. 199–263). Unfortunately this is something very few students of economic theory know even when they finish their studies and leave the university. Nevertheless, this knowledge applies without any doubt to one of the most important spontaneous market processes that every economist should be highly familiar with.

In order to understand what will follow, we must visualize the real productive structure of the market as a temporal process composed of many very complex temporal stages in which most labor, capital goods and productive resources are not devoted to producing consumer goods maturing this year, but consumer goods and services that will mature, and eventually be demanded by consumers, two, three, four, or even many more years from now. For instance, a period of several years elapses between the time engineers begin to imagine and design a new car, and the time the iron ore has already been mined and converted into steel, the different parts of the car have been produced, everything has been assembled in the auto factory, and the new cars are distributed, marketed, and sold.

This period comprises a very complex set of successive temporal productive stages. So, what happens if the subjective time preference of economic agents suddenly decreases and as a result the current consumption of this year decreases, for example, by 10 percent? If this happens, three key spontaneous microeconomic processes are triggered and tend to guarantee the correct investment of the newly saved consumer goods.

The first effect is the new disparity in profits between the different productive stages: immediate sales in current consumer-goods industries will fall and profits will decrease and stagnate compared with the profits in other sectors further away in time from current consumption. I am referring to industries produce consumer goods maturing two, three, five, or more years from now, their profitability not being affected by the negative evolution of short-term, current consumption.

Entrepreneurial profits are the key signal that moves entrepreneurs in their investment decisions, and the relatively superior profit behavior of capital-goods industries, which help to produce consumer goods that will mature in the long term, tells entrepreneurs all around the productive structure that they must redirect their efforts and investments from the less profitable industries closer to consumption to the more profitable capital-goods industries situated further away in time from consumption.

"The banking crisis is not the cause of the economic recession but one of its most important first symptoms."

The second effect of the new increase in savings is the decrease in the interest rate and the way it influences the market price of capital goods situated further away in time from consumption: as the interest rate is used to discount the present value of the expected future returns of each capital good, a decrease in the interest rate increases the market price of capital goods, and this increase in price is greater the longer the capital good takes to reach maturity as a consumer good. This significant increase in the market prices of capital goods compared with the relatively lower prices of the less demanded consumer goods (due to the increase in savings) is a second very powerful microeconomic effect that signals all around the market that entrepreneurs must redirect their efforts and invest less in consumer-goods industries and more in capital-goods industries further from consumption.

Finally, and third, we should mention what Hayek called the "Ricardo effect" (Hayek 1948, pp. 220–254; 1978, pp. 165–178), which refers to the impact on real wages of any increase in savings: whenever savings increase, sales and market prices of immediate consumer goods relatively stagnate or even decrease. If factor incomes remain the same, this means higher real wages, and the corresponding reaction of entrepreneurs, who will try in the margin to substitute the now relatively cheaper capital goods for labor.

What the Ricardo effect explains is that it is perfectly possible to earn profits even when sales (of consumer goods) go down — if costs decrease even more via the replacement of labor, which has become more expensive, with machines and computers, for instance. Who produces these machines, computers, and capital goods that are newly demanded? Precisely the workers who have been dismissed by the stagnating consumer-goods industries and who have relocated to the more distant capital-goods industries, where there is new demand for them to produce the newly demanded capital goods.

This third effect, the Ricardo effect, along with the other two mentioned above, promotes a longer productive process with more stages, which are further away from current consumption. And this new, more capital-intensive productive structure is fully sustainable, since it is fully backed by prior, genuine, real savings. Furthermore, it can also significantly increase, in the future, the final production of consumer goods and the real income of all economic agents. These three combined effects all work in the same direction; they are the most elementary teachings of capital theory; and they explain the secular tendency of the unhampered free market to correctly invest new savings and constantly promote capital accumulation and the corresponding sustainable increase in economic welfare and development.

The Nature of the Bubbles Induced by Fractional-Reserve Banking

We are now in a position to fully understand, by contrast with the above process of healthy capital accumulation, what happens if investments are financed not by prior genuine savings but by a process of artificial credit expansion, orchestrated by fractional-reserve banks and directed by the lender of last resort or central bank.

Unilateral credit expansion means that new loans are provided by banks and recorded on the asset side of their balance sheets, against new demand deposits that are created out of thin air as collateral for the new loans and are automatically recorded on the liability side of banks' balance sheets. So new money, or I should say new "virtual money" because it only "materializes" in bank-accounting-book entries, is constantly created through this process of artificial credit expansion. And in fact roughly only around 10 percent of the money supply of most important economies is in the form of cash (paper bills and coins), while the remaining 90 percent of the money supply is this kind of virtual money that only exists as written entries in banks' accounting books. (This is precisely what the Spanish Scholastics termed, over 400 years ago, chirographis pecuniarum, virtual money that only exists in writing in an accounting book.)

It is easy to understand why credit expansions are so tempting and popular and the way in which they entirely corrupt the behavior of economic agents and deeply demoralize society at all levels. To begin with, entrepreneurs are usually very happy with expansions of credit, because they make it seem as if any investment project, no matter how crazy it would appear in other situations, could easily get financing at very low interest rates. The money created through credit expansions is used by entrepreneurs to demand factors of production, which they employ mainly in capital-goods industries more distant from consumption.

As the process has not been triggered by an increase in savings, no productive resources are liberated from consumer industries, and the prices of commodities, factors of production, capital goods, and the securities that represent them in stock markets tend to grow substantially and create a market bubble. Everyone is happy, especially because it appears it would be possible to increase one's wealth very easily without any sacrifice in the form of prior saving and honest, hard, individual work.

The so-called virtuous circle of the new economy, in which recessions seemed to have been avoided forever, cheats all economic agents: investors are very happy looking at stock-market quotes that grow day after day; consumer-goods industries are able to sell everything they carry to the market at ever-increasing prices; restaurants are always full with long waiting lists just to get a table; workers and their unions see how desperately entrepreneurs demand their services in an environment of full employment, wage increases, and immigration; political leaders benefit from what appears to be an exceptionally good economic and social climate that they invariably sell to the electorate as the direct result of their leadership and good economic policies; state budget bureaucrats are astonished to find that every year public income increases at double digit figures, particularly the proceeds from value-added taxes, which, though in the end is paid by the final consumer, is advanced by the entrepreneurs of those early stages newly created and artificially financed by credit expansion.

"For years the central banks have shirked their monetary responsibility, and now they find themselves up a blind alley."

But we may now ask ourselves, how long can this party last? How long can there continue to be a huge discoordination between the behavior of consumers (who do not wish to increase their savings) and that of investors (who continually increase their investments financed by banks' artificial creation of virtual money and not by citizens' prior genuine savings)? How long can this illusion that everybody can get whatever he wants without any sacrifice last?

The unhampered market is a very dynamically efficient process (Huerta de Soto 2010a, pp. 1–30). Sooner or later it inevitably discovers (and tries to correct) the huge errors committed. Six spontaneous microeconomic reactions always occur to halt and revert the negative effects of the bubble years financed by artificial bank-credit expansion.

The Spontaneous Reaction of the Market against the Effects of Credit Expansions

In my book on Money, Bank Credit, and Economic Cycles (Huerta de Soto 2009, pp. 361–384) I study in detail the six spontaneous and inevitable microeconomic causes of the reversal of the artificial boom that the aggression of bank-credit expansion invariably triggers in the market. Let us summarize these six factors briefly:

1. The rise in the price of the original means of production (mainly labor, natural resources, and commodities). This factor appears when these resources have not been liberated from consumer-goods industries (because savings have not increased) and the entrepreneurs of the different stages in the production process compete with each other in demanding the original means of production with the newly created loans they have received from the banking system.
2. The subsequent rise in the price of consumer goods at an even quicker pace than that of the rise in the price of the factors of production. This happens when time preference remains stable and the new money created by banks reaches the pockets of the consumers in an environment in which entrepreneurs are frantically trying to produce more for distant consumption and less for immediate consumption of all kinds of goods. This also explains the third factor, which is
3. The substantial relative increase in the accounting profits of companies closest to final consumption, especially compared with the profits of capital-goods industries, which begin to stagnate when their costs rise more rapidly than their turnover.
4. The Ricardo effect, which exerts an impact that is exactly opposite to the one it exerted when there was an increase in voluntary saving. Now the relative rise in the prices of consumer goods (or of consumer industries' turnover in an environment of increased productivity) with respect to the increase in original-factor income begins to drive down real wages, motivating entrepreneurs to substitute cheaper labor for machinery, which lessens the demand for capital goods and further reduces the profits of companies operating in the stages furthest from consumption.
5. The increase in the loan rate of interest even exceeding pre-credit-expansion levels. This happens when the pace of credit expansion stops accelerating, something that sooner or later always occurs. Interest rates significantly increase due to the higher purchasing power and risk premiums demanded by the lenders. Furthermore, entrepreneurs involved in malinvestments start a "fight to the death" to obtain additional financing to try to complete their investment projects (Hayek 1937).

These five factors provoke the following sixth combined effect:

6. Companies that operate in the stages relatively more distant from consumption begin to discover they are incurring heavy accounting losses. These accounting losses, when compared with the relative profits generated in the stages closest to consumption, finally reveal beyond a doubt that serious entrepreneurial errors have been committed and that there is an urgent need to correct them by paralyzing and liquidating the investment projects mistakenly launched during the boom years.

The financial crisis begins the moment that the market, which as I have said is very dynamically efficient (Huerta de Soto 2010a, pp. 1–30), discovers that the true market value of the loans granted by banks during the boom is only a fraction of what was originally thought. In other words, the market discovers that the value of bank assets is much lower than previously thought and, as bank liabilities (which are the deposits created during the boom) remain constant, the market discovers the banks are in fact bankrupt; and were it not for the desperate action of the lender of last resort in bailing out the banks, the whole financial and monetary system would collapse. In any case, it is important to understand that the financial and banking crisis is not the cause of the economic recession but one of its most important first symptoms.

Economic recessions begin when the market discovers that many investment projects launched during the boom years are not profitable. And then consumers demand liquidation of these malinvestments (which, it is now discovered, were planned to mature in a too-distant future considering the true wishes of consumers). The recession marks the beginning of the painful readjustment of the productive structure, which consists of withdrawing productive resources from the stages furthest from consumption and transferring them back to those closest to it.

"Bank-credit expansion during the boom period encourages entrepreneurs to act as if savings had increased."

Both the financial crisis and the economic recession are always unavoidable once credit expansion has begun, because the market sooner or later discovers that investment projects financed by banks during the boom period were too ambitious due to a lack of the real saved resources that would be needed to complete them. In other words, bank-credit expansion during the boom period encourages entrepreneurs to act as if savings had increased when in fact this is not the case.

A generalized error of economic calculation has been committed and sooner or later it will be discovered and corrected spontaneously by the market. In fact all the Hayekian theory of economic cycles is is a particular case of the theorem of the impossibility of economic calculation under socialism discovered by Ludwig von Mises, which is also fully applicable to the current, wrongly designed and heavily regulated banking system.

The Specific Features of the 2008 Financial Crisis and the Current Economic Recession

The expansionary cycle that has now come to a close was set in motion when the American economy emerged from its last recession in 2001, and the Federal Reserve embarked again on a major artificial expansion of credit and investment — an expansion unbacked by a parallel increase in voluntary household saving. In fact, for several years the money supply in the form of banknotes and deposits has been growing at an average rate of over 10 percent per year (which means that every seven years the total volume of money circulating in the world has doubled).

The media of exchange originating from this severe fiduciary inflation have been placed on the market by the banking system as newly created loans granted at extremely low (and even negative in real terms) interest rates. This fueled a speculative bubble in the shape of a substantial rise in the prices of capital goods, real-estate assets, and the securities that represent them and are exchanged on the stock market, where indexes soared.

Curiously enough, like in the "roaring" years prior to the Great Depression of 1929, the shock of monetary growth has not significantly influenced the unit prices of the subset of consumer goods and services (which are only approximately one third of the total number of goods that are exchanged in the market). The last decade, like the 1920s, has seen a remarkable increase in productivity as a result of the introduction, on a massive scale, of new technologies and significant entrepreneurial innovations which, were it not for the "money and credit injection," would have given rise to a healthy and sustained reduction in the unit price of the goods and services all citizens consume.

Moreover, the full incorporation of the economies of China and India into the globalized market has gradually raised the real productivity of consumer goods and services even further. The absence of a healthy "deflation" in the prices of consumer goods in a stage of such considerable growth in productivity as that of recent years provides the main evidence that the monetary shock has seriously disturbed the whole economic process. And let us remember the antideflationist hysteria of those who, even during the years of the bubble, used the slightest symptoms of this healthy deflation to justify even greater doses of credit expansion.

As we have already seen, artificial credit expansion and the (fiduciary) inflation of media of exchange offer no shortcut to stable and sustained economic development, no way of avoiding the necessary sacrifice and discipline behind all high rates of voluntary saving. (In fact, before the crisis, and particularly in the United States, voluntary saving not only failed to increase, but even fell to a negative rate for several years.)

The specific factors that trigger the end of the euphoric monetary "binge" and the beginning of the recessionary "hangover" are many and they can vary from one cycle to another. In this crisis, the most obvious triggers were, first, the rise in the price of commodities and raw materials, particularly oil; second, the subprime-mortgage crisis in the United States, and finally, the failure of important banking institutions when it became clear in the market that the value of their debts exceeded that of their assets (mainly mortgage loans erroneously granted).

If we consider the level of past credit expansion and the quality and volume of malinvestment produced by it, we could say that very probably in this cycle the economies of the European Monetary Union are in comparison in a somewhat less poor state (if we do not consider the relatively greater Continental European rigidities, particularly in the labor market, which tend to make recessions in Europe longer and more painful).

The expansionary policy of the European Central Bank, though not free of grave errors, has been somewhat less irresponsible than that of the Federal Reserve. Furthermore, fulfillment of the convergence criteria for the monetary union involved at the time a healthy and significant rehabilitation of the chief European economies. Only some countries on the periphery, like Ireland and Spain, were immersed in considerable credit expansion from the time they initiated their processes of convergence.

The case of Spain is paradigmatic. The Spanish economy underwent an economic boom, which, in part, was due to real causes (like the liberalizing structural reforms which originated with José María Aznar's administration). Nevertheless, the boom was also largely fueled by an artificial expansion of money and credit, which grew at a rate nearly three times the corresponding rates in France and Germany.

Spanish economic agents essentially interpreted the decrease in interest rates that resulted from the convergence process in the easy-money terms traditional in Spain: a greater availability of easy money and mass requests for loans from Spanish banks (mainly to finance real estate speculation), loans that Spanish banks granted by creating the money ex nihilo, while European central bankers looked on unperturbed. Once the crisis hit Spain, the readjustment was quick and efficient: in less than a year more than 150,000 companies — mainly related to the building sector — have disappeared, almost five million workers who were employed in the wrong sectors have been dismissed, and nowadays we can conclude that although still very weak, the economic body of Spain has been already healed. We will later come back to the subject of what economic policy is most appropriate to the current circumstances. But before that, let us make some comments on the influence of the new accounting rules on the current economic and financial crisis.

The Negative Influence of the New Accounting Rules

We must not forget that a central feature of the long-past period of artificial expansion was a gradual corruption, on the American continent as well as in Europe, of the traditional principles of accounting as practiced globally for centuries.

To be specific, acceptance of the international accounting standards (IAS) and their incorporation into law in most countries have meant the abandonment of the traditional principle of prudence and its replacement by the principle of "fair value" in the assessment of the value of balance sheet assets, particularly financial assets.

"100 percent reserve banking is the only system compatible with the general principles of the law of property rights."

In fact, during the years of the "speculative bubble," this process was characterized by a feedback loop: rising stock-market values were immediately entered into the books, and then such accounting entries were sought as justification for further artificial increases in the prices of financial assets listed on the stock market.

It is easy to realize that the new accounting rules act in a procyclic manner by heightening volatility and erroneously biasing business management: in times of prosperity, they create a false "wealth effect" which prompts people to take disproportionate "risks"; when, from one day to the next, the errors committed come to light, the loss in the value of assets immediately decapitalizes companies, which are obliged to sell assets and attempt to recapitalize at the worst moment, when assets are worth the least and financial markets dry up.

Clearly, accounting principles which have proven so disturbing must be abandoned as soon as possible, and the accounting reforms recently enacted must be reversed. This is so not only because these reforms mean a dead end in a period of financial crisis and recession, but especially because it is vital that in periods of prosperity we stick to the principle of prudence in valuation, a principle which has shaped all accounting systems from the time of Luca Pacioli at the beginning of the 15th century till the adoption of the false idol of the International Accounting Rules.

It must be emphasized that the purpose of accounting is not to reflect supposed "real" values (which in any case are subjective and which are determined and vary daily in the corresponding markets) under the pretext of attaining a (poorly understood) "accounting transparency." Instead, the purpose of accounting is to permit the prudent management of each company and to prevent capital consumption, as Hayek already established as early as 1934 in his article "The Maintenance of Capital" (Hayek 1934).

This requires the application of strict standards of accounting conservatism (based on the prudence principle and the recording of either historical cost or market value, whichever is lower), standards which ensure at all times that distributable profits come from a safe surplus that can be distributed without in any way endangering the future viability and capitalization of each company.

Who Is Responsible for the Current Situation?

Of course, the spontaneous order of the unhampered market is not responsible for the current situation. And one of the most typical consequences of every past crisis, and of course of this current one, is that many people are blaming the market and firmly believing that the recession is a "market failure" that requires more government intervention.

The market is a process that spontaneously reacts in the way we have seen against the monetary aggression of the bubble years, which consisted of a huge credit expansion that was not only allowed but even orchestrated and directed by central banks, which are the institutions truly responsible for all the economic sufferings from the crisis and recession that are affecting the world. And paradoxically central banks have been able to present themselves to the general public not only as indignant victims of the list of ad hoc scapegoats they have been able to put together (stupid private bankers, greedy managers receiving exorbitant bonuses, etc.), but also as the only institutions that, by bailing out the banking system as a last resort, have avoided a much greater tragedy.

In any case, it is crystal clear that the world monetary and banking system has chronically suffered from wrong institutional design at least since Peel's bank act of 1844. There is no free market in the monetary and banking system but just the opposite: private money has been nationalized, legal-tender rules introduced, a huge mess of administrative regulations enacted, the interest rate manipulated, and most importantly, everything is directed by a monetary central-planning agency: the central bank.

In other words, real socialism, represented by state money, central banks, and financial administrative regulations, is still in force in the monetary and credit sectors of the so-called free-market economies.

As a result of this fact we experience regularly in the area of money and credit all the negative consequences established by the theorem of the impossibility of socialism discovered by those distinguished members of the Austrian School of economics, Ludwig von Mises and Friedrich Hayek.

Specifically, the central planners of state money are unable to know, to follow, or to control the changes in both the demand for and supply of money. Furthermore, as we have seen, the whole financial system is based on the legal privilege given by the state to private bankers, who can use a fractional-reserve ratio with respect to the demand deposits they receive from their customers. As a result of this privilege, private bankers are not true financial intermediaries, but are mainly creators of deposits materializing in credit expansions that inevitably end in crisis and recession.

The most rigorous economic analysis and the coolest, most balanced interpretation of past and recent economic and financial events lead inexorably to the conclusion that central banks (which, again, are true financial central-planning agencies) cannot possibly succeed in finding the most convenient monetary policy at every moment. This is exactly the kind of problem that became evident in the case of the failed attempts to plan the former Soviet economy from above.

To put it another way, the theorem of the economic impossibility of socialism, which the Austrian economists Ludwig von Mises and Friedrich A. Hayek discovered, is fully applicable to central banks in general, and to the Federal Reserve and (at one time) Alan Greenspan and (currently) Ben Bernanke in particular. According to this theorem, it is impossible to organize any area of the economy and especially the financial sector, via coercive commands issued by a planning agency, since such a body can never obtain the information it needs to infuse its commands with a coordinating nature. This is precisely what I analyze in chapter 3 of my book on Socialism, Economic Calculation, and Entrepreneurship, which has been published by Edward Elgar in association with the Institute of Economic Affairs, and which we present today (Huerta de Soto, 2010b).

Indeed, nothing is more dangerous than to indulge in the "fatal conceit" — to use Hayek's useful expression (Hayek, 1990) — of believing oneself omniscient or at least wise and powerful enough to be able to keep the most suitable monetary policy fine-tuned at all times. Hence, rather than softening the most violent ups and downs of the economic cycle, the Federal Reserve and, to a lesser extent, the European Central Bank, have been their main architects and the culprits in their worsening.

Therefore, the dilemma facing Ben Bernanke and his Federal Reserve Board, as well as the other central banks (beginning with the European Central Bank), is not at all comfortable. For years they have shirked their monetary responsibility, and now they find themselves up a blind alley. They can either allow the recessionary process to follow its course, and with it the healthy and painful readjustment, or they can escape forward toward a "renewed inflationist" cure. With the latter, the chances of an even more severe recession (even stagflation) in the not-too-distant future increase dramatically. (This was precisely the error committed following the stock market crash of 1987, an error which led to the inflation at the end of the 1980s and concluded with the sharp recession of 1990–1992.)

Furthermore, the reintroduction of the artificially cheap-credit policy at this stage could only hinder the necessary liquidation of unprofitable investments and company reconversion. It could even wind up prolonging the recession indefinitely, as happened in the case of the Japanese economy, which, though all possible interventions have been tried, has ceased to respond to any stimulus involving either monetarist credit expansions or Keynesian methods.

It is in this context of "financial schizophrenia" that we must interpret the "shots in the dark" fired in the last two years by the monetary authorities (who have two totally contradictory responsibilities: both to control inflation and to inject all the liquidity necessary into the financial system to prevent its collapse). Thus, one day the Fed rescues Bear Stearns, AIG, Fannie Mae, Freddie Mac or City Group, and the next it allows Lehman Brothers to fail, under the amply justified pretext of "teaching a lesson" and refusing to fuel moral hazard.

Finally, in light of the way events were unfolding, the US and European governments launched multibillion-dollar plans to purchase illiquid (that is, worthless) assets from the banking system, or to monetize the public debt, or even to buy bank shares, totally or partially nationalizing the private banking system. And considering all that we have seen, what are now the possible future scenarios?

Possible Future Scenarios and the Most Appropriate Economic Policy

Theoretically, under the wrongly designed current financial system, once the crisis has hit we can think of four possible scenarios:

The first scenario is the catastrophic one in which the whole banking system based on a fractional reserve collapses. This scenario seems to have been avoided by central banks, which, acting as lenders of last resort, are bailing out private banks whenever it is necessary.

The second scenario is just the opposite of the first one, but equally tragic: it consists of an "inflationist cure" so intense that a new bubble is created. This forward escape would only temporarily postpone the solution of the problems at the cost of making them far more serious later (this is precisely what happened in the crisis of 2001).

The third scenario is what I have called the "Japanization" of the economy: it happens when the reintroduction of the cheap-credit policy together with all conceivable government interventions entirely blocks the spontaneous market process of liquidation of unprofitable investments and company reconversion. As a result, the recession is prolonged indefinitely and the economy does not recover and ceases to respond to any stimulus involving monetarist credit expansions or Keynesian methods.

The fourth and final scenario is currently the most probable one: it happens when the spontaneous order of the market, against all odds and despite all government interventions, is finally able to complete the microeconomic readjustment of the whole economy and the necessary reallocation of labor and the other factors of production toward profitable lines based on sustainable new investment projects.

In any case, after a financial crisis and an economic recession have hit it is necessary to avoid any additional credit expansion (apart from the minimum monetary injection strictly necessary to avoid the collapse of the whole fractional-reserve-banking system). And the most appropriate policy would be to liberalize the economy at all levels (especially in the labor market) to permit the rapid reallocation of productive factors (particularly labor) to profitable sectors. Likewise, it is essential to reduce public spending and taxes, in order to increase the available income of heavily indebted economic agents who need to repay their loans as soon as possible.

Economic agents in general and companies in particular can only rehabilitate their finances by cutting costs (especially labor costs) and paying off loans. Essential to this aim are a very flexible labor market and a much more austere public sector. These measures are fundamental if the market is to reveal as quickly as possible the real value of the investment goods produced in error and thus lay the foundation for a healthy, sustainable economic recovery.

However, once the economy recovers (and in a sense, the recovery begins with the crisis and the recession themselves, which mark the discovery by the market of the errors committed and the beginning of the necessary microeconomic readjustment), I am afraid that, as has happened in the past again and again, no matter how careful central banks may be in the future (can we expect them to have learned their lesson? For how long will they remember what happened?), nor how many new regulations are enacted (as in the past all of them and especially Basel II and III have attacked only the symptoms but not the true causes), sooner or later new cycles of credit expansion, artificial economic boom, financial crisis and economic recession will inevitably continue affecting us until the world financial and banking systems are entirely redesigned according to the general principles of private-property law that are the essential foundation of the capitalist system and that require a 100 percent reserve for any demand-deposit contract.

Conclusion

I began this lecture with Peel's bank act, and I will also finish with it. On June 13 and 24, 1844, Robert Peel pointed out in the House of Commons that in each one of the previous monetary crises "there was an increase in the issues of country bank paper" and that "currency without a basis … only creates fictitious value, and when the bubble bursts, it spreads ruin over the country and deranges all commercial transactions."

Today, 166 years later, we are still suffering from the problems that were already correctly diagnosed by Robert Peel. And in order to solve them and finally reach the only truly free and stable financial and monetary system that is compatible with a free-market economy in this 21st century, it will be necessary to take the following three steps:

First, to develop and culminate the basic concept of Peel's bank act by also extending the prescription of a 100 percent reserve requirement to demand deposits and equivalents. Hayek states that this radical solution would prevent all future crises (Hayek 1984, p. 29) as no credit expansions would be possible without a prior increase in real genuine saving, making investments sustainable and fully matched with prior voluntary savings. And I would add to Hayek's statement the most important fact, that 100 percent banking is the only system compatible with the general principles of the law of property rights that are indispensable for the capitalist system to work: there is no reason to treat deposits of money differently from any other deposit of a fungible good, such as wheat or oil, in which nobody doubts the need to keep the 100 percent reserve requirement.

In relation to this first step of the proposed reform it is most encouraging to see how two Tory MPs, Douglas Carswell and Steve Baker, were able to introduce in the British Parliament on September the 15th and under the 10-minute rule the first reading of a Bill to reform the banking system extending the prescriptions of Peel's bank act to demand deposits. This Bank Customer Choice Disclosure and Protection Bill will be discussed in its second reading, three weeks from now, on November the 19th, and has two goals: first, to fully and effectively defend citizens' right of ownership over money they have deposited in checking accounts at banks; and second, to once and for all put an end to the recurrent cycles of artificial boom, financial crisis, and economic recession.

Of course, this first draft of the bill still needs to be completed with some important details, for instance the time period (let us say a month) under which all deposits should be considered demand deposits for storage and not for investment, and any contract that guarantees full availability of its nominal value at any moment should be considered at all effects a demand deposit for storage. But the mere discussion of these matters in the British Parliament and by the public at large is, in itself, of huge importance.

In any case it is exciting that a handful of MPs have taken this step against the tangle of vested interests related to the current privileged fractional-reserve-banking system. If they are successful in their fight against what we could call the current "financial slavery" that grips the world they will go down in history like William Wilberforce — with the abolition of the slave trade — and other outstanding British figures to which the whole world owes so much.

Second, if we wish to culminate the fall of the Berlin wall and get rid of the real socialism that still remains in the monetary and credit sector, a priority would be the elimination of central banks, which would be rendered unnecessary as lenders of last resort if the above 100 percent reserve reform is introduced, and harmful if they insist on continuing to act as financial central-planning agencies.

And third, who will issue the monetary base? Maurice Allais, the French Nobel Prize winner who passed away two weeks ago, proposed that a Public Agency print the public paper money at a rate of increase of 2 percent per year. I personally do not trust this solution, as any emergency situation in the state budget would be used, as in the past, as a pretext for issuing additional doses of fiduciary media. For this reason, and this is probably my most controversial proposal, in order to put an end to any future manipulation of our money by the authorities, what is required is the full privatization of the current, monopolistic, and fiduciary state-issued paper base money, and its replacement with a classic, pure gold standard.

There is an old Spanish saying: "A grandes males, grandes remedios." In English, "great problems require radical solutions." And though of course any step toward these three measures would significantly improve our current economic system, it must be understood that the reforms proposed and taken by governments up to now (including Basel II and III) are nervously attacking only the symptoms but not the real roots of the problem, and precisely for that reason they will again miserably fail in the future.

Meanwhile, it is encouraging to see how a growing number of scholars and private institutions like the Cobden Centre, under the leadership of Toby Baxendale, are studying again not only the radical reforms required by a truly honest private money, but also very interesting proposals for a suitable transition to a new banking system, like the one I develop in chapter 9 of my book on Money, Bank Credit, and Economic Cycles. By the way, in this chapter I also explain a most interesting byproduct of the proposed reform, namely the possibility it offers of paying off, without any cost nor inflationary effects, most of the existing public debt, which in the current circumstances is a very worrying and increasingly heavy burden in most countries.

Briefly outlined, what I propose, and the Cobden Centre has developed in more detail for the specific case of the United Kingdom, is to print the paper banknotes necessary to consolidate the volume of demand deposits that the public decides to keep in the banks. In any case, the printing of this new money would not be inflationary, as it would be handed to banks and kept entirely sterilized, so to speak, as 100 percent asset collateral of bank liabilities in the form of demand deposits. In this way, the basket of bank assets (loans, investments, etc.) that are currently backing the demand deposits would be "freed," and what I propose is to include these "freed" assets in mutual funds, swapping their units at their market value for outstanding treasury bonds.

In any case, an important warning must be given: naturally, and one must never tire of repeating it, the solution proposed is only valid in the context of an irrevocable decision to reestablish a free-banking system subject to a 100 percent reserve requirement on demand deposits. However, no matter how important this possibility is considered to be under the current circumstances, we must not forget it is only a byproduct (of "secondary" importance) compared to the major reform of the banking system we have outlined.

And now to conclude, should in this 21st century a new Robert Peel be able to successfully push for all these proposed reforms, this great country of the United Kingdom would again render an invaluable service not only to itself but also to the rest of the world.

References
Hayek, Friedrich A. (1937), "Investment that Raises the Demand for Capital", Review of Economics and Statistics, 19, no. 4. Reprinted in Profits, Interest and Investment, pp. 73-82.

Hayek, Friedrich A. (1948), "The Ricardo Effect" in Individualism and Economic Order, Chicago: University of Chicago Press, pp. 250-54.

Hayek, Friedrich A. (1975), "The 'Paradox' of Saving" in Profits, Interest, and Investment and other Essays on the Theory of Industrial Fluctuations, Clifton, N.J.: Augustus M. Kelly.

Hayek, Friedrich A. (1978), "Three Elucidations of the Ricardo Effect" in New Studies in Philosophy, Politics, and the History of Ideas, London: Routledge and Kegan Paul, pp. 165-78.

Hayek, Friedrich A. (1984), "The Monetary Policy of the United States after the Recovery from the 1920 Crisis," Chapter 1 in Money, Capital, and Fluctuations: Early Essays, R.M. McCloughry, ed., Chicago: University of Chicago Press.

Hayek, Friedrich A. (1990), The Fatal Conceit: The Errors of Socialism, W.W. Bartley, III (ed.), London: Routledge and Chicago, Il.: The University of Chicago Press.

Huerta de Soto, Jesús (2009), Money, Bank Credit, and Economic Cycles, Auburn, Al.: Mises Institute (Second English edition). First Spanish edition, 1998.

Huerta de Soto, Jesús (2010a), The Theory of Dynamic Efficiency, London and New York: Routledge.

Huerta de Soto, Jesús (2010b), Socialism, Economic Calculation, and Entrepreneurship, Cheltenham, UK and Northampton, Massachusetts, USA: Edward Elgar.

Mises, Ludwig von (1980), The Theory of Money and Credit, Indianapolis, Ind.: Liberty Classics. First German edition 1912, Second German edition, 1924.

Jesús Huerta de Soto, professor of economics at the Complutense University of Madrid, is Spain's leading Austrian economist. As an author, translator, publisher, and teacher, he also ranks among the world's most active ambassadors for classical liberalism. He is the author of Money, Bank Credit, and Economic Cycles. Send him mail. See Jesus Huerta de Soto's article archives.. Comment on the blog.