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Dear Editor:
I read Mayor Jensen’s justification for increased borrowing, and also noted that Mayor Brainard justified increased borrowing with the same reasoning: “interest rates are at historic lows.”
I am a follower of the Austrian School of Economics, where Ludwig von Mises, Murray Rothbard, and Nobel Prize winner Friedrich von Hayek have posited the Austrian business cycle theory. This suggests that interest rates set artificially low by a central bank, in our case the Federal Reserve, can lead to a cluster of errors by borrowers because they assume that the pool of real savings is actually deeper than it is, since interest rates naturally occurring help coordinate the timing of economic decisions.
These artificially low interest rates lead to what the Austrian economists refer to as “malinvestment.”
Much of what the Mayors say seem like they are falling into these same errors: “This approach enables Noblesville to accelerate its investment in public infrastructure, economic development projects and quality of life for all residents.”
Maybe these long-dead economists are wrong and our esteemed local mayors are correct, but Mises was right that communism would die on its own in 1920, due to the economic calculation problem.
The mayors continually state we have low taxes, but if their central planning and “investments” were working as well as they posit, not only would the rates remain “low,” but they would actually be dropping, and you would assume so much in fact that actual overall tax bills, accounting for the increased assessed values, would also be dropping precipitously. Neither is true, so I will keep believing more in Mises than Jensen, Cook, Fadness and Brainard.
The only thing that is “positive” from this excessive borrowing are the contributions by cronies to the campaign finance accounts of these snake oil salesmen.
Eric Morris
Carmel