(O)ne needs to understand capital theory, as pioneered by Carl Menger and Eugen von Böhm-Bawerk, in order to make sense of what the heck just happened in the US economy. Any talking head on CNBC who doesn't understand capital consumption is going to give horrible policy recommendations.
When thinking about this article, I went back and forth. I have decided that I should spell out a "model" of intermediate complexity, because if I simplify it too much, it might not really click with the reader, but if I go overboard with it, no one in his right mind would finish the article. Without further ado, let's examine a hypothetical island economy composed of 100 people, where the only consumption good is rolls of sushi.
Robert Murphy explains the Austrian school of capital theory with an example using sushi rolls.
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