Scott Horton Show - Just the Interviews 12/11/25 Bob Murphy on How Central Banking Fuels the War State
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Dec 17, 2025 Bob Murphy, an Austrian-school economist and Senior Fellow at the Mises Institute, dives into how the Federal Reserve finances wars through inflation and debt monetization. He critiques Modern Monetary Theory, arguing taxation remains crucial to curb inflation. They discuss the implications of dollar dominance, the potential for stablecoins, and the intricate geopolitical motives behind U.S. actions in Venezuela. Murphy also addresses the housing affordability crisis, influenced by Fed policies, and explores the trade-offs of monetary reform versus short-term pain in pursuit of stability.
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Central Banking Fuels The War State
- Central banking enables sustained large-scale warfare by letting governments finance wars through inflation and monetization.
- A hard-money constraint (like gold) would limit war-making by forcing governments to face real financing limits.
Why Bretton Woods' End Sparked Inflation
- The Bretton Woods collapse and the 1970s inflation followed removing gold constraints and expanding dollar supply.
- The petrodollar deal with Saudi Arabia helped preserve dollar demand, but it's only one element propping the dollar's global role.
Tech Could Undermine Dollar Dominance
- Stablecoin and blockchain infrastructure could reduce switching costs and erode dollar dominance over time.
- Digital alternatives make it easier for countries and firms to adopt non-dollar settlement tools when political will aligns.