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Government Monopoly Money vs. Personal Choice in Currency
GOVERNMENT MONOPOLY MONEY VS. PERSONAL CHOICE IN CURRENCY For more than two hundred years, practically all of even the most free market advocates have assumed that money and banking were different from other types of goods and markets. From Adam Smith to Milton Friedman, the presumption has been competitive markets and free consumer choice are […]
The Velocity of Money Myth
THE VELOCITY OF MONEY MYTH Effect of changes in money supply on economic activity and prices is a velocity of money. It is alleged that when the velocity of money rises, all other thing being equal, the buying power of money declines ie the prices of goods and services rise. The opposite occurs when velocity […]
Does the Price of Oil Determine General Increases in the Prices of Goods and Services?
DOES THE PRICE OF OIL DETERMINE GENERAL INCREASES IN THE PRICES OF GOODS AND SERVICES? A very good visual correlation between the yearly percentage change in the consumer price index (CPI) and the yearly percentage change in the price of oil seems to provide support to the popular thinking that future changes in price inflation […]
Fed’s Policy of Price Stability Results in More Instability
FED’S POLICY OF PRICE STABILITY RESULTS IN MORE INSTABILITY For most economists the key factor that sets the foundation for healthy economic fundamentals is a stable price level as depicted by the consumer price index. According to this way of thinking, a stable price level doesn’t obscure the visibility of the relative changes in the […]
The Mystery Behind Economic Growth
THE MYSTERY BEHIND ECONOMIC GROWTH With sound money and free markets, the evolving production of businesses increases the purchasing power of money over time. We learn, out of the blue, that “the Eurozone is performing well, but with opinions divided on the causes, doubts linger over whether it is a sustainable recovery” (Daily Telegraph, 19 […]
Give Us Another Oil Boom
GIVE US ANOTHER OIL BOOM Dear Lord, Y’all give us another oil boom… If there is one sector of the US economy where an Austrian-style Boom-and-Bust bust has taken place, it is the onshore oil industry – though, by extension, other primary resource industries, such as metals and mining and farming have also suffered in […]
Yellen’s Balance Sheet Baloney
YELLEN’S BALANCE SHEET BALONEY Of the many questions reporters asked Janet Yellen on Wednesday, at her press conference following the FOMC’s decision to raise the Fed’s policy rates, my favorite was the very first, posed by the Financial Times‘ U.S. Economics Editor, Sam Fleming. Here is Mr. Fleming’s question: [You’ve stated that the Fed wants to […]
For Keynesians and Austrians, ‘Uncertainty’ Means Two Different Things
FOR KEYNESIANS AND AUSTRIANS, “UNCERTAINTY” MEANS TWO DIFFERENT THINGS Keynesian economics has witnessed a remarkable resurgence since the crisis of 2008. The inability of mainstream economics to predict or explain the crisis led many economists to become skeptical of its core macroeconomic tenets. Several have turned the clock back to the ideas of Keynes to […]
Why Free Trade is Officially Dead
WHY FREE TRADE IS OFFICIALLY DEAD G20 Finance ministers meeting in Baden Baden last weekend agreed, on America’s insistence, to drop the long-standing commitment to free trade from the final communiqué. It is hard to know to what extent America’s position is driven by her autarkic view on world trade, or to what extent it […]
Can Yellen Keep the Boom Going?
CAN YELLEN KEEP THE BOOM GOING? Yellen, like notorious previous Fed chiefs including Strong, Martin, and Greenspan, can now claim success in having prolonged and strengthened an asset price inflation which otherwise may well have been about to enter its severe end phase. If history is any guide, the result of that success is to […]
Faking It
FAKING IT Thanks to the election of President Trump and his uncompromising attitude to the establishment media, much hot air is being expended on the subject of ‘fake news’. Those being so exercised seem unable to stop and wonder when such news has NOT been, shall we say, ‘nuanced’. In Napoleon’s day, a well-worn figure […]
True Free Trade vs. ‘Free Trade Deals’: The Misappropriation of Freedom
TRUE FREE TRADE VS. ‘FREE TRADE DEALS’: THE MISAPPROPRIATION OF FREEDOM One of the most frustrating aspect of those trade negotiations that are sold as ‘Free Trade Deals’ is that they are not truly ‘Free Trade’ and, instead, they are just selective liberalisations that work to enrich particular interests, that increase the disparities between those […]
President-elect Trump stated in his victory speech that he intends to make America great again by infrastructure spending.
President-elect Trump stated in his victory speech that he intends to make America great again by infrastructure spending. Unfortunately, he is unlikely to have the room for manoeuvre to achieve this ambition as well as his intended tax cuts, because the Government’s finances are already in a perilous state. It is also becoming increasingly likely […]
A History of Fractional Reserve Banking–Or Why Interest Rates Are the Most Important Influence on Stock Market Valuations? Part 1
A HISTORY OF FRACTIONAL RESERVE BANKING – OR WHY INTEREST RATES ARE THE MOST IMPORTANT INFLUENCE ON STOCK MARKET VALUATIONS? PART 1 William Hogarth – The South Sea Bubble The South Sea Company was founded in 1711. The company was part of the treaty during the War of Spanish Succession, which was traded in return […]
Central Banks May Choose Helicopter Money Over Negative Rates
CENTRAL BANKS MAY CHOOSE HELICOPTER MONEY OVER NEGATIVE RATES The US Federal Reserve (Fed) is considering raising rates. Is the “normalization” of interest rates about to happen which savers and investors have been yearning for? Most likely not. Policymakers are merely realizing that the policy of zero rates — or even negative rates as in the euro […]
