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Economic Thought in Ancient Greece
ECONOMIC THOUGHT IN ANCIENT GREECE The intellectual odyssey that laid the foundations for Western civilization began in classical Greece. Unfortunately, Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order and of the dynamic process of social cooperation which surrounded them. While we must acknowledge the important Greek contributions […]
We Should Ditch GDP as a Measure of Economic Activity
WE SHOULD DITCH GDP AS A MEASURE OF ECONOMIC ACTIVITY This article exposes the false economic concepts behind GDP, which is only the visible tip of a large iceberg of economic deceit. Describing an increase in GDP as economic growth owes its meagre validity to imprecise definition. An economy does not grow, only the quantity […]
Can Consumer Surveys Help Ascertaining the Future Course of an Economy?
CAN CONSUMER SURVEYS HELP ASCERTAINING THE FUTURE COURSE OF AN ECONOMY? In order to gain insight into the future state of an economy, many economists refer to a variety of consumer and business surveys. Randomly selected consumers and businessmen are asked to provide their views about where the economy is heading. Thus if a survey […]
Strong GDP Data and Individuals’ Wellbeing
STRONG GDP DATA AND INDIVIDUALS’ WELLBEING In the New York Times September 14 2018 in an article – We’re Measuring The Economy All Wrong, the writer of the article David Leonhardt complains that despite strong gross domestic product data (GDP) most people don’t feel it. The writer of the article argues that, The trouble is […]
Happy Anniversary
HAPPY ANNIVERSARY “They have learned nothing, and forgotten nothing.” Attributed to Talleyrand. Since everybody else in financial media has been indulging in an orgy of self-reflection, selective recollection and brazen virtue-signalling on the back of the 10 year anniversary of Lehman Brothers’ bankruptcy in September 2008, and in steadfast keeping with our principle of ‘no […]
Why the Fed Denied the Narrow Bank
WHY THE FED DENIED THE NARROW BANK It’s not every day that a clear example showing the horrors of central planning comes along—the doublethink, the distortions, and the perverse incentives. It’s not every year that such an example occurs for monetary central planning. One came to the national attention this week. A company called TNB […]
The Fed and Asset Bubbles
THE FED AND ASSET BUBBLES In his speech on April 7 2010 at the Economic Club of New York the President of the New York Fed, William Dudley argued that asset bubbles pose a serious threat to real economic activity. The New York Fed chief is of the view that the US central bank should […]
Interest Rates Need to Tell the Truth
INTEREST RATES NEED TO TELL THE TRUTH In the middle of July 2018, President Donald Trump said in an interview that he was “not happy” with the Federal Reserve nudging up interest rates and threatening economic growth in the United States. At the recent Jackson Hole, Wyoming, meeting of global central bank leaders, the Federal […]
Fiscal Stimulus and Economic Growth–Are They Related?
FISCAL STIMULUS AND ECONOMIC GROWTH – ARE THEY RELATED? For most experts a key factor that policy makers should be watching is the gap between the actual real output and the potential real output. The potential output is the maximum output that the economy could attain if all the resources are used efficiently. The gap […]
Economic Armaments and China’s Global Ambitions
ECONOMIC ARMAMENTS AND CHINA’S GLOBAL AMBITIONS The world continues to move in potentially dangerous directions. A leading component of this threat is the use of economic armaments by governments to gain political and market advantages in their foreign relations with other countries. Among the leading participants in the use of such economic armaments is the […]
John Law–300 Years On
JOHN LAW – 300 YEARS ON Most people are aware that historically there have been speculative bubbles. Some of them can even name a few – the South Sea bubble, tulips, and more recently dot-coms. Some historians can go even further, quoting the famous account by Charles Mackay of the South Sea bubble, the tulip […]
Monetary Consequence of Tariffs
MONETARY CONSEQUENCE OF TARIFFS Last week in Monetary Paradigm Reset, we talked about the challenge of explaining a new paradigm. We said: “The hard part of accepting this paradigm shift, was that people had to rethink their entire view of cosmology, theology, and philosophy. In the best case, people take time to grapple with these challenges […]
Did Russia Really Dump Its U.S. Debt?
DID RUSSIA REALLY DUMP ITS U.S. DEBT? Russia dumped 84% of its American debt,” blared a July CNN headline. Russian central-bank head Elvira Nabiullina said the sales were just part of “diversifying the entire structure of currencies.” But with the U.S. dollar accounting for two-thirds of global foreign-exchange reserves and most (non-intra-eurozone) international trade, dumping this much dollar debt […]
What Causes the Acceptance of Paper Money?
WHAT CAUSES THE ACCEPTANCE OF PAPER MONEY? Demand for a good arises because of its perceived benefit. For instance, people demand food because of the nourishment it offers them. This is however not so, with regard to the pieces of paper we call money – why do we accept them? Following the view of Plato […]
The Fed and Interest Rates
THE FED AND INTEREST RATES Most experts agree that through the manipulation of short-term interest rates, the central bank by means of expectations regarding future interest rate policy can also dictate the direction of long-term interest rates. On this way of thinking expectations regarding future short-term interest rates are instrumental in setting the long-term rates. […]
