Home » Posts tagged 'dr. richard m. ebeling'

Tag Archives: dr. richard m. ebeling

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

Central Banking is Central Planning

April 29, 2019

CENTRAL BANKING IS CENTRAL PLANNING

At a time when the appeal of and demands for a new “democratic” socialism seem to have caught the imagination of many among the young and are reflected in the promises of a good number of political candidates running for high office, there is one already-existing socialist institution in America with few opponents: the Federal Reserve System.

The fact is, central banking is a form of central planning. The Federal Reserve has a legal monopoly over the monetary system of the United States. It plans the quantity of money in circulation and its availability for lending purposes; and it sets a target for the annual rate of price inflation (currently around 2 percent), while also intentionally influencing interest rates, affecting investment spending, and supporting full employment. Almost all discussions and debates concerning the Federal Reserve revolve around how it should undertake its monetary central planning: which policy tools should be used, what target goals should be aimed for, and who should be in charge of directing America’s central bank.

Federal Reserve Independence in the Trump Era

A complementary issue that has received renewed attention concerns the question of how much “independence” the Federal Reserve and other central banks should have to determine and implement monetary and interest rate policy. This has recently come to the fore due to comments made by President Donald Trump concerning Federal Reserve interest rate policy and the individuals he has recently proposed for positions on the Federal Reserve Board of Governors.

Several times over the last year, President Trump has expressed irritation and frustration with increases in market rates of interest under the Federal Reserve Board leadership of Jerome Powell, who Trump nominated for Fed chairman and who has held that position since February 2018.

 …click on the above link to read the rest of the article…

The Dangers of Negative Interest Rates and a Cashless Economy

January 25, 2019

THE DANGERS OF NEGATIVE INTEREST RATES AND A CASHLESS ECONOMY

The recent gyrations in the stock market and the uncertainties surrounding American trade policies with China and other parts of the world have raised the question of when the next recession will inevitably follow the current economic recovery from the 2008-9 financial crisis. In the face of a future economic downturn, some economic policy analysts are already making the case for central banks to use negative interest rates to dampen and shorten the impact of any economy-wide decline in output and employment that may be ahead.

Not surprisingly, much of the speculation concerning the power of government to mitigate, if not prevent, an economic downturn surrounds the usual debates over the potentials of monetary and fiscal policy. Harvard University economist Kenneth Rogoff, in a recent article, “Central Bankers’ Fiscal Constraints” (January 4, 2019), downplays the efficacy of taxing and spending tools, and highlights, instead, the continuing crucial role of monetary policy and interest rate manipulation.

The Limits on Implementing Fiscal Policy

With nominal interest rates in the United States and some other places around the world still at historical lows (even in the face of recent Federal Reserve rate increases), Rogoff points out that many central bankers hope that more direct fiscal policy will carry the weight of countercyclical activities in the face of any serious recession that may come.

But he points out that in the American system of government, there is little immediate flexibility to enable agreement upon and introduction of tax cuts or spending increases that might be effective in holding back the recessionary trends in a timely fashion. Fiscal changes must work their way through and be passed by Congress, then signed by the president, and finally implemented by various government agencies. The entire process normally can take a long time, during which a recession could get increasingly worse.

 …click on the above link to read the rest of the article…

Beyond GDP to a New Road to Serfdom

December 14, 2018

BEYOND GDP TO A NEW ROAD TO SERFDOM

It is a commonplace that there is more to life than money and the material benefits that it may provide someone. We often make trade-offs between income-earning work opportunities and more time with family or friends, or between risky but well-paying employment and a calmer and less stressful job that does not pay as well. We might decide whether it is worth forgoing some amount of personal material wealth for a more pleasant and healthy environment. The question is, Should government be trying to measure and manage these and other things like them, instead of each of us finding the right balance and values for ourselves?

Columbia University professor and Nobel Prize winner in economics Joseph E. Stiglitz thinks that it is more the government’s role to sort these things out, and, by implication, less each of ours as individuals. In a recent article titled “Beyond GDP,” Stiglitz points out that the usual measurements of economy-wide economic well-being fall short and leave out a lot of important things that make up a happy, fulfilling, and better life. Correct and recalibrate the measurements, and government can be trusted to take care of a lot of the rest.

The Meddler Wanting to Manage Society

It is an interesting sociological phenomenon how there seems to be an inexhaustible urge and drive among some people to constantly look for ways and means to remake society into their own preferred image. The idea that it is not the business or the right of such people to tell other people how to live, what values they should prefer, and in what manners they should interact with others never seems to enter their heads, particularly when they wish to use the coercive powers of government to make everyone conform to their vision of how to live. In the past, they sometimes have been called busybodies or meddlers.

…click on the above link to read the rest of the article…

Interest Rates Need to Tell the Truth

September 7, 2018

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 Reserve chair, Jerome (“Jay”) Powell, said the Fed board would continue to act independently of politics and move interest rates up to ensure a stable economy with limited price inflation.

Lost in the exchange was one simple question: should it be the business of any central bank to be targeting or setting interest rates, or should this be the business of the market forces of supply and demand, as with any other price in the economy?

Market Prices Coordinate Supply and Demand

Let’s recall what it is that market-based prices are supposed to do. First, they are meant to bring the two sides of any market into coordinated balance — that is, to bring the buying plans and desires of willing demanders into balance with the producing and selling plans and desires of willing suppliers.

When a price is too high, it means that the amounts of a good that producers are offering on the market are too high for the buyers to be willing and able to purchase all that is being supplied. Facing a surplus of unsold inventories in excess of any planned levels, sellers competitively reduce the price of the good to entice demanders to purchase more.

If the price is too low, it means that the amounts of any good that producers find profitable to offer on the market are less than the quantities that interested and willing buyers would like to purchase. This shortage of a good tends to bring about a competitive bidding up of the price to induce sellers to produce and market more of it.

…click on the above link to read the rest of the article…

Economic Armaments and China’s Global Ambitions

August 31, 2018

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 government of China.

First, what are “economic armaments”? In the 1930s, the term was used in reference to attempts for economic self-sufficiency. For instance, the Swiss classical liberal economist and political scientist William E. Rappard (1883–1958) gave the following definition in a 1936 lecture delivered in London titled “The Common Menace of Economic and Military Armaments”:

By economic armaments we mean all those legislative and administrative devices intended to restrict imports and develop domestic production with a view of reducing international interdependence. Economic armaments are the tools of economic nationalism. Economic nationalism may be defined as the policy of national self-sufficiency.…

As, in spite of all their efforts, all States must continue to import and as none can live on the charity of its neighbors, they must all continue to export in order to secure the foreign exchange necessary for the purchase abroad of what they lack at home. Economic nationalism therefore everywhere recommends both the promotion of exports and the restriction of imports.… Considered from that of the world community, economic nationalism is obviously a self-contradictory policy.

Clearly, today, there are few, if any, proponents of economic nationalism who propose that their respective nations follow a policy of national self-sufficiency. Fortunately, that economic irrationality has not yet experienced a rebirth.

Economic Weaponry for Import and Export Planning

But, nonetheless, governments do attempt to use various economic policy tools — economic weapons — to attain what they consider political and economic advantages for their own nation at the expense of their global rivals.

…click on the above link to read the rest of the article…

TARIFF WARS AND THE FALLACY OF THE BALANCE OF TRADE

July 11, 2018

TARIFF WARS AND THE FALLACY OF THE BALANCE OF TRADE

The world may be on the brink of a series of trade wars between the United States and both the European Union and China. All the parties say they don’t want this — though President has asserted that trade wars are not a problem and easy to win. That remains to be seen!

It may have become a cliché, but we do live in a global economy. The days of actual or attempted national self-sufficiency are long gone. Even in some of the remaining most underdeveloped countries, multitudes of people walk around with cell phones seemingly glued to their ears, communicating with family, friends and business associates a mile away or on the other side of the world.

The clothes that people wear, the music they listen to, the foods they often eat, many of the everyday goods they buy are frequently imported from other continents or from facilities in their own country or region of the world that are owned and operated by international corporations and companies or their local affiliates that serve everyone, everywhere.

An Interconnected and Interdependent World

Manufacturing supply-chains often zig and zag back and forth from one country or continent to another before the final products are ready to be shipped to and sold at the retail stores where the finished goods are offered to ultimate consumers all over our planet. Raw materials are mined or extracted in country “X,” then shipped for refining in country “B,” after which they are sent off to country “C” as an input or component part for the manufacture of a product in country “D,” and then sent on to country “E” for final assembly and finishing up, followed by being shipped off for sale in multitudes of other countries, including those in which these steps in the worldwide stages of the production process have all been undertaken.

…click on the above link to read the rest of the article…

Free Market Capitalism as the Antidote to the World’s Ills

June 29, 2018

FREE MARKET CAPITALISM AS THE ANTIDOTE TO THE WORLD’S ILLS

In following the daily news events both in the United States and around the rest of the world, it is easy to get lost in the detail and not step back once and awhile and remind ourselves what the really important issues are. Under the anxiety of a possible nuclear war in Korea, actual terrorist attacks in the Middle East and by seemingly “lone wolves” in other countries, threats of trade wars, and polarizing trends in politics in many places, the real underlying issue is and remains, how should people live together?

Clearly people are not living as harmoniously, peacefully and prosperously as they could, and many of us believe they should. The question is, why? The sophisticates will say that life, politics, and local and global society are complex. It is just the way it is, and we have to just “muddle through” on a daily basis as best we can.  The dreamers of various sorts will point to racism, class conflict, gender wars, the one true religion, or the transcendent ideological purpose. If only their brand of salvation was established all the problems of the world would go away.

All of these conceptions of the solutions to our problems share one thing in common. They invariably involve someone in society imposing their vision and will on the rest of mankind. This is fairly obvious when we turn to the religious or ideological fanatic. Make the world follow my faith or my political utopia or my ideal of a “socially just” society, and then peace and happiness will reign with an end to all the strife dividing humanity.

Element of Coercion in Proposals to Make a Better World

…click on the above link to read the rest of the article…

The Myth That Central Banks Assure Economic Stability

June 7, 2018

THE MYTH THAT CENTRAL BANKS ASSURE ECONOMIC STABILITY

The world has been plagued with periodic bouts of the economic rollercoaster of booms and busts, inflations and recessions, especially during the last one hundred years. The main culprits responsible for these destabilizing and disruptive episodes have been governments and their central banks. They have monopolized the control of their respective nation’s monetary and banking systems, and mismanaged them. There is really nowhere else to point other than in their direction.

Yet, to listen to some prominent and respected writers on these matters, government has been the stabilizer and free markets have been the disturber of economic order. A recent instance of this line of reasoning is a short article by Robert Skidelsky on “Why Reinvent the Monetary Wheel?” Dr. Skidelsky is the noted author of a three-volume biography of John Maynard Keynes and a leading voice on public policy issues in Great Britain.

Skidelsky: Central Banking Equals Stable Prices and Markets

He argues against those who wish to denationalize and privatize money and the monetary system. That is, he criticizes those who want to take control of money and monetary affairs out of the hands of the government, and, instead, put money and the monetary order back into the competitive, private market. He opposes those who wish to separate money from the State.

Skidelsky sees the proponents of Bitcoin and other “cryptocurrences” as “quacks and cranks.” He says that behind any privatization of the monetary system reflected in these potential forms of electronic money may be seen “the more sordid motives” of “Friedrich Hayek’s dream of a free market in money.”

…click on the above link to read the rest of the article…

Mises the Man and His Monetary Policy Ideas Based on His “Lost Papers”

April 3, 2018

MISES THE MAN AND HIS MONETARY POLICY IDEAS BASED ON HIS “LOST PAPERS”

One day in 1927 Austrian economist, Ludwig von Mises, stood at the window of his office at the Vienna Chamber of Commerce, and looked out over the Ringstrasse (the main grand boulevard that encircles the center of Vienna). He said to his young friend and former student, Fritz Machlup, “Maybe grass will grow there, because our civilization will end.” He also wondered what would become of many of the Austrian School economists in Austria. He suggested to Machlup that, clearly, they would have to immigrate, perhaps, to Argentina, where they might find work in a Buenos Aires nightclub. Friedrich A. Hayek could be employed as the headwaiter, Mises said, while Machlup, no doubt, would be the nightclub’s resident gigolo. But what about Mises? He would have to look for work as the doorman, for what else, Mises asked, would he be qualified to do?

It is worth recalling that in the mid-1920s, Mises had warned of the rise of “national socialism” in Germany, with many Germans, he said, “setting their hopes on the coming of the ‘strong man’ – the tyrant who will think for them and care for them.” He also predicted that if a national socialist regime did come to power in Germany and was determined to reassert German dominance over Europe, it would likely have only one important ally with whom to initially conspire in this new struggle – Soviet Russia. Thus, years before Adolph Hitler came to power, Mises anticipated the Nazi-Soviet Pact to divide up Eastern Europe that set in motion the start of the Second World War in 1939.

Ten years after Mises’s playful 1927 prediction to Fritz Machlup, reality was not that far from what he said. By 1938, many of the Austrian economists had, indeed, emigrated and left their native country.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress