Thursday, 21 September 2017

Monthly Archives May 2010

“Monetary Central Planning and the State”

Posted by Tom Duncan
May 28, 2010
in Blog

The Future of Freedom Foundation has an in-depth history of the debate over a monetary central authority. Dr. Richard Ebeling offers his stunning knowledge on the subject in a 40 part series entitled “Monetary Central Planning and the State”. To read his work, here is a link to the FFF’s Freedom Daily. “Monetary Central Planning […]

Read More

On the EU’s Bank Bailout Fund

Posted by Tom Duncan
May 28, 2010
in Blog

On Wednesday, I posted a Wall Street Journal article on the EU’s plan to levy taxes on banks that would fund a bank bailout system. The article states,  But the commission is adamant that the funds shouldn’t be used to pump capital into banks or for other measures that could benefit bank shareholders and creditors. […]

Read More

Steve Horwitz on Monetary Equilibrium Theory

Posted by Tom Duncan
May 28, 2010
in Blog

“Professor Steve Horwitz gives a talk on Capital and Its Structure to the student of the Advanced Austrian Economics seminar in Irvington, New York.” Listen here.   Mentary Equilibrium Theory Steve Horwitz Advanced Austrian Economics Via the Foundation for Economic Education.   Image by renjith krishnan / FreeDigitalPhotos.net.

Read More

“When Will the Eurozone Collapse?”

Posted by Tom Duncan
May 27, 2010
in Blog

“As a long-standing critic of the concept of a single European currency, I have not rejoiced at the current problems in the eurozone that threaten the very survival of the euro. Before discussing the events surrounding the Greek debt crisis further, I must provide at least a working definition of what the word “collapse” means. […]

Read More

The Recovery Starts With Sound Money – Judy Shelton

Posted by Judy Shelton
May 27, 2010
in Blog

The willingness to work for the sake of future prosperity is a universal human quality, but people must believe there is a link between effort and reward. The euro is beset with fiscal calamities that threaten its downfall, and markets in the U.S. are roiled by uncertainty over the government’s financial regulatory legislation. But don’t […]

Read More

About the Fed

Posted by Tom Duncan
May 27, 2010
in Blog

“How does monetary policy affect the U.S. economy? The point of implementing policy through raising or lowering interest rates is to affect people’s and firms’ demand for goods and services. This section discusses how policy actions affect real interest rates, which in turn affect demand and ultimately output, employment, and inflation. What are real interest […]

Read More

Israel Kirzner on Entrepreneurship

Posted by Tom Duncan
May 27, 2010
in Blog

Israel Kirzner presents an excellent piece on entrepreneurship for the students at the Advanced Austrian Economics seminar hosted by the Foundation for Economic Education. Given today’s regulation of financial markets and other steps taken to “prevent future problems” in the financial and monetary systems, perhaps it is worth questioning what happens to the entrepreneur when […]

Read More

More calls for Keynesian policies

Posted by Alex Chafuen
May 27, 2010
in Blog

Creating fears about declining M3 in order to encourage another round of monetary expansion and government spending? Take a look at http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html . Take a look at these paragraphs written by Ambrose Evans-Pritchard: “It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The […]

Read More

“Free Banking for Zimbabwe”

Posted by Tom Duncan
May 26, 2010
in Blog

“Zimbabwe’s hyperinflation is destroying the economy, pushing more of its inhabitants into poverty and forcing millions of Zimbabweans to emigrate. Since 1997, inflation has surged by 1,030,217%, while living standards (as measured by real GDP per capita) have fallen by 35%. In addition, hyperinflation has robbed people of their savings and financial institutions of their […]

Read More

Free Banking in Britain

Posted by Tom Duncan
May 26, 2010
in Blog

“Free banking, generically speaking, denotes a monetary system without a central bank, under which the issuing of currency is left to private banks. This book explores how this could work in practice by examining how this has worked historically, specifically in the United Kingdom in the early 19th century. After building a theory of free […]

Read More

“EU Proposes Tax to Support Bank Crisis Funds”

Posted by Tom Duncan
May 26, 2010
in Blog

“The European Commission Wednesday proposed that each European Union government levy a tax on its banks and use the proceeds to create a fund dedicated to ensuring the “orderly failure” of troubled banks. The proposal would create a European network of such funds that would follow the same rules, although the commission, the EU’s executive […]

Read More

Budgetary Impact of Fed’s Actions During the Crisis

Posted by Tom Duncan
May 26, 2010
in Blog

“Over the past several years, the nation has experienced its most severe financial crisis since the Great Depression of the 1930s. To stabilize financial markets and institutions, the Federal Reserve System used its traditional policy tools to reduce short-term interest rates and increase the availability of funds to banks, and created a variety of nontraditional […]

Read More

“US exposed to Europe debt woes”

Posted by Tom Duncan
May 26, 2010
in Blog

“A top Federal Reserve official said on Tuesday that European debt woes pose a risk to the US economic recovery, but expressed confidence the danger of contagion was small. ‘It’s hard to see a banking crisis,’ St. Louis Federal Reserve Bank President James Bullard told Reuters Insider in an interview. ‘It might be expensive, there […]

Read More

Good Money

Posted by Tom Duncan
May 25, 2010
in Blog

“This is the true and remarkable story of private coinage and banking in Britain in the early years of the Industrial Revolution (1775-1850). Making money was a business in demand. The needs of business for small denominations were changing. Merchants needed small denomination coins in copper and silver. The Royal Mint couldn’t be bothered. It […]

Read More

“Financial Reform Bill is a ‘Disaster’: Sen. Gregg”

Posted by Tom Duncan
May 25, 2010
in Blog

“The financial regulatory bill is a “disaster,” and its proposed consumer protection agency would create a Fannie and Freddie “on steroids,” Sen. Judd Gregg, R-N.H. told CNBC on Monday. “The bill is a disaster because it doesn’t address the fundamental underlining causes of the economic issue, which were real estate and underwriting,” he said. “This […]

Read More

Hayek on Sound Money

Posted by Alex Chafuen
May 25, 2010
in Blog

Great quote by Hayek: “With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.”

Read More

The Return of Financial Repression?

May 25, 2010
in Blog

Financial repression was used extensively by governments in the post-war period and is still common today in emerging markets such as China. As Cato scholar James Dorn writes in a recently posted commentary, “Financial repression is a hallmark of China’s market socialism.” Given developments in the wake of the financial crisis, the big question is […]

Read More

“Monetary-Policy Disasters of the Twentieth Century”

Posted by Tom Duncan
May 24, 2010
in Blog

“The Federal Reserve System was created in 1913 and soon did what central banks almost always do: it started printing lots of money. During World War I the Bank of England inflated its money supply, and as a result a significant amount of gold flowed out of Great Britain to the United States in the […]

Read More

Less is More

Posted by Tom Duncan
May 21, 2010
in Blog

It’s absolutely mind-boggling to think that Congress can successfully regulate something as complex as the entire financial industry. I don’t believe it for a second. These are the same legislators who just lost billions in TARP funds. These are the same political leaders who directly and purposefully threw money away on failing companies around the […]

Read More

The Fed’s Balance Sheet

May 21, 2010
in Blog

The Wall Street Journal has created a good graphic illustration displaying the development of the Fed’s balance sheet during the financial crisis. Assets on the balance sheet are currently $2.333 trillion, of which the main part consists of mortgage-backed securities, Fannie and Freddie debt and government securities. Some noteworthy developments: During the first phase of […]

Read More

Applying Hayekian Ideas: Leonard Read and I, Money

Posted by Tom Duncan
May 20, 2010
in Blog

“In a recent blog post, Peter Boettke argues that in reading F.A. Hayek it is important to distinguish between Hayek and Hayekianism. Because Hayek, as a lifetime learner, did not always apply his ideas as fully he possibly could have, Hayek the man was at times less willing to take the ideas as far as […]

Read More

“Can the Government Regulate Inflation?”

Posted by Tom Duncan
May 20, 2010
in Blog

“In a recent column, Nobel Prize winning economist Paul Krugman claimed that the government needs to have two important duties in finance. First, it must keep interest rates low; second, it must strictly regulate where the newly created money goes. Now, as one who believes that government cannot simultaneously make water run downhill and uphill, […]

Read More

The Euro – a Greek Drachma in Disguise

May 20, 2010
in Blog

The Euro keeps tumbling as international investors are loosing faith in the Eurozone. The currency has so far fallen 14 percent against the dollar this year. There is fear that contagion could trigger “Greek” debt crises among other EU countries with weakening fiscal positions, and that European banks could realize substantial losses as a result. […]

Read More

“Did Deregulation Cause the Financial Crises?”

Posted by Tom Duncan
May 19, 2010
in Blog

“The growing narrative in Washington is that a decades-long unraveling of the regulatory system allowed and encouraged Wall Street to excess, resulting in the current financial crisis. Left unchallenged, this narrative will likely form the basis of any financial reform measures. Having such measures built on a flawed foundation will only ensure that future financial […]

Read More

“Fed Will Hold Interest Rates – And Inflation Will Rise”

Posted by Tom Duncan
May 19, 2010
in Blog

“Early this year, it was our belief (and forecast) that the Federal Reserve would start lifting interest rates from their current level of near zero by mid-year 2010. Our view has been that 0% interest rates are too low, that the economy would be (and is) in recovery, and that inflationary pressures would continue to […]

Read More

“Financial Regulation Bill Will Hurt Main Street”

Posted by Tom Duncan
May 19, 2010
in Blog

“The U.S. Congress should be forced to take the same oath that doctors take to “first do no harm.” Because more often than not, under the guise of “fixing” a problem, Washington makes things much, much worse for hard-working middle-class families and small businesses. That’s precisely the problem with the financial regulation bill that’s before […]

Read More

“The Great Chinese Inflation”

Posted by Tom Duncan
May 19, 2010
in Blog

“Inflations have undermined the cultural and economic fabric of society, bringing social chaos and revolution. One example is the Great Chinese Inflation of the 1930s and 1940s. Indeed, the destruction of the Chinese monetary system during this period helped Mao Zedong’s communist movement triumph on the Chinese mainland in 1949. In the nineteenth and early […]

Read More

“Greece and GM: Too weak to fail”

Posted by Tom Duncan
May 19, 2010
in Blog

“In the commercial, Whitacre says GM has ‘repaid our government loan in full.’ Rep. Paul Ryan (R-Wis.) noted that GM used government funds to pay back the government: It ‘simply transferred $6.7 billion from one taxpayer-funded TARP account to another.’ The government still owns 60.8 percent of GM’s common equity, and the Congressional Budget Office […]

Read More

Inflation Destroys Savings

Posted by Tom Duncan
May 19, 2010
in Blog

“Everything that is done by a government against the purchasing power of the monetary unit is, under present conditions, done against the middle classes and the working classes of the population. Only these people don’t know it. And this is the tragedy. The tragedy is that the unions and all these people are supporting a […]

Read More

The Return of British Stagflation?

May 19, 2010
in Blog

The UK inflation rate jumped to 3.7 percent last month, way above the Bank of England’s 2 percent target. This comes as a surprise to both the monetary policymakers of the BoE and to the newly formed coalition government. The Bank’s Governor Mervyn King explains this sudden rise in consumer prices in a letter to […]

Read More

“Roberts on the Crises”

Posted by Tom Duncan
May 19, 2010
in Blog

“Russ Roberts, host of EconTalk, discusses his paper, “Gambling with Other People’s Money: How Perverted Incentives Created the Financial Crisis.” Roberts reflects on the past eighteen months of podcasts on the crisis, and then turns to his own take, a narrative that emphasizes the role of government rescues of creditors and the incentives this created […]

Read More

“The Great 18-Year Real Estate Cycle”

Posted by Tom Duncan
May 18, 2010
in Blog

“On January 3rd, US Federal Reserve Chairman Ben S. Bernanke delivered a major speech at the annual meeting of the American Economic Association. In his formal paper, “Monetary Policy and the Housing Bubble,” Chairman Bernanke argues that the Fed’s monetary policy was not responsible for the U.S. housing bubble. He claims that faulty regulation was […]

Read More

Nouriel Roubini – Return to the Abyss

May 18, 2010
in Blog

“If fiscal imbalances are not addressed through spending cuts and revenue increases, only two options remain: inflation for countries that borrow in their own currency and can monetize their deficits; or default for countries that borrow in a foreign currency or can’t print their own. Thus, the recent events in Greece, Portugal, Ireland, Italy, and […]

Read More

Stephen Roach Calls for a New Monetary Policy Regime

May 18, 2010
in Blog

Stephen Roach, Chief Economist of Morgan Stanley, have been a critic of the Fed for many years. In a Financial Times op-ed he makes the case for exiting the current monetary policy regime once and for all: “it is high time to banish the moral hazard of macro policy – the false sense of security […]

Read More

“Venezuela’s Monetary Mayhem”

Posted by Tom Duncan
May 17, 2010
in Blog

“Anchoring the currency to the dollar and thus outsourcing monetary policy to the U.S. Federal Reserve had been a success, but special interests and politicians could not bear that it robbed them of power. Venezuela is another place where the politicians see no reason why the state’s appetite for grabbing private-sector wealth should be constrained. […]

Read More

Fed Monetary Dissident Thomas Hoenig

May 17, 2010
in Blog

Thomas Hoenig, a voting member of the Fed’s interest rate decision body, the Federal Open Market Committee (FOMC), has on several occasions expressed concerns about the direction of U.S. monetary policy. During the last year, he has been a lone voice of dissent at FOMC meetings. This weekend’s Wall Street Journal features an interview with […]

Read More

Europe’s Freezing Money Markets

May 17, 2010
in Blog

“Money markets are showing rising levels of mistrust between Europe’s banks on concern an almost $1 trillion bailout package won’t prevent a sovereign debt default that might trigger a breakup of the euro.” “The cost to hedge against losses on European bank bonds is 63 percent higher than a month ago. Investment-grade corporate debt sales […]

Read More

Shining a Light on the Fed

Posted by Tom Duncan
May 14, 2010
in Blog

Much has been made recently of the plan to audit the Fed (here, here and here). It is a very interesting idea. Given the amount of money ($2 trillion) the Fed sent out in bailout loans, it makes sense that the taxpayers who funded it want to know where the money went. Given the Fed’s […]

Read More

Will Congress ever reform the Fed?

Posted by Tom Duncan
May 13, 2010
in Blog

“This week’s Senate floor votes on the powers of the Federal Reserve caught my attention. Despite Congress’s bipartisan lashing of the Fed for its performance before and after the financial crisis of 2008, the Fed this week defeated two challenges to its autonomy as a central bank. Granted, Congress’s pummeling of the Fed (recall Bernanke’s […]

Read More

Roche – Not the way to solve the debt crisis

May 13, 2010
in Blog

“the world is facing a major sovereign debt crisis that will squeeze economic growth and possibly deliver a series of debt default events down the road. Sovereign debt issuance is now sucking up 25 per cent of available world savings and that will squeeze the ability of the private sector to invest in productive opportunities.” […]

Read More

“Warning: Inflation May Be Harmful to Your Growth”

Posted by Tom Duncan
May 13, 2010
in Blog

“While few doubt that very high inflation is bad for growth, there is less agreement about the effects of moderate inflation. Using panel regressions and allowing for a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and growth, which holds robustly at all but the lowest inflation rates. A […]

Read More

“The Relationship Between Inflation and the Budget Deficit in Turkey”

Posted by Tom Duncan
May 13, 2010
in Blog

“For Turkey, Metin (1995) analyzed inflation using a general framework of sectoral relationships and found that fiscal expansion was a determining factor for inflation. The excess demand for money affected inflation positively, but only in the short run. On the other hand, imported inflation, the excess demand for goods, and the excess demand for assets […]

Read More

“Calculating the Candy Price Index”

Posted by Tom Duncan
May 13, 2010
in Blog

“In this classroom experiment, students develop a price index based on candy-purchasing decisions made by members of their class. They use their index to practice calculationg inflation rates and to consider the strengths and weaknesses of the consumer prices index (CPI). Instructors can use the experiment as an introduction to the topic of inflation and […]

Read More

“Economic Calculation and Monetary Stability”

Posted by Tom Duncan
May 13, 2010
in Blog

“My thesis will be that monetarists, while their criticism ofthe Fed’sthesis will be that monetarists, while their criticism ofthe Fed’s expansionist history has been most welcome and has been instrumental in the struggle against inflation, do not go far enough. In particular I will stress two issues which most monetarists have ignoredinstrumental in the struggle […]

Read More

Carmen Reinhart on Debt Crises

May 12, 2010
in Blog

University of Maryland economist Carmen Reinhart recently published a book with co-researcher Kennet Rogoff presenting several hundred years of data on financial crises. The title This Time Is Different alludes to the mentality that often develops during unsustainable booms–namely the belief that the old rules of valution does not apply anymore because of some technological […]

Read More

“Who got Fed money during financial crises?”

Posted by Tom Duncan
May 12, 2010
in Blog

“A Senate vote Tuesday left no doubt: Congress wants to know more about what the Federal Reserve was up to when its asset portfolio grew by more than $1 trillion during the financial crisis. What companies did the Fed help, and on what terms? The Senate voted 96 to 0 for the Government Accountability Office […]

Read More

Paper Money and the shadow economy

Posted by Alex Chafuen
May 11, 2010
in Blog

Last night I read several articles by Hernando de Soto and a few interviews on the financial crisis. He focused on the shadowy nature of derivatives. The success of the free enterprise system is based on clear property titles and respecting freedom to exchange. He focuses on the shadowy and artificial nature of the legal […]

Read More

“Euro Crisis Tests Germany’s Ability to Lead”

Posted by Tom Duncan
May 11, 2010
in Blog

“At a defining moment for the European Union, its largest country, Germany, appeared divided and its leader absent, raising significant concerns about what kind of leadership Chancellor Angela Merkel can offer as the region tries to stabilize financial markets and shore up its common currency.” Read more. “Euro Crisis Tests Germany’s Ability to Lead” Nicholas […]

Read More

Business Cycles in Powerpoint

Posted by Tom Duncan
May 10, 2010
in Blog

Dr. Roger Garrison, Professor of Economics at Auburn University, has constructed a variety of useful slideshow presentations to aid students in understanding the workings of the market system. For those unfamiliar with the Austrian Business Cycle Theory of malinvestment and overconsumption, these slides are an excellent way to expand your knowledge of the basics. These […]

Read More

The Euro-Crisis: Fear Is Back in Play

May 9, 2010
in Blog

“Now, fear is back in play,” said William H. Gross, managing director of Pimco, as the European crisis is sending shock waves into financial markets around the world. There is fear that the sovereign debt crisis could freeze up the euro-zone interbank market, in a replay of the credit crunch of 2007-2008. Several major European […]

Read More