Wednesday, 18 October 2017

Monthly Archives August 2010

Ron Paul Questions Whether There’s Gold at Fort Knox

Posted by Tom Duncan
August 31, 2010
in Blog

“Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold. Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it’s “a possibility” that there might not actually be any gold in the vaults of Fort Knox or the […]

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“Spreading Hayek, Spurning Keynes”

Posted by Tom Duncan
August 30, 2010
in Blog

“To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.” Governments that spend money they don’t have to cushion downturns, they say, lead nations down the path of large debts and runaway inflation. Eight decades ago, in […]

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The Recovery is Artificial

Posted by Tom Duncan
August 27, 2010
in Blog

“The stimulus is causing an artificial rebound in the economy that cannot be maintained, says Jerry Jordan, former president of the Federal Reserve Bank of Cleveland.” Watch it here.  “The Recovery is Artificial” Jerry Jordan MoneyShow.com, August 19, 2010.

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“Fed Off’ls at Jackson Hole Discuss Tough Policy Challenges”

Posted by Tom Duncan
August 26, 2010
in Blog

“Federal Reserve policymakers and many of the world’s other top central bankers are gathering Thursday for their annual retreat and symposium in the shadow of the Grand Tetons. They are also meeting in the shadow of looming economic and financial problems, which seem to be defying the stimulative efforts of both monetary and fiscal policy. […]

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“Fed Asks Court to Stay Discount-Window Ruling”

Posted by Tom Duncan
August 26, 2010
in Blog

“The Federal Reserve has asked a U.S. appeals court to stay a ruling that it must disclose documents regarding borrowing from its discount window and other “last resort” lending programs during the financial crisis. “The stay is necessary to permit the board to consult with the Department of Justice regarding an appeal to the Supreme […]

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Is There a Government Bond Bubble?

Posted by Tom Duncan
August 25, 2010
in Blog

“YES, there is a government bond bubble. And it’s huge. Uncle Sam and his counterparts in the EU and Japan are broke and are, almost surely, going to print vast quantities of money to cover their enormous spending obligations. The printing presses are already working full time. The Fed, for example, has increased the monetary […]

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The Monetary Theorist From The Little House on the Prairie?

Posted by Tom Duncan
August 24, 2010
in Blog

“The FEE archives are full of correspondences. Many of these letters contain interesting discussions on the economics, politics, and philosophy of liberty. Shifting through them it becomes clear that those in the liberty movement truly cared about obtaining a better understand of how society works. This letter from Rose Wilder Lane to Leonard Read on […]

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Why QE Could Trigger a Collapse of the Dollar

Posted by Tom Duncan
August 23, 2010
in Blog

“A week ago, the Federal Reserve initiated a new program of “quantitative easing” (QE), with the Fed purchasing U.S. Treasury securities and paying for those securities by creating billions of dollars in new monetary base. Treasury bond prices surged on the action. With the U.S. economy predictably weakening, this second round of quantitative easing appears […]

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“Fed’s Hoenig Says Big Banks Still Benefit From Safety Net”

Posted by Tom Duncan
August 23, 2010
in Blog

“The largest U.S. banks have an implied government safety net that gives them a lower cost of capital compared to community banks even after a congressional overhaul of banking regulation, Kansas City Federal Reserve President Thomas Hoenig said. “Despite the provisions of the Dodd-Frank Act to end too- big-to-fail, community banks will continue to face […]

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“Fannie Mae and Freddie Mac Reform”

Posted by Tom Duncan
August 20, 2010
in Blog

“Mr. Geithner cited the possibility of giving Fannie Mae and Freddie Mac an “elegant funeral.” But that wouldn’t mean a government exit from its prominent role in America’s housing market. In fact, it could mean that the government agrees to stand explicitly behind the GSEs’ obligations, while also putting in place a new system designed […]

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“Treasure 10-Year Yields Near 17 Month Low”

Posted by Tom Duncan
August 19, 2010
in Blog

“The Fed’s purchases today will be its second this week, after it bought $2.551 billion of notes on Aug. 17. The central bank plans to purchase about $18 billion of U.S. debt by the middle of September using the money from principal payments on its holdings of agency debt and agency mortgage-backed securities, according to […]

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“Foreign Lenders: Friends Indeed to a U.S. Treasury in Need”

Posted by Tom Duncan
August 18, 2010
in Blog

“When the U.S. government wishes to spend more money than it receives as tax revenue, it covers the shortfall by borrowing, and foreign lenders have become increasingly important sources of such borrowed funds. Reliance on foreign lenders is as old as the republic. Indeed, loans from the French and the Dutch proved critical in keeping […]

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“How to Feed a Recovery”

Posted by Tom Duncan
August 18, 2010
in Blog

“To get a sense of the current economic climate, I spoke with John Taylor, Stanford economics professor and George P. Shultz Senior Fellow in Economics at the Hoover Institution. He is well known in economic-policy circles for coining the Taylor rule, a monetary-policy principle that offers guidance on how to tinker with interest rates to […]

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“Lots of Regulatory Expansion but Little Reform”

Posted by Tom Duncan
August 18, 2010
in Blog

“In the wake of every financial crisis, politicians face the demand that they Do Something. They feel they have to enact something to “make sure this never happens again”—although historically it has always happened again anyway. Moving the boxes on the regulatory organization chart and expanding regulatory powers are always available options, and the financial […]

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“How the Market Creates Jobs, and the Government Destroys Them”

Posted by Tom Duncan
August 18, 2010
in Blog

“By bringing about the business cycle, Federal Reserve money creation causes unemployment. Inflation not only raises prices, it also misallocates labor. During the boom phase of the trade cycle, businesses hire new workers, many of whom are pulled from other lines of work by the higher wages. The Fed subsidy to these capital industries lasts […]

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“Nationalization of the Morgage Market”

Posted by Tom Duncan
August 18, 2010
in Blog

“On Sunday, September 7, the United States government took control of more than half the U.S. mortgage market, through its seizure—and that is the word used in mainstream press accounts—of Fannie Mae and Freddie Mac, two colossal government-sponsored enterprises (GSEs), hybrid organizations owned by private individuals yet created by the government. The likes of this […]

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“Fed May Reemerge as Bigger Buyer With Resumption of Treasury Purchases”

Posted by Tom Duncan
August 17, 2010
in Blog

“The Federal Reserve will likely reemerge as the biggest buyer of Treasuries when it resumes purchasing U.S. government securities today to prevent money from draining out of the financial system. JPMorgan Chase & Co. strategists estimate the Fed will buy about $284 billion in Treasuries over the next year, or more than the combined purchases […]

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The Fed Can’t Solve Our Economic Woes

August 16, 2010
in Blog

A policy of low interest rates is a textbook response of monetary authorities to the economic weakness brought on by deficient aggregate demand. The policy is justified by pointing to various ways in which money can promote economic activity—including by stimulating investment, discouraging savings, encouraging consumption spending, and allowing individuals to lower their debt burdens […]

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“Treasury Fixing Mortgage-Finance System Juggles Limitless Bailout, Economy”

Posted by Tom Duncan
August 16, 2010
in Blog

“The U.S. Treasury Department, hosting a summit tomorrow on how to repair the mortgage-finance system, may get a blunt message from stakeholders in an industry tied to 15 percent of the country’s economy: Don’t screw it up. The system’s size and complexity mean that a wrong move by the Obama administration could restrict credit, drive […]

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“In a Sluggish Economic Summer, No Easy Fix Ahead”

Posted by Tom Duncan
August 13, 2010
in Blog

“Typically, the Fed can lower interest rates to encourage Americans to borrow money and spend it, invigorating the economy. But the benchmark interest rate controlled by the Fed has been almost zero for more than a year now. The Fed this week took a new step by announcing it would use the proceeds from its […]

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“Fed Official Warns of Starting a Cycle of Boom and Bust”

Posted by Tom Duncan
August 13, 2010
in Blog

“In a sharply worded dissent to the Federal Reserve’s decision to help ease the supply of credit to the economy, a member of the Fed committee that sets interest rates said Friday that the central bank’s monetary strategy could backfire and touch off a new boom-and-bust cycle. The member, Thomas M. Hoenig, the president of […]

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Idle Resources Don’t Eliminate Inflation

Posted by Steve Horwitz
August 13, 2010
in Blog

One of the gravest sins of modern economics is its tendency to treat resources, both capital and labor, as essentially homogenous aggregates. Capital is more or less interchangeable with other capital, and labor is treated much the same. One reason for this is that such homogeneity and aggregation make mathematical modeling much more tractable, as […]

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The immorality of today’s monetary policy

Posted by Alex Chafuen
August 12, 2010
in Blog

I have been reading Buying at the Point of Maximum Pessimism (FT Press, 2010), by Scott Phillips. Before introducing his “six value investment trends” he devotes close to 100 pages to describe what went wrong in the US economy. When he addresses current inflationary policies, he states “Technology is amazing: a policy maker’s ability to […]

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Europe Jumps Off the Keynesian Bus — WSJ

Posted by Alex Chafuen
August 12, 2010
in Blog

By ALLAN H. MELTZER — President Obama is the victim of bad advice and misinformation. From his advisers, the Democratic caucus and the New York Times, he hears that markets have failed and the country needs more government spending to increase consumer spending. He is told that any plan to reduce government spending and the […]

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“The Austrian Theory: One More Time”

Posted by Tom Duncan
August 12, 2010
in Blog

“The Austrian theory is not a theory of recessions per se; it is a theory of the unsustainable boom. As such, it has a much stronger link to the underlying microeconomics than does much of today’s mainstream theorizing. The Austrians focus broadly on credit markets and ask what happens when the price of credit, i.e., […]

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Monetary Policy and Productivity

Posted by Tom Duncan
August 11, 2010
in Blog

“This relationship holds, I believe, because low inflation tends to focus people’s attention on productive investments at the same time it promotes confidence by delivering stability, while high inflation tends to encourage speculative investments and discourage investment because it increases uncertainty. If prices are generally stable, for example, then it is difficult to make money […]

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“Fed Economic Outlook Sends Investors to Gold”

Posted by Tom Duncan
August 11, 2010
in Blog

“The Fed’s commitment to maintaining liquidity and its deteriorating growth outlook are broadly speaking bullish for gold,” said Standard Bank analyst Leon Westgate. Gold is often seen as a stronger store of value than equities and other commodities in times of economic uncertainty, and the metal gained ground after the Federal Open Market Committee on […]

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“Perspectives on the U.S. Economy: Fiscal Policy Issues”

Posted by Tom Duncan
August 11, 2010
in Blog

“A clear and credible path of fiscal consolidation is clearly needed and would do much to remove uncertainty about future policy and thereby build confidence. The reason why such a plan is not being articulated and carried out now is an apparent concern that such a consolidation would remove needed stimulus from the economy. In […]

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Deflation and Liberty

Posted by Tom Duncan
August 11, 2010
in Blog

“The link between the paper dollar and the exponential expansion of public debt is well known. From the point of view of the creditors, the federal government controls the Federal Reserve—the monopoly producer of paper dollars—and it can therefore never go bankrupt. If necessary, the federal government can have any quantity of dollars printed to […]

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“The High Costs of Very Low Interest Rates”

Posted by Tom Duncan
August 11, 2010
in Blog

“The prevailing view among economists, policy makers and Federal Reserve Board governors is that a zero or near-zero short-term interest rate stimulates the economy—the lower the rate, the better. It is time to re-examine this conventional wisdom. In fact, lowering interest rates too much may not stimulate recovery, but actually slow it. Yes, there are […]

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“Wells Says New Regulations to Cost $530M”

Posted by Tom Duncan
August 10, 2010
in Blog

“Wells Fargo said Monday that new financial regulation will cost the San Francisco bank $530 million in lost revenue this year. The bank expects changes to its overdraft practices and other new policies will reduce its fee income $225 million, after tax, in the third quarter and $275 million in the fourth quarter.” Read more. […]

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“Gold Is Steady Ahead of Fed”

Posted by Tom Duncan
August 9, 2010
in Blog

“Spot gold was mostly flat early Monday in a quiet start to the week, as market participants await the Federal Reserve meeting Tuesday. Analysts said they expected the Fed’s comments this week to indirectly boost gold.” Read more. “Gold Is Steady Ahead of Fed” Matthew Walls The Wall Street Journal, August 9, 2010. Image by […]

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“Who Will Regulate AIG? Who Knows”

Posted by Tom Duncan
August 6, 2010
in Blog

“There is a section of today’s second quarter filing from AIG that reads like a “Choose Your Own Adventure” book. For those out there who need a reminder, in Choose Your Adventure books readers get to choose what happens to the main character by deciding to turn to one page or another. “If you decide […]

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Tax and Spend

Posted by Tom Duncan
August 6, 2010
in Blog

On Wednesday, August 4, Secretary of Treasury Timothy Geithner debated the Bush tax cuts with Douglas Hotz-Eakin, president of the American Action Forum. It was not much of a debate. With Geithner and Holtz-Eakin joined by the third panelist, John Podesta, president and CEO of Center for American Progress, and a time constraint of 45 […]

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“Senate Rejection of Fed Nominees Slows White House Plan”

Posted by Tom Duncan
August 6, 2010
in Blog

“The Obama administration’s effort to fill every vacancy on the Federal Reserve Board is running into more trouble than expected after Senate leaders returned Peter A. Diamond’s nomination to the White House late Thursday. The move means President Obama must renominate Diamond or pick a new candidate. The White House did not immediately comment on […]

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“Dollar Bears Will Soon Have Had Their Day”

Posted by Tom Duncan
August 5, 2010
in Blog

“Dollar bears should soon be hiding their faces. A combination of soft U.S. economic data, over cautious Fed officials and sliding Treasury yields have all raised expectations of more quantitative easing. As a result, the dollar has been sold heavily over the last few weeks as investors have turned elsewhere for higher returns. However, the […]

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“Dollar Near Eight-Month Low”

Posted by Tom Duncan
August 4, 2010
in Blog

“The dollar traded near an eight-month low against the yen on speculation the Federal Reserve will take more credit easing measures to revive its flagging economic recovery, diminishing the appeal of U.S. assets. The greenback was close to its lowest level in three months versus the euro before a U.S. report today that economists said […]

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“Less than Zero: The Case for a Falling Price Level in a Growing Economy”

Posted by Tom Duncan
August 4, 2010
in Blog

“Not long ago, many economists were convinced that monetary policy should aim at achieving ‘full employment’. Those who looked upon monetary expansion as a way to eradicate almost all unemployment failed to appreciate that persistent unemployment is a non-monetary or ‘natural’ economic condition, which no amount of monetary medicine can cure. Today most of us […]

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“Federal Reserve Information and the Behavior of Interest Rates”

Posted by Tom Duncan
August 4, 2010
in Blog

“This paper tests for the existence of asymmetric information between the Federal Reserve and the public by examining Federal Reserve and commercial inflation forecasts. It demonstrates that the Federal Reserve has considerable information about inflation beyond what is known to commercial forecasters. It also shows that monetary-policy actions provide signals of the Federal Reserve’s information […]

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The Money Debate

Posted by Tom Duncan
August 4, 2010
in Blog

In the battle of ideologies, the libertarian always faces certain disadvantages. The foundation is, as the name implies, liberty. Yet there is no strict use towards which “liberty” can be put. It is a somewhat amorphous idea, and context changes its meaning. That is not to say that an individual libertarian is inconsistent, or at […]

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“Money in the 1920s and 1930s”

Posted by Tom Duncan
August 4, 2010
in Blog

“One of the most enduring and troublesome mysteries in economics is money: how it is created, what sorts of institutions initiate the process, what kinds of mystique and priestcraft central bankers use in managing monetary systems, and what rules, laws, or customs limit their actions. Perhaps the common ignorance about money is harmless. After all, […]

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“Interest Rates and the Federal Reserve”

Posted by Tom Duncan
August 4, 2010
in Blog

“On June 30, 2004, the Federal Reserve Open Market Committee announced it was raising the targeted federal funds interest rate from 1 to 1.25 percent, to begin to prevent a possible future price inflation. The next day the European Central Bank (ECB) decided to leave its targeted interest rate unchanged at 2 percent, even though […]

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“Bernanke Says Rising Wages Will Lift Spending”

Posted by Tom Duncan
August 3, 2010
in Blog

“Investors and the public have been closely watching signals about the economy and the Fed’s possible policy moves to address problems. While the United States has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth,” Mr. Bernanke said on Monday in a speech in Charleston, […]

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Bullard’s Bipoloar Fed Strategy

Posted by Tom Duncan
August 2, 2010
in Blog

“Forcing banks to take undue risk for the sake of the economy would result in banks recklessly engaging in the behavior that precipitated the financial crisis in the first place! Banks could still decide not to lend to small businesses and consumers, preferring to party like its 2007 by engaging in LBOs, M&A financing, etc. […]

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