Monday, 11 December 2017

Monthly Archives April 2011

Neutral Money?

April 28, 2011
in Blog

The idea of money neutrality is a cornerstone in formal monetary theory. It is not free, however, of some controversy. If there are changes in money supply, why will the economy converge to the same equilibrium and not to a different one? If changes in money have a neutral effect in the long run, then […]

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“Inflation – What It Is, What It Isn’t” – Nasdaq

Posted by Tom Duncan
April 28, 2011
in Blog

“Depending on what you read, your political leanings, and philosophical beliefs, some scenarios like these could be on your mind. But reality is seldom that outrageous, so here is what I think will happen. First of all, prices are going up. Economists have underestimated increases because, whenever a trend emerges, the bean counters are always […]

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“Debt Limit Standoff: 10 Things to Watch” – The Hill

Posted by Tom Duncan
April 27, 2011
in Blog

“Republicans and Democrats on Capitol Hill are strategizing for what is expected to be a bruising debate on raising the nation’s debt limit and reining in government spending. The Obama administration has set an early-July deadline for lifting the $14.3 trillion debt ceiling, a move that congressional leaders agree must be done.But some Tea Party […]

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“Bernanke’s Code: A Guide to Fed Chairman’s First Q&A” – WSJ

Posted by Tom Duncan
April 27, 2011
in Blog

“When Federal Reserve Chairman Ben Bernanke makes his debut press conference Wednesday, his every word will be parsed for signs of where he hopes to take U.S. monetary policy. Specifically, many people want to know when the central bank will begin raising interest rates, and when it will begin off-loading some assets, including Treasurys and […]

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Some light reading…

Posted by Gonzalo Schwarz
April 26, 2011
in Blog

For the next couple of weeks I will be unable to post a new article, but in the meantime if you would like to continue learning about sound money, inflation, and other related topics I encourage you to read: On The Origins Of Money By Carl Menger …In primitive traffic the economic man is awaking but […]

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“Debt-Ceiling Strategies” – NRO

Posted by Tom Duncan
April 26, 2011
in Blog

“The conventional wisdom in Washington — on the left and among many on the right — is that the debt ceiling must be raised in order to avoid defaulting on the national debt, a potentially catastrophic scenario, the thought of which has business and financial leaders lobbying hard to raise the ceiling. Plenty of conservatives […]

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“Monetary Reform: The Key to Spending Restraint” – WSJ

Posted by Tom Duncan
April 26, 2011
in Blog

“No man in America is a match for House Budget Committee Chairman Paul Ryan on the federal budget. No congressman in my lifetime has been more determined to cut government spending. No one is better informed for the task he has set himself. Nor has anyone developed a more comprehensive plan to reduce, and ultimately […]

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“Markets Get Ready to Navigate Fed’s Departure” – WSJ

Posted by Tom Duncan
April 25, 2011
in Blog

“Senior Fed officials believe they will be able to push up the fed-funds rate, the traditional benchmark for short-term interest rates, but not by the usual means of simply selling relatively small amounts of Treasury securities to soak up bank reserves. Instead, they are looking at a new tool, raising the interest rate that the […]

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Deficit Spending on the Backs of the Poor

Posted by Tyler Watts
April 25, 2011
in Blog

Rejecting any serious cuts to government spending, President Obama stated recently, “Nothing is easier than solving a problem on the backs of people who are poor, for people who are powerless and don’t have lobbyists or don’t have clout.” Exactly. In the context of Obama’s much-discussed budget speech of a few days ago, one would […]

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Are Bank Runs a Problem for laissez-faire Banking?

April 21, 2011
in Blog

The problem of bank runs is probably the most serious concern in monetary economics. It is clear that if all clients claim back their depositors together the bank will fail. This situation, it is argued, puts the banks in an unstable position where their clients may try to run each other to get their deposits […]

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“Why a Lack of Transparency in the Administration’s Budget II Is a Problem” – Taylor

Posted by Tom Duncan
April 21, 2011
in Blog

“A transparent budget proposal—such as the Administration’s first 2012 Budget presented by President Obama on February 14 or the House Budget presented by Paul Ryan on April 6—contains year-by-year tables showing the proposed path for government outlays over time. These are needed to estimate the economic impact of a budget and assess its credibility.” Read […]

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“A Good Exit Strategy Proposed by Philadelphia Fed President Plosser” – WSP

Posted by Tom Duncan
April 21, 2011
in Blog

“Previous statements about exits by Fed officials simply listed the tools that could be used in an exit strategy, but did not actually put forth an exit strategy. In contrast, President Plosser describes a specific strategy. Two things are very attractive about strategy. First, it aims is to return monetary policy to one in which […]

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The Eurozone’s Coming Inflation Divide

Posted by Henry Boateng
April 20, 2011
in Blog

“So now – for once – it is the German economy that is bound for higher inflation than the rest of Europe. And make no mistake about whether rising prices will feed through to wage growth. Already, barely a year into the recovery from the worst economic crisis since World War II, unemployment in Germany […]

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“Gold Rises Above $1500 to a Record on Slumping Dollar, Inflation Concern” – Bloomberg

Posted by Tom Duncan
April 20, 2011
in Blog

“Gold rose above $1,500 an ounce to a record in New York and London as a weaker dollar and concern about debt and faster inflation spurred demand for an alternative investment. Silver reached a 31-year high. The dollar slipped as much as 1 percent against six major currencies, trading at a 16-month low, while a […]

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The Shell Game, Part III

Posted by Gonzalo Schwarz
April 20, 2011
in Blog

The Conclusion: The native inhabitants of Shell Island were living under growing pressure. For generations they had lived quiet lives tending their coconut trees, weaving their straw hats, and perfecting their massage techniques. With the arrival of the Outsiders, however, things had changed… The Outsiders had made it illegal for the Islanders to raise prices […]

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Why Washington only cut $38 billion: A Public Choice perspective

Posted by Tom Duncan
April 20, 2011
in Blog

“Why did politicians cut a trivial amount of money in the recent budget agreement? Prof. Ben Powell explains why politicians don’t cut spending, as a general rule. Using public choice economics, or the economics of politics, he shows how the political system naturally leads to overspending.” Watch it here. Why Washington only cut $38 billion: […]

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“Fed’s Monetary Stimulus Won’t Completely End in June” – Atlantic

Posted by Tom Duncan
April 20, 2011
in Blog

“In fact, there’s a big difference between the three scenarios before the Fed. One option would be to keep QE2 going after June, continuing to grow the Fed’s balance sheet. The second option would be to kill QE2, but keep QE1.5 intact, leaving the size of the Fed’s balance sheet unchanged. The third option would […]

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“Robust Political Economy and the Federal Reserve” – Boettke and Smith

Posted by Tom Duncan
April 20, 2011
in Blog

“The economics profession not only failed to predict the recent financial crisis, but has been struggling in its aftermath to reach a consensus on the cause(s) of the crisis. While competing narratives are being offered and evaluated, the narrow scope of the debate on strictly technical aspects of monetary policy has precluded the examination of […]

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Me, Obama, Standard and Poor’s and Popcorn

Posted by Henry Boateng
April 19, 2011
in Blog

For the past few months I have been really disturbed about this nation’s fiscal challenges. With a $14 trillion structural deficit, and a $1.6 trillion deficit for this fiscal year alone, I think people should be concerned—I mean really concerned. So when I heard that the president was going to propose a plan to reduce […]

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“Fed Officials See Softer Q1, Inflation Risks” – Reuters

Posted by Tom Duncan
April 19, 2011
in Blog

“To Atlanta Fed President Dennis Lockhart, higher gas prices dampened consumer spirits and contributed to disappointing growth in the first quarter. High energy prices are likely to weigh on consumers and business for a while, he said. “It appears that the first quarter will come in soft relative to what we expected — what many […]

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Signs of Inflation

Posted by Tyler Watts
April 18, 2011
in Blog

Driving to the big city the other day, I noticed 2 billboards along the interstate highway that struck me as unique signs of the times. No, they weren’t ads for upcoming Justin Beiber concerts. They were ads for scrap metal buyers. One advertises “top prices paid” for metal by a company that deals in industrial […]

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Stop Printing Money, Inc.

Posted by Tom Duncan
April 18, 2011
in Blog

“America currently has $14 trillion in debt on the books and another $70 trillion or so in unfunded entitlements and pensions that are not yet on the books. These debts will never be repaid with dollars at current value. Either America will devalue its currency through inflation or it will default on its promises and […]

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“Is Inflation Here to Stay? Price Rise Nears a 30-Year High” – Time

Posted by Tom Duncan
April 15, 2011
in Blog

“The government reported the Consumer Price Index, the most important monthly gauge of inflation, on Friday for March and it showed that inflation is rising at the fastest pace in more than a year. On average, prices are up 2.7% in the past 12-months. But if you take the past four months alone, prices are […]

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Why Study Free Banking?

April 15, 2011
in Blog

Last Tuesday ATLAS’ Sound Money Project held a panel with the title of “Making the Case for Sound Money” at the 2011 APEE Conference. Jorge Borlandelli from The Nassau Institute, myself from Suffolk University, Tom Duncan from GMU/Sound Money Project and Gerald O’Driscoll from The Cato Institute as discussant were in the panel. I tried […]

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So Where Do We Go From Here?

Posted by Henry Boateng
April 14, 2011
in Blog

Last week, in my blog, I discussed my concerns regarding the policies that the Federal Reserve has been pursuing lately. My concern was that in its attempt to achieve maximum employment, it might lose its grip on both of its mandates: price stability and maximum employment. Because reserves (or the monetary base), as things stand […]

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Towards Defining Inflation

Posted by Gonzalo Schwarz
April 13, 2011
in Blog

Part III of The Shell Game will be posted next week. One of the goals of this corner of the Interweb is to help people understand what inflation is and what comes of it.  I would like this week to talk about inflation from a different angle. I have been writing on the premise that […]

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A Cure for Fiscal Failure?

Posted by Henry Boateng
April 12, 2011
in Blog

“In a new paper, “A Decade of Debt,” Carmen M. Reinhart and I show that general government debt in the United States, including federal, state, and local debt, has now surpassed the record 120% of GDP reached at the end of World War II.” “Japan, of course, is in even worse shape, with government debt […]

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Asia’s Inflation Trap

Posted by Henry Boateng
April 12, 2011
in Blog

“The lessons of earlier battles against inflation are clear on one fundamental point: inflationary pressures cannot be contained by negative, or slightly positive, real short-term interest rates. The only effective anti-inflation strategy entails aggressive monetary tightening that takes policy rates into the restrictive zone. The longer this is deferred, the more wrenching the ultimate policy […]

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Sound Money and Financial Crisis

Posted by Tyler Watts
April 12, 2011
in Blog

One of the main virtues of sound money is stability. We sound-money types like to point out that financial systems built on core sound money principles—namely, free competition at all stages of money production and credit markets—are not nearly as prone to monetary crises and money-induced recessions. Sounds too good to be true, I know. […]

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“Monetary Mockery” – Henry Hazlitt

Posted by Tom Duncan
April 8, 2011
in Blog

“The devaluation of the British pound from $2.80 to $2.40 is not only another declaration of the bankruptcy by Great Britain; it is another revelation of the bankruptcy of the international money system concocted at Bretton Woods, N.H., in 1944.” Read more.  “Monetary Mockery”  Henry Hazlitt  The Deseret News, November 23, 1967. Image by Michelle […]

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A Barbarously Progressive Idea

Posted by Andrew Mack
April 8, 2011
in Blog

The Federal Reserve is a barbarous institution from the progressive era long past and is not compatible with a modern market economy. Last week a parade of regional Fed presidents spoke about the future of money creation and inflation. They all had widely differing opinions of how current and future monetary policy should be carried […]

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“Welfare and Inflation Create Endless Spiral” – Henry Hazlitt

Posted by Tom Duncan
April 7, 2011
in Blog

“As to where the money is coming from, Humphrey announced, “We can pay for it out of a growing, expanding economy. And it is actuarially sound.” It is depressing to record that three days later, on Sept. 28, Richard Nixon also proposed that Social Security benefits be increased automatically to offset cost-of-living increases. The blunt […]

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Was There a Saving Glut or a Credit Expansion Glut?

April 7, 2011
in Blog

The Greenspan-Bernanke explanation on the cause of the financial bubble rests on the theory of the saving glut. According to this explanation, the problem was not that the Fed mismanaged the monetary policy, but that a saving glut that took place outside the scope of the Fed’s jurisdiction was the cause of the financial boom […]

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“Republicans Embrace Rep. Ryan’s Budget Plan for 2012” – WP and Bloomberg

Posted by Tom Duncan
April 7, 2011
in Blog

“The proposal represents the most comprehensive philosophical statement by resurgent Republicans since they claimed control of the House in last fall’s midterm elections. It promises to define the party heading into the 2012 presidential election and to shape the policy debate in Washington as both parties grapple with a soaring national debt. Drafted by House […]

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“Fed, Sanguine About Inflation, Not Apt to Alter Stimulus Plan” – Boston Globe

Posted by Tom Duncan
April 6, 2011
in Blog

“The Federal Reserve shows few signs of easing its aggressive efforts to stimulate growth before the middle of the year, according to the minutes of the most recent meeting of the central bank’s policy making committee. Some members of that committee have suggested in recent speeches that the Fed might reconsider its plans to buy […]

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The Shell Game, Part II

Posted by Gonzalo Schwarz
April 6, 2011
in Blog

Part II: The Islanders have begun to fight amongst themselves. Whenever anyone went to the store to buy a coconut to eat, or a stylish hat to wear, there were always others there willing to bid higher. This was creating tension among the Islanders who blamed each other for overbidding and the store owners for […]

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“Fed’s Biggest Foreign-Bank Bailout Saved Muni Bonds” – Bloomberg

Posted by Tom Duncan
April 6, 2011
in Blog

“A European bank that received the most Federal Reserve discount window help during the financial crisis also took $381 billion in aid from its home countries and owned subsidiaries implicated in bid-rigging that prosecutors say defrauded U.S. taxpayers. Details of Fed lending released last week show that Dexia SA (DEXB), based in Brussels and Paris, […]

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Saying Goodbye to Price Stability

Posted by Henry Boateng
April 5, 2011
in Blog

America’s monetary policy has been going rogue ever since the Great Recession began. Mr. Bernanke, a man, whose position I by no means envy, has taken certain unprecedented steps, since the crisis, with the aim of helping get America’s economy back on track. I do not doubt Mr. Bernanke’s intentions (I know he means well); […]

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“Fed Aided At Least 111 Banks That Later Failed” – Boston Globe

Posted by Tom Duncan
April 5, 2011
in Blog

“The loans, made through the so-called discount window, transformed a little-used program for banks that run low on cash into a source of long-term financing for troubled institutions, some of which borrowed regularly from the Fed for more than a year. The central bank took little risk in making the loans, protecting itself by demanding […]

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What Good Are Banks, Anyway?

Posted by Tyler Watts
April 4, 2011
in Blog

There’s plenty of frustration, irritation, and anger at banks during times of financial crisis and recession. Complaints run the gamut: bank over-exuberance (“predatory lending”) fueled the boom, and their under-exuberance (tight credit) contributes to the bust. They’re charging outrageous overdraft fees and being too harsh on loan defaulters. And oh yes, the taxpayer-funded bailouts! Why […]

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“Fed and BCE: The Differential Is Dollar Negative, Period” – FXStreet

Posted by Tom Duncan
April 4, 2011
in Blog

“Most central banks chose to ignore commodity prices, like food and oil, because (1) they are overly volatile and (2) a central bank can’t take any countervailing action. Almost every sensible person who actually buys gasoline and food—which central bank chiefs do not–has a real problem with this attitude. For one thing, commodity prices move […]

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Robert Kiyosaki on Saving Money

Posted by Tom Duncan
April 4, 2011
in Blog

Robert Kiyosaki talks about his book, Rich Dad’s Conspiracy of the Rich: The 8 New Rules of Money, and the fall in value of money due to inflationary money printing. I have not read the book, but the video is a good one. Watch the video here. H/T to Romulo Lopez of Atlas. Image by […]

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“Will 1970s Style Inflation Derail the Bull Market in Stocks?” – Seeking Alpha

Posted by Tom Duncan
April 1, 2011
in Blog

“Inflation can adversely affect corporate profits, household discretionary spending, and stock prices. Rising costs for raw materials have a dampening effect on profits. Increasing costs of food and energy begin to account for larger and larger portions of a household’s disposable income. From an investment perspective, when the annual inflation rate jumped significantly between 1971 […]

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