Tuesday, 12 December 2017

Monthly Archives May 2011

Inflation Goggles.

Posted by Gonzalo Schwarz
May 31, 2011
in Blog

Following policies, however well intentioned, that inevitably lead from miscalculation to miscalculation, is a recipe for disaster. Key data and assumptions used by central bankers are misleading and dangerous to the economy and “contrary to popular thinking, the recent strengthening in some key US economic data such as employment doesn’t reflect economic strengthening but is simply a response to the strengthening of bubble activities that are setting in motion another economic bust.”

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“The State and 100 Percent Reserve Banking” – Selgin

Posted by Tom Duncan
May 31, 2011
in Blog

“Free bankers have been fighting a war on two fronts. On one they face champions of central banking and managed money. On the other they struggle against advocates of 100-percent reserve banking. Although the second front is a lot smaller than the first, it’s far from being unimportant, in part because the battle there is […]

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“A Note on the Machiavellian Origins of Central Banking in America” – QJAE

Posted by Tom Duncan
May 31, 2011
in Blog

“In The Mystery of Banking, Murray Rothbard explained how the origins of central banking in the U.S. were rooted in a lobbying effort by Robert Morris and other “nationalists” to create a bank modeled after the Bank of England that would subsidize their businesses with cheap credit and other forms of corporate welfare. This paper […]

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“Defense Spending No Longer ‘Sacred Cow’ to Republicans Searching for Cuts” – Bloomberg

Posted by Tom Duncan
May 31, 2011
in Blog

“As the House Budget Committee worked on a Republican plan to cut more than $6 trillion of government spending over a decade, the panel’s senior Democrat proposed a symbolic amendment saying national security costs should be included in any responsible deficit-reduction effort. Seventeen of 22 committee Republicans, including Chairman Paul Ryan of Wisconsin, joined all […]

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“Barney Frank’s Latest Bad Idea” – WSJ

Posted by Tom Duncan
May 31, 2011
in Blog

“Mr. Frank’s bill is simple and remarkably short by Washington standards: two pages. It would strike the language in Section 12A of the Federal Reserve Act that provides for voting membership by the New York Fed and rotating voting membership by the other 11 Federal Reserve banks on the Federal Open Market Committee (FOMC). Monetary […]

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“Hoenig Urges Fed to Raise Interest Rates to Encourage Saving” – Bloomberg

Posted by Tom Duncan
May 30, 2011
in Blog

“Federal Reserve Bank of Kansas City President Thomas Hoenig, the central bank’s longest-serving policy maker, said the U.S. needs to raise interest rates to encourage individuals to save and avoid future asset bubbles. Hoenig, who doesn’t vote on monetary policy this year, has repeatedly urged the central bank to tighten lending to prevent inflation and […]

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Stateless Money: The Example of Somalia

May 26, 2011
in Blog

It is a common belief that money and the financial markets are inherently unstable; or that a financial crisis is an easy outcome in the case of a random event (sometimes referred as sunspots). A central bank, along with proper regulation, is what is needed to guarantee the stability of the market. It is true […]

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“Measuring Inflation: The Core is Rotten” – Bullard

Posted by Tom Duncan
May 25, 2011
in Blog

“Controlling overall inflation is a goal of monetary policy. Measures of overall, or headline, inflation attempt to include changes in the prices paid for a wide variety of goods—that is, what households actually have to pay for their daily purchases. This is a sensible notion of precisely what the central bank can and should control […]

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“Sold Down the River” (SDR)

Posted by Gonzalo Schwarz
May 25, 2011
in Blog

Merriam-Webster defines sovereignty as: a: supreme power, especially over a body politic; b: freedom from external control – autonomy; and, c: controlling influence. Sovereignty in the first sense, over a “body politic,” can seem to contradict sovereignty in the second two senses, however. For a State to have sovereignty is for an individual within that […]

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“Gold Bubble, Debt Bubble, or Both?” – Seeking Alpha

Posted by Tom Duncan
May 24, 2011
in Blog

“To begin, the national debt has provoked concern over the stability of US debt. Last month Standard and Poor’s revised its sovereign credit rating of the U.S. in the long-term from stable to negative. Last week the US reached its debt limit, which, justified or not, has perpetuated this anxiety. The cause of these fears […]

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“Ben Bernanke Loses Control of the Fed”

Posted by Tom Duncan
May 24, 2011
in Blog

“The Fed is blaming the earthquake in Japan for disrupting first quarter global growth, plus droughts and other natural disasters which didn’t help. The problem for Bernanke and his allies on the Fed is that hardly anyone is buying this argument. Most financial analysts, economists, and CEOs are blaming inflation for the global slowdown, and […]

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“The Return of Stagflation” – WSJ

Posted by Tom Duncan
May 24, 2011
in Blog

“‘Stagflation” is an ugly word for an ugly situation: persistent high inflation combined with high unemployment and stagnant demand in a country’s economy. The term was coined by British politician Iain Mcleod in a speech to Parliament in 1965. We haven’t experienced it here in the United States since the bad old days of the […]

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The Central Planning Elephant in the Room

Posted by Tyler Watts
May 23, 2011
in Blog

Roberts and Papola have done it again: a rap video that explains the divergent views of two of the most prominent economists of the 20th century. It’s  better than most textbooks, and entertaining to boot. It’s “Fight of the Century.” The video is a follow-up to their 2009 Youtube hit, “Fear the Boom and Bust.” […]

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“Who’s Gonna Bail Out the Fed?” – Forbes

Posted by Tom Duncan
May 23, 2011
in Blog

“In ordinary times it would be ignorant to ask, “Who’s going to bail out the Fed?” — but then again these aren’t ordinary times. Solvency of the Federal Reserve Bank shouldn’t be an issue because it carries the full faith and credit of the United States of America. In theory, the only way the Fed […]

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“Drifting Back to Gold Standard” – Hindu Business Line

Posted by Tom Duncan
May 20, 2011
in Blog

“After 1914, the gold standard was given up and in the 1920s countries unabashedly resorted to unbridled fiat money resulting in hyper-inflation in a number of European countries. World War II resulted in the virtual demise of the sterling as a reserve currency, and since then the US dollar has held sway as the dominant […]

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“Partly Caused by Inflation, US Home Starts Stumbled in April” – Reed

Posted by Tom Duncan
May 19, 2011
in Blog

“The U.S. Consumer Price Index for April provided insight into one reason why the housing market is so quiet. While home prices have been showing steady erosion so far this year, as recorded by the S&P Case-Shiller index, the price level for a basket of consumer goods has been rising. April’s Consumer Price Index climbed […]

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“An Austrian Rehabilitation of the Phillips Curve” – Cato Journal

Posted by Tom Duncan
May 19, 2011
in Blog

“William Niskanen (2002) estimated a Phillips curve for the United States using annual 1960–2000 data. By adding one-year lagged terms in unemployment and infl ation, he was able to show that this familiar equation is misspecified. In his improved specification, Niskanen found that the immediate impact of inflation is to reduce unemployment, confirming the traditional […]

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“Fannie Mae, Freddie Mac, and the Future of Federal Housing Finance Policy” – Cato

Posted by Tom Duncan
May 18, 2011
in Blog

“The federal government recently placed Fannie Mae and Freddie Mac, the government chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit driven, but as government-sponsored enterprises (GSEs) they also have a government-mandated mission to provide liquidity and stability to the U.S. mortgage market and to achieve certain affordable housing goals. […]

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“The Federal Reserve System’s Influence on Research in Monetary Economics” – White

Posted by Tom Duncan
May 18, 2011
in Blog

“The Federal Reserve System is a major sponsor of monetary economics research by American economists. I provide some measures of the size of the Fed’s research program (both inputs and published outputs) and consider how the Fed’s sponsorship may directly and indirectly influence the character of academic research in monetary economics. In particular, I raise […]

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“How Fed Policy Has Cost America $170 Billion” – Money Rates

Posted by Tom Duncan
May 18, 2011
in Blog

“Could the U.S. economy use an extra $170 billion right about now? Though the economy has shown fitful signs of growth, that growth is still so fragile that it remains to be seen whether it can withstand setbacks such as the rising price of gasoline. So, an extra $170 billion in the pockets of American […]

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“Zimbabwe must lead the way.”

Posted by Gonzalo Schwarz
May 17, 2011
in Blog

…In the meantime, even Mexico may be trying to get a step or two ahead of the Federal Reserve and the U.S. Treasury Department. In the words of Mexican billionaire Hugo Salinas Price, “Well I think the central bank (of Mexico) is watching what the Federal Reserve has been doing with utter amazement because we have been down that path before and it led to our ruin. So maybe they are saying, ‘We better have a little bit of gold because what is going on with quantitative easing is really hair-raising.’”

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“Why the U.S. Needs to Stop Dodging the Debt Bullet” – Forbes

Posted by Tom Duncan
May 17, 2011
in Blog

“Practically speaking,a ceiling that is raised automatically is no ceiling at all. Given that, why not dispense with the pretense? The reason is politics. No Congressman wants to be on the record voting for unlimited debt, yet most are willing to rail against fiscal recklessness while raising the ceiling every time it’s reached. Any Congressman […]

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“Slow Growth, Inflation Makes US Bonds Bad Buy: Gross” – CNBC

Posted by Tom Duncan
May 16, 2011
in Blog

“The US economy is headed for a period of higher inflation and lower growth that makes the nation’s debt unappealing when measured against its global competitors, Pimco’s Bill Gross told CNBC. The head of the world’s largest bond firm, with nearly $1.3 trillion under management, explained the firm’s position further as it has cut out […]

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“How Would the Invisible Hand Handle Money?” – Selgin and White

Posted by Tom Duncan
May 13, 2011
in Blog

“It is easy to note what is absent from a pure laissez faire monetary regime. There is no government control of the quantity of exchange media. There is no state-sponsored central bank. There are not legal barriers to entry, branching, or exit of commercial banks (or non-bank financial institutions, assuming any distinction can be drawn). […]

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“Quantitative Uneasiness” – Freeman

Posted by Tom Duncan
May 13, 2011
in Blog

“The second problem with QE2 is that the Fed is stuck in an inappropriate economic model, which embodies the adage that when all you have is a hammer, every problem looks like a nail. The Fed really only has one policy tool: raising and lowering interest rates, whether short- or long-term. Therefore all economic problems […]

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“U.S. Government Spending Is the Biggest Threat to Economic Recovery” – Money Morning

Posted by Tom Duncan
May 12, 2011
in Blog

“Bernanke continues to dismiss inflation as a big U.S. economic concern, and the Fed decided last week to keep interest rates between 0.00% and 0.25% “for an extended period.” But U.S. consumers have complained that sky-high gasoline prices are eating away at household budgets and now some retailers are starting to raise prices. The U.S. […]

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“Vincent Reinhart on Bear Stearns, Lehman Brothers, and the Financial Crisis” – EconTalk

Posted by Tom Duncan
May 12, 2011
in Blog

“Vincent Reinhart of the American Enterprise Institute talks with EconTalk host Russ Roberts about the government interventions and non-interventions into financial markets in 2008. Conventional wisdom holds that the failure to intervene in the collapse of Lehman Brothers precipitated the crisis. Reinhart argues that the key event occurred months earlier when the government engineered a […]

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“The Upside-Down World of Modern Monetary Theory” – Murphy

Posted by Tom Duncan
May 11, 2011
in Blog

“Modern Monetary Theory (MMT) is a hip economic/financial paradigm apparently sweeping a world unsatisfied with mainstream economics. Over the past year, I have been hearing a growing number of people refer to MMT: either fans who think it blows up my Austrian views, or foes who think it deserves a full-scale critique. MMT’s underground popularity […]

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“Roosevelt’s Inflation Program in a Nutshell”

Posted by Tom Duncan
May 11, 2011
in Blog

“President Roosevelt’s second offensive against the depression has been launched in the form of an amendment to the farm bill. This amendment provides a manner in which the credit of the country will be expanded. Expansion of credit is expected to lead to increased business activity. Other features are expected to lead to what is […]

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“Forbes Predicts US Gold Standard Within 5 Years” – Human Events

Posted by Tom Duncan
May 11, 2011
in Blog

“A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS. “What seems astonishing today could become conventional wisdom in […]

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Thoughts on a Return to Gold

Posted by Gonzalo Schwarz
May 10, 2011
in Blog

It took 200 years to build and perfect the classic gold standard system; then it was destroyed in about seven weeks when the Guns of August 1914 thundered across Europe; and now I am allotted seven minutes to resurrect it. Fortunately, Churchill’s defense of democracy also applies to the daunting task at hand: To wit, the classic gold standard is the worst possible monetary system – except for all of the alternative inflation-generating, savings-destroying, debt-breeding, bubble-emitting and boom and bust-prone systems which have been tried in the 100 years since its demise. Hence, we offer six present day monetary vices which are curable by gold…

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Coming Soon to a Bank Near You…the “Hoarders”

Posted by Tyler Watts
May 10, 2011
in Blog

We sound money types lament the disappearance of “good” money like gold and silver coins from day-to-day business. There is something special about these ancient and honorable monies. No, it’s not some Goldmember-style fetish, some psychological affliction known only to “gold bugs.” It’s knowing that the value of your money cannot be inflated away by […]

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“Trichet Says Global Central Bankers Are United in Fighting Against Inflation” – Bloomberg

Posted by Tom Duncan
May 9, 2011
in Blog

“European Central Bank President Jean- Claude Trichet said the world’s central bankers are united in fighting inflation fueled by surging commodity prices and fast- growing emerging economies. “There is a solid unity of purpose of all central bankers concentrated on solidly anchoring inflation expectations,” Trichet said today in Basel, Switzerland, after chairing the Global Economy […]

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“Kazakhstan’s Bid to Influence Global Finance” – Euronews

Posted by Tom Duncan
May 6, 2011
in Blog

“What is needed most is global financial stability. Many worry that the dollar-centred monetary system is sick, leaving some to present radical proposals. Judy Shelton from Atlas Economic Research Foundation, a US think tank is one of these people: “We can’t have a sound monetary policy until we have sound finances. I hope the future […]

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Jansen on Bank Secrecy and Financial Privacy

Posted by Tom Duncan
May 6, 2011
in Blog

“J. Bradley Jansen spoke at the Mises Institute’s Austrian Scholar’s Conference in 2005 on bank secrecy and financial privacy.” See it here. Image by Michal Marcol / FreeDigitalPhotos.net.

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A Tiger by the Tail – Hayek

Posted by Tom Duncan
May 5, 2011
in Blog

“F.A. Hayek said that his biggest regret in a lifetime of writing was that he never wrote a book-length refutation of Keynesian economics. He seriously doubted that Keynesian style planning would ever captivate governments, so he focused on different things. Economist Sudha Shenoy decided to rectify the problem. As a Hayek scholar, she noted that […]

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“From Pleasant Deficit Spending to Unpleasant Sovereign Debt Crises” – White

Posted by Tom Duncan
May 5, 2011
in Blog

“Economists have long disagreed seriously about the costs and benefits of government budget deficits and debt. Following the Second World War, a clash between Keynesian and―orthodox fiscal policy views arose. The debate waned as fiscal Keynesianism won the day, then resumed as monetarist and new classical economists challenged Keynesian thinking in the 1970s. Economists became […]

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Hayek On Deflation – Coordination Problem

Posted by Tom Duncan
May 4, 2011
in Blog

Over on the Coordination Problem blog, a number of scholars in the field of monetary theory are having an interesting discussion on the topic of Hayek and deflationary spirals. I am providing the link. I recommend a thorough reading of the comments. The post is titled: Hayek on Deflation Steve Horwitz Coordination Problem, May 3, […]

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“Targeting Inflation at 2% Is Too Low” – DeLong

Posted by Tom Duncan
May 4, 2011
in Blog

“First, the question is not whether the Federal Reserve should raise its target inflation rate above 2% per year. The question is whether the Federal Reserve should raise its target inflation rate to 2% per year. On Wednesday afternoon, the Federal Reserve chairman, Ben Bernanke, stated that he was unwilling to undertake more stimulative policies […]

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“Can the Federal Reserve Print to Prosperity?” – Forbes

Posted by Tom Duncan
May 4, 2011
in Blog

“The side affect of all of the money supply and low interest rates is that commodity prices continue to rise, which is hitting the middle class rather hard. And with consumers making up 70% of the economy, this is a real drag on real economic growth. We have printed a lot of money but the […]

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“Bill Would Deny Fed Chiefs Interest Rate Votes” – Boston Globe

Posted by Tom Duncan
May 4, 2011
in Blog

“US Representative Barney Frank introduced a bill yesterday that would block the heads of Federal Reserve regional banks in Boston and elsewhere from voting when they serve on the Fed’s interest-rate-setting panel in Washington. The presidents of the regional banks take turns filling five of the 12 voting seats on the Federal Open Market Committee, […]

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Inflation at the Pump

Posted by Gonzalo Schwarz
May 3, 2011
in Blog

Here is an interesting article about the effect of inflation on your pain at the pump. The linked article by Mark Brandly, professor of economics at Ferris State University and an adjunct scholar of the Ludwig von Mises Institute, shows the effects of the Federal Reserve’s monetary expansion on domestic gas prices. With gas now […]

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“Can the Federal Reserve Print to Prosperity?”

Posted by Tom Duncan
May 3, 2011
in Blog

“The side affect of all of the money supply and low interest rates is that commodity prices continue to rise, which is hitting the middle class rather hard. And with consumers making up 70% of the economy, this is a real drag on real economic growth. We have printed a lot of money but the […]

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“Federal Reserve’s Politicization Is Dangerous”

Posted by Tom Duncan
May 2, 2011
in Blog

“It might help getting our minds around what is so wrong in America today by thinking about the local police force. It’s not hard to understand that the job of the police is to protect lives and property. Suppose we decided to broaden their mandate. Suppose each municipality decided that the job of the police […]

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When Low Inflation is Too High

Posted by Tyler Watts
May 2, 2011
in Blog

Milton Friedman famously stated, “Inflation is always and everywhere a monetary phenomenon.” In other words, whenever you see persistent, high inflation, you know the cause was too much money. When too much money is chasing the same amount of goods, as they say, prices tend to rise; the faster the money supply is increased, the […]

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