Tag: Inflation

Monetary Policy and Heightened Price Volatility in Raw Materials Markets »

Despite the Fed’s breathtaking increase of base money since the autumn of 2008, the money stock as measured by conventional concepts such as M2 has not increased greatly, and hence, as ordinary quantity-theory-of-money thinking would lead us to expect, inflation as measured by conventional concepts such as the consumer price index (CPI) has been...
Read More »

A Bogus Example of Controlling Inflation with Price Controls »

As the U.S. government prepared for and then engaged fully in World War II, it made increasingly stringent efforts to control inflation by imposing price controls. Late in 1942, these controls were strengthened substantially, and from early 1943 through mid-1946, when the controls were allowed to lapse, the consumer price index rose very little....
Read More »

The Fiscal Cliff and Policy Uncertainty »

In today’s issue of the Wall Street Journal, economics editor David Wessel has a useful column about policy uncertainty—worries about government spending, the expiration of provisions in the tax code, inflationary expectations, and the like—and its role in hampering economic growth by discouraging private investment. (The piece is available online to WSJ subscribers here.)...
Read More »

Robert Reich to Dems: Hold the Middle Class Hostage »

In a recent blog post Robert Reich takes the Obama administration to task for—gasp—trying to forestall “Taxmageddon”—the potentially devastating combination of expired tax rate cuts and new taxes slated to go into effect automatically on January 1. Mr Reich suggests Mr. Obama ought instead let it occur as scheduled: his strongest bargaining position would...
Read More »

Extraordinary Demand to Hold Cash—The Mystery Persists »

Since the fall of 2008, the Federal Reserve System has pumped an almost incomprehensibly large amount of reserves into the commercial banking system—about $1.4 trillion. In normal circumstances, this action would have given rise to hyperinflation. Of course, not only has no hyperinflation occurred, but scarcely any inflation at all has occurred, and policy...
Read More »

The Bazooka That Doesn’t Kill »

The chairman of the Federal Reserve and the President of the European Central Bank, arguably the two most powerful men in the world right now, have done what many people had been asking for—fire the monetary bazooka that will supposedly obliterate the four-year economic crisis. In Europe, Mario Draghi announced he would buy unlimited...
Read More »

Economists Testify on Federal Reserve Before House Committee Chaired by Ron Paul »

On May 8th, five economists, including our Research Fellow Peter Klein, appeared in testimony before the U.S. House Committee on Financial Services Domestic Monetary Policy and Technology Subcommittee, chaired by Congressman Ron Paul. The panelists included two economists from the Austrian School, two Keynesians, and one monetarist: Peter G. Klein, Research Fellow, The Independent...
Read More »

Inflation Update »

Conventional wisdom today is that the threat of inflation is low, despite the Fed’s easy money policy, and notwithstanding some economists in the minority (I’m in that minority) who see the Fed’s easy money policy as laying the groundwork for inflation. The March Consumer Price Index (CPI) numbers were recently released, so let’s see...
Read More »

Another Sad Watershed in Fast Food Pricing »

We might define our time in economic history by the prices of various fast food items. When I was growing up, $5 could get you a feast at McDonald’s or any similar establishment—deluxe burger, fries, soda, maybe an apple pie or some fried chicken bits. I saw $5 as the upper limit of what...
Read More »

Likely Fiscal and Monetary Legacies of the Current Crisis »

I am not a prophet, nor do I play one on TV. Nevertheless, I will hazard some conjectures here about certain likely legacies of the current crisis. I focus on fiscal and monetary matters. In a future post, I will deal with regulatory and ideological matters. I will try to avoid mere guesses or hunches...
Read More »