Tag: Money and Banking

Is Macroeconomics Really Economics? »

The world probably would have been much better off had macroeconomics never been devised. Although I have in mind Keynesian macroeconomics above all, I include other types of macro models as well. I even include, somewhat reluctantly, the whole quantity theory approach descended from David Hume to the Friedmanites, now known as monetarism. One...
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The Federal Reserve’s First Century »

One factor often cited as contributing to the decline of the Roman Empire was the debasement of the currency. In a period of about 150 years following Emperor Nero’s reign (from 54 to 68 AD) the value of Rome’s currency fell by 50%. By 250 AD, 200 years after Nero, the value of Rome’s...
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The Delusion of Money »

French president Francois Hollande’s statement saying that the euro should not fluctuate according to the mood of the market; the complaint by Eurogroup president Jean-Claude Juncker about the euro being “dangerously high”; and the Bank of Japan’s recent decision to weaken the yen with “aggressive” quantitative easing confirm what we already knew: The world...
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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...
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An Open Letter to Washington on the Debt Ceiling »

Over at Forbes, there is a pithy letter to our D.C. politicos on the debt ceiling. Here is a snippet: The upcoming debt ceiling fight isn’t just about “paying our already committed bills,” as the President suggested in his most recent press conference. It’s about addressing the underlying causes of our debt and quitting our...
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A Vulgar Keynesian Visits My Chamber »

I heard a noise that seemed to come from my chamber door. I opened it, and then . . . Deep into that darkness peering, long I stood there wondering, fearing, Doubting, dreaming dreams some Austrians dared to dream before; But recession was unbroken, and the darkness gave no token, And the only words...
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Stream of Conciousness Ramblings, Somewhat Related to James M. Buchanan »

A bottle of Jack Daniels is sitting on our kitchen counter, the result of a fire in our microwave oven. The oven was destroyed so we ordered a replacement, which was supposed to be installed a few days ago, but the installers who showed up couldn’t get the new oven into the spot where...
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Krugman’s Coin »

Paul Krugman has made a tongue-in-cheek proposal that has set tongues wagging—having the U.S. Treasury Department mint a $1 trillion platinum coin in order to circumvent the federal debt ceiling. Actually, Krugman was not the first to propose this solution he himself calls “silly” but he has given it wider exposure. In these weird...
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Krugman Attacks Us »

When Paul Krugman starts attacking us, we know we’re doing something right. John Maynard Keynes’s presumptive heir, Krugman apparently doesn’t like the findings of our recent book edited by Research Fellow David Beckworth, Boom & Bust Banking: The Causes and Cures of the Great Recession, exposing the profound fallacies of Lord Keynes’s love affair...
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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...
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