Nicolas Cachanosky

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 […]

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 […]

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 […]

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 […]

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 […]

The discussion in monetary institutions is becoming increasingly relevant in economics. How to deal and avoid financial crisis is an important issue. The recent financial crisis showed that economics might not be as suited to foresee and deal with these problems as the theory seems to suggest. This analysis requires a benchmark in the same […]

In conventional microeconomics the monopoly is associated with inefficiency. Under perfect competition there are no deadweight losses. This means that resources are efficiently allocated. The monopoly, on the other hand, provokes inefficient production by choosing a low level of production. This inefficiency could be reduced by the involvement of the government; that is, by regulation. […]

Extreme events sometimes cause big shifts in the economic point of view of the market process. The recent financial crisis brought back into scene Keynesian economics as a way to cope with the depression and make the economy recover. The recent tragic events in Japan seems to have brought to surface once more the “Broken […]

An important aspect of the study of sound money is to correctly identify historical cases of free markets in money and banking versus regulated markets in money and banking. If we cannot correctly separate one from another then our conclusions will inevitably be biased. The period known in the U.S. as the “free banking era” […]

There are two main reasons usually mentioned to prefer fiat money over gold standard. One is that fiat money offers more flexibility to do fine tuning on the economy and also central banks will have their hand free if they need to go into a monetary stimulus. The other reason is that a regime of […]