Monetary Policy
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Real Banking Reform? End the Federal Reserve
“The next major question that needs to be asked is: How do they know? These are the same politicians whose time horizon goes no further than the next election day, and who pander to the special interest groups that provide them with the campaign contributions and the votes that keep them in office. And these…
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Market Interest Rates Need to Tell the Truth
“In the free market, interest rates perform the same functions as all other prices: to provide information to market participants; to serve as an incentive mechanism for buyers and sellers; and to bring market supply and demand into balance. Market prices convey information about what goods consumers want and what it would cost for producers…
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The Origins of the Federal Reserve
“Where did this thing called the Fed come from? Murray Rothbard has the answer here — in phenomenal detail that will make your head spin. In one extended essay, one that reads like a detective story, he has put together the most comprehensive and fascinating account based on a century’s accumulation of scholarship. The conclusion…
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Lawrence H. White – What Type of Inflation Target?
“For much of monetary history, inflation targeting was unnecessary. There was no need to worry about constraining the central bank’s inflationary proclivities because no central bank existed. The quantity of basic money was constrained by the mints’ commitment to full-bodied gold and silver coinage (at least where the mint-owners lacked monopoly status or chose not…
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“A Three-Point Plan to Save the Euro”
“The rescue package requested by Greece will, if endorsed, buy the eurozone six months, perhaps a year at most. By then, the Greek government will have exhausted the aid and be forced to ask for more or to borrow at astronomical rates. This assumes that, before then, Greece does not precipitate into an even deeper…
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“Senate Ends Financial-Bill Standoff”
“Lawmakers ended the three-day standoff holding up action on the financial-overhaul bill, setting up a Senate debate in which both sides will be maneuvering for advantage. The breakthrough came in a bipartisan agreement on a single contentious element of the overhaul proposal: the creation of new government authority to wind down failing financial firms. Democrats,…
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What Austrian Economics Can Tell Us about the Crisis
The recent financial crisis has called into question several basic tenets of mainstream macroeconomics. In the words of William White, former chief economist of the Bank for International Settlements (BIS), “the prevailing paradigm of macroeconomics allows no room for crises of the sort we are experiencing.” White and his BIS colleagues were among the few…
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“Greece’s Threat to the Euro”
“All too often in the midst of an economic and financial crisis, policymakers either engage in denial or else take flights into fantasy. Sadly, the present Greek crisis is proving to be no exception. Rather than recognising the Greek crisis for the solvency issue that it is, European policymakers seem to be convincing themselves that…
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“The Limits of Monetary Policy”
“History has shown that monetary stability—money growth consistent with a stable and predictable value of money—is an important determinant of economic stability. Safeguarding the long-run purchasing power of money is also essential for the future of private property and a free society. In the United States, persistent inflation has eroded the value of money and…
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“The Case for Auditing the Fed is Obvious”
“Recently, the Federal Reserve has significantly altered the procedures and goals that it had followed for decades. It has more than doubled its balance sheet, paid interest to banks on reserves held as deposits with the Fed, made decisions about which institutions to prop up and which should be allowed to fail, invested in assets…
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Wolf and Krugman Discuss Austrian Economics
Martin Wolf (Financial Times) and Paul Krugman (New York Times) discuss Austrian economics.
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Deflating China’s Bubble
Reining in China’s investment boom will be hard. The Chinese authorities are damned if they do and damned if they don’t.