Category: Economic Theory
The analysis published under this category are as follows.Thursday, July 29, 2010
Austrian Business Cycle Theory Vs Keynesians / Economics / Economic Theory
The current recession has brought back discussion on the merits of countercyclical fiscal and monetary policy. Broadly speaking, the economics profession is divided into two camps. One side is made up of "liquidationists" and "deficit hawks," supporting tight monetary policy and low — or no — government spending. The other group is composed of those fearing a fall in prices, who support easy credit and expansive fiscal policy to combat it. While most economists probably fall in between, this dichotomy represents the two poles. The extremes are occupied by the Austrian School on one end and Paul Krugman on (or close enough to) the other.
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Tuesday, July 27, 2010
The Unlimited Power of Suppressing the Interest Rate / Interest-Rates / Economic Theory
Under today's fiat-money regimes, central banks, as a rule, control short-term interest rates. They do so by setting the interest rates on short-term loans extended to commercial banks (typically with maturities of one day, one week, two weeks, or one month).
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Sunday, July 25, 2010
Credit Based on Consumption Not Savings, Real Bills Revisted / Economics / Economic Theory
Adam Smith in his Wealth of Nations worked out the foundations of a second type of credit that is based, not on savings, but on consumption. Later this theory was pejoratively called "Real Bills Doctrine" by its detractors. We stick to this name because the adjective "real" admirably captures the essence of a bill of exchange, making it different from anticipation bills, accommodation bills, treasury bills, which all have a measure of being "unreal".
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Sunday, July 25, 2010
Thoughts on the Economy / Economics / Economic Theory
Marcus Eduardo de Oliveira writes: "… the ideas of Economists and political philosophers, BOTH right when they are and when they are wrong, are more powerful than is commonly understood." -John Maynard Keynes
Nobody can ignore the economy for only two reasons: the first is that not enough resources for everyone, since desires are unlimited. The shortage, understood as market failure, is an incontestable truth. The second reason is that we are all part of the economy. The latest issues involving the economy also involve us in every moment. Thus, regardless of the evolutionary stage of each company, we always affect situations involving the generation of employment, income, combating poverty, hunger, resource transfers, taxation, purchase and sale of goods.
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Thursday, July 22, 2010
The Death of the Postindustrial Dream / Politics / Economic Theory
Remember postindustrialism? Not long ago, this catchphrase was supposed to define America’s future: no more grubby hard industries, just a clean bright world of services and high technology. Its most succinct formulation is as follows:
Manufacturing is old hat and America is moving on to better things.
Monday, July 19, 2010
Keynesian Economics Fraud, A Bad Day For The WSJ / Economics / Economic Theory
A recurrent theme in my articles has been that our current economic system is intended to steal your wealth and that a vast amount of information being taught as economics is intended to justify this stealing and to trick you into falling for its program.
As with any misinformation, one must make a distinction between a deliberate lie and an honest mistake. As I have studied this, it is clear to me that, at the very top, it is deliberate. For example, John Maynard Keynes was a deliberate fraud. He did not believe Keynesian economics. It was a useful tool toward his goal of attracting the bankers to support him and his followers. Keynes was a confidence man; our current economic system is a confidence game, and the intent is to steal the wealth of all the marks.
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Sunday, July 18, 2010
Debunking Paul Krugman's Icelandic Economic Miracle / Economics / Economic Theory
With op-ed pieces such as "Budget Deficits: Spend Now, Save Later", it is of no surprise that Paul Krugman declares--Iceland--a "Post-Crisis Miracle."
In an article dated June 30, Krugman wrote: "...although Iceland is generally considered to have experienced the worst financial crisis in history, its punishment has actually been substantially less than that of other nations."
Friday, July 16, 2010
Austrian and Keynesian Economics, Price Target for Gold and Silver Mining Stocks / Commodities / Economic Theory
We live in an era of unparalleled confusion on monetary and economic issues. It’s almost like a shoot-out among the economists in the Old West, except that here you can’t tell the good guys from the bad guys. You read so many conflicting reports, editorials, and newsletters that it’s easy to get befuddled.
There are those who say inflation, those who shout deflation. Some say print more money, others say halt the printing presses. There are those who say bail them out, and the others who say let them fail. There are those who say gold is going up to $2,000 and even to $5,000, and those who say it’s a bubble about to burst. We’re in a bear market, sell all your stocks. No, we’re in a bull market, buy, buy, buy.
Friday, July 16, 2010
Economics in Freefall / Economics / Economic Theory
I admire Joseph E. Stiglitz, because he has a social conscience and a sense of justice, the absence of which turns economists into monsters. Despite his virtues and Nobel Prize, Stiglitz sometimes falls down as an economist. Readers of my new book, How The Economy Was Lost, will be aware that I take him to task for the Solow-Stiglitz production function, which seriously misleads economics about the scarcity of nature’s capital.
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Wednesday, July 14, 2010
Economics Is Easy Except for Academic Economists / Economics / Economic Theory
Sterling T. Terrell writes: I stumbled across an interesting article a few days ago. Written by Kartik Athreya, of the Federal Reserve Bank of Richmond, the article is titled "Economics is Hard. Don't Let Bloggers Tell You Otherwise."
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Tuesday, July 13, 2010
The Self-Defeat of the Keynesian Cross / Economics / Economic Theory
Predrag Rajsic writes: The Austrian business-cycle theory, initiated by Ludwig von Mises and further developed and elaborated by F.A. Hayek, is by many considered the cornerstone of this school of thought. However, in 1998, Paul Krugman plainly dismissed the theory as not "worthy of serious study."
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Wednesday, July 07, 2010
Ten Economic Blunders from History / Economics / Economic Theory
John S. Chamberlain writes: Take cover when you hear a political leader talking about economic affairs. You can bet a bad decision is incoming. Luckily for the leaders, their meddling usually has a slow, erosive effect on the economy. Every so often, however, the great ones manage to land a real whopper that takes them down along with their whole country. Here are ten examples from history.
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Wednesday, July 07, 2010
Beyond Black Swans, De-Leveraging And Re-Leveraging / Economics / Economic Theory
The black swan is the foo bird of modern Keynesianism. It is a threat only because of central bank fiat money and commercial bank leverage.
In a recent report, "China: What Rhymes with 'Crash'?" I wrote this:
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Tuesday, July 06, 2010
Economists Gathering Data Whilst Economy Burns / Politics / Economic Theory
Mark R. Crovelli writes: When future generations of scholars look back on the economic and political disaster enveloping the United States today, three questions should be at the forefront of their minds.
First, they should wonder whether the many generations of politicians that collectively engineered this economic and political disaster were either (1) too outrageously stupid to know that what they were doing would produce such a dreadful catastrophe, or (2) whether they were so evil and underhanded that they did know what they were doing would result in disaster — and yet they did it anyway.
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Wednesday, June 30, 2010
Defending the Slum Landlord / Housing-Market / Economic Theory
Walter Block writes: To many people, the slumlord — alias ghetto landlord and rent gouger — is proof that man can, while still alive, attain a satanic image. Recipient of vile curses, pincushion for needle-bearing tenants with a penchant for voodoo, perceived as exploiter of the downtrodden, the slumlord is surely one of the most hated figures of the day.
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Wednesday, June 30, 2010
How Economic Policy Errors Cause Depressions / Economics / Economic Theory
It is easy to pick on Paul Krugman. So easy in fact, that it is not even fair sport.
However, if you can separate the wheat from the chaff, sometimes there are nuggets of truth in what Krugman writes.
Wednesday, June 30, 2010
Economic Choice Between Austrian Austerity Or Keynesian Poverty / Economics / Economic Theory
Sean Corrigan writes: [Government] is apprehended, not as a committee of citizens chosen to carry on the communal business of the whole population, but as a separate and autonomous corporation, mainly devoted to exploiting the population for the benefit of its own members… The intelligent man, when he pays taxes, certainly does not feel he is making a prudent investment of his money; on the contrary, he feels he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him" ~ H.L. Mencken, "More of the Same," American Mercury 1925
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Tuesday, June 29, 2010
Keynesian Economics C + I + G = Baloney / Economics / Economic Theory
Patrick Barron writes: Wrongheaded governmental interventions are preventing the world's largest economies from recovering from massive malinvestment.
Japan, currently the world's third-largest economy, has had zero growth for 20 years. A good case can be made that the United States has had zero growth for ten years, because the so-called growth of the first decade of the new millennium now appears to have been phony. All of those houses were built at a loss, losses that we are only now recognizing. We have yet to plumb the total extent of the rot.
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Tuesday, June 29, 2010
Paul Krugman Warns of Depression / Economics / Economic Theory
The more I read Paul Krugman's columns and papers, the more I realize just how great the gulf is between Austrian and Keynesian thought. It is impossible to sum up all of the differences between the two camps, but I do think that perhaps the disparities can be summed up in the Austrian rejection of Keynes' famous 1943 statement that expansion of credit by the central bank will create a "miracle . . . of turning a stone into bread."
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Monday, June 28, 2010
How do Other Nations Balance Their Trade? Try Germany / Economics / Economic Theory
As America continues to contemplate its trade mess, the question naturally arises how other developed nations manage to trade with the world without deficits and without turning high-wage industries into low-wage industries to compete. Although some other developed nations, like Britain and Spain, have trade situations almost as bad as ours in recent years, some have been quite the opposite.Read full article... Read full article...