Category: Economic TheoryThe analysis published under this category are as follows.
Tuesday, October 28, 2014
Old Habits Reappear
Fighting the Fear of Fear
Myself Is after Me
Frayed Ends of Sanity
Hear Them Calling
Frayed Ends of Sanity
Hear Them Calling
Hear Them Calling Me
- Frayed Ends of Sanity, Metallica
Wednesday, October 22, 2014
I am thinking about the similarities between a financial crisis and for instance a family crisis, the death of a loved one or close friend, a divorce, or a personal bankruptcy.
And I wonder why in the case of our recent (aka current) financial crisis, we allow nothing to enter our communications, and our train of thought, but the idea of recovery and a return to growth. Has everyone always reacted that way after earlier financial crises – history is full of them -, or is something else going on?Read full article... Read full article...
Monday, October 20, 2014
Challenge to Keynesians 'Prove Rising Prices Provide an Overall Economic Benefit' / Economics / Economic Theory
The ECB has been concerned about falling consumer prices. I propose that's 100% stupid, yet that's the concern.
When the euro declined vs. the US dollar, the ECB was happy that inflation would inch back up. The fear now is that falling oil prices will take away the alleged gain of a falling euro.Read full article... Read full article...
Tuesday, October 14, 2014
Mateusz Machaj writes: Recently, the Polish economy experienced its first price deflation since the 1980s, which sparked in the country deflationphobia (or, as Mark Thornton calls it, apoplithorismosphobia).
Media sources and many economists focus on price inflation and price deflation as the source of various economic ills, but, contrary to much of the rhetoric, price inflation and price deflation are always “optimal” in the economic sense. At first, such a claim may seem controversial, since virtually all economists have something negative to say about either inflation or deflation. This concerns almost all schools of economic thought, mainstream and heterodox, including the Austrians.Read full article... Read full article...
Monday, October 13, 2014
Adam Smith and the Ponzi Economy
Like the archetypal images of love that were handed down by early Greek philosophers, of Erotic love, Parental love, and what later became Christian or Dutiful love towards fellow persons and living things of all kinds, the supposed “classic image” of the economy is the “Wealth of Nations”. Taken by the “Neolibs” of the 1980s and their surviving throw-offs as a timeless ode to invisible but all-powerful “market forces”, this classic model was handed down by their guru – Adam Smith.
Thursday, October 09, 2014
Claudio Grass writes: Most believe that expansionary monetary policy helps ease crises. Austrian School economists argue that central banks don't help in smoothing the amplitude of the cycles, but rather are the cause of cycles. In this microdocumentary video, we look back at four major busts in the last 100 years and explain how central banks created them. We also clarify why we believe the next bust is just around the corner. This video will not explain the mainstream view, but rather the view of the Austrian Business Cycle Theory (ABCT).Read full article... Read full article...
Tuesday, September 30, 2014
This Friday is Yom Kippur, the day when Jews around the world ask forgiveness for their transgressions from the year past. Rabbis remind the penitent to dwell on their sins of omission, in which they did nothing when a more thoughtful and proactive action was needed, and sins of commission, in which they actively participated in an unjust action. And while not all economists are Jewish, Gene Epstein the economics editor at Barron's, offered his thoughts on how this applies to the group.Read full article... Read full article...
Friday, September 26, 2014
In 1633 Galileo Galilei, then an old man, was tried and convicted by the Catholic Church of the heresy of believing that the earth revolved around the sun. He recanted and was forced into house arrest for the rest of his life, until 1642. Yet “The moment he [Galileo] was set at liberty, he looked up to the sky and down to the ground, and, stamping with his foot, in a contemplative mood, said, Eppur si muove, that is, still it moves, meaning the earth” (Giuseppe Baretti in his book the The Italian Library, written in 1757).Read full article... Read full article...
Wednesday, September 24, 2014
Mario Draghi, in one of his latest speeches, prodded governments to ease austerity to spur aggregate demand (an oxymoron). The IMF director, Christine Lagarde, recently urged the ECB to continue its easy monetary policy until aggregate demand picks up. U.S. Treasury Secretary, Jack Lew, has, for years, suggested government actions to boost aggregate demand. He has in turn lectured Germany, Japan, and China on the need to encourage demand. It is sad that such economic nonsense is constantly promoted by some of the world’s most influential people, including many leading economists, and that this continues to serve as the foundation of much of contemporary macroeconomic theory.Read full article... Read full article...
Tuesday, September 23, 2014
Shortly after the current Great Recession started, I wrote a Globe Asia column, “A Great Depression?” (December 2008). In it, I stressed the findings contained in Robert Higgs’ important book Depression, War and Cold War: Studies in Political Economy (Oxford University Press, 2006). Higgs concluded that, because of regime uncertainty, investors were afraid to commit funds to new projects. They simply didn’t know what President Roosevelt and the New Dealers would do next.Read full article... Read full article...
Sunday, September 14, 2014
Hans-Hermann Hoppe writes: In the most fundamental sense we are all, with each of our actions, always and invariably profit-seeking entrepreneurs.
Whenever we act, we employ some physical means (things valued as goods) — at a minimum our body and its standing room, but in most cases also various other, “external” things — so as to divert the “natural” course of events (the course of events we expect to happen if we were to act differently) in order to reach some more highly valued anticipated future state of affairs instead. With every action we aim at substituting a more favorable future state of affairs for a less favorable one that would result if we were to act differently. In this sense, with every action we seek to increase our satisfaction and attain a psychic profit. “To make profits is invariably the aim sought by any action,” as Ludwig von Mises has stated it. (Mises, 1966, p. 289)Read full article... Read full article...
Monday, September 08, 2014
By Pure Economic Decision
Firstly Tweeted by journalist Peter Spiegel, late Sunday, September 7, a leaked copy of proposed and agreed new EU28 sanctions against Russia, dating from September 5 confirmed that Russia's energy giants Rosneft, Gazprom and Transfeft will all be hit by European capital market bans:
Friday, September 05, 2014
Paul Krugman is at it again. That is, Mr. Krugman continues to myopically attack anyone who has warned that money printing could lead to 'inflation'.
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"...as I have written many many times, this inflation paranoia has proved remarkably resilient, enduring despite five-plus years of utter empirical failure." Three Roads to Hard Money
Tuesday, September 02, 2014
In recent months talking heads, disappointed with the lack of economic recovery, have turned their attention to wages. If only wages could grow, they say, there would be more demand for goods and services: without wage growth, economies will continue to stagnate.Read full article... Read full article...
Monday, September 01, 2014
Thomas Piketty Tried
Unremarked by most reviewers of Piketty's book “Capital” earlier this year, he also tried to “square the circle” on this longstanding subject. Marx argued that capitalist blind faith in ever-growing markets on the back of ever-growing populations in ever-growing economies could and would try to increase industrial production “until the last moment”. To do this, not only would they need more credit at lower interest rates – harming their pure financial banker brethren – but they would have to pay ever-lower real wages to their slavish workers. With lower real incomes, unsurprisingly, their workers would buy less - but the capitalists “could not understand”. So crisis was hard-wired into the system.