My big takeaway from Money (McGraw Hill, 2014) is that Steve Forbes is no James Dean. Forbes is a rebel with a cause. Free-markets and sound money, please. In what follows, I will briefly mention 11 other takeaways from my reading of Money by Steve Forbes and Elizabeth Ames.
Category: Economic TheoryThe analysis published under this category are as follows.
Wednesday, August 20, 2014
Mark Tovey writes: During an early scene of Dawn of the Planet of the Apes, in which the hyper-intelligent apes were depicted hunting for deer in the forestsurrounding their settlement, someone behind me interjected “if those apes are so smart, how come they’re hunter-gatherers?” While a decent question, he received nothing but a shush from his more etiquette-conscious companion for raising it. While there are many factors other than intelligence that are relevant to a society’s choice of an agricultural or hunter-gather economy, Austrian capital theory can go a long way in helping to explain why the apes featured in the film can be both highly-intelligent and hunter-gatherers.Read full article... Read full article...
Sunday, August 17, 2014
Abenomics Does Not Work
So-called Abenomics is also (so) called Pure Keynesian. Two physics-related analogies help explain why neither Abenomics nor Keynesian economics will work. There is the concept of escape velocity – that is escape from recession - and the time rate of decay of plenty of things, for example of prices if deflation sets in. As we know, economists like to dress up their works on what is a subject that can never be scientific – economics – using mathematical formulae purporting to show neat functional relationships between “key aggregates”, but in several science domains, from astrophysics to subatomic physics firstly these terms have a real meaning. Secondly, ambiguity has to be allowed into the party. Multiple outcomes are perfectly possible.
Friday, August 15, 2014
Gary M. Galles writes: The use of the ceteris paribus, or “other things equal” assumption is an essential aspect of economic education. It is an important caveat that helps make sense of a complicated world by clarifying the incentive stories that comprise the core of economics.
Unfortunately, the often unthinking acceptance of that phrase has also provided an opening for misrepresenting economic reality in analyzing government interventions. That is because governments cannot change just one incentive. As a result, assuming certain “other things equal,” when those other things inherently cannot remain equal, provides cover for omitting adverse effects.Read full article... Read full article...
Wednesday, August 13, 2014
High Frequency Failure
Japan's most recent GDP data showing a 6.8% annual rate of contraction was quickly shrugged off by the markets as only a signal for more handouts from the Japanese government and the BOJ. But Shinzo Abe's government has to admit the failures are coming faster all the time. In the global finance industry we can move on from the easy explanation why we have HFT, Dark Pools, Libor rigging, FX rigging, oil and gold market rigging and the rest – that they deliver large easy profits to insiders, fixers and riggers. These fail-sure (rather than fail-safe) processes are also essential to maintaining an appearance of real economies with real markets. They serve this additional basic function.
Wednesday, July 30, 2014
By Grant Williams
Though they reunited this past month for a series of concerts at London’s O2 Arena, the cast of Monty Python last assembled onstage together at London’s Drury Lane Theatre a staggering 40 years ago.
As they took to the stage at the O2 in early July, the surviving members of perhaps the most famous comedy troupe in history (sadly, Graham Chapman died in 1989) boasted a combined age of 357.Read full article... Read full article...
Monday, July 28, 2014
Read full article... Read full article...
Thursday, July 03, 2014
Remarks on Money: How the Destruction of the Dollar Threatens the Global Economy / Economics / Economic Theory
— and What We Can Do about It by Steve Forbes and Elizabeth Ames
Thursday, July 03, 2014
Hal W. Snarr writes: In a 2010 Bloomberg Television interview, Alan Greenspan said, “The general notion the Fed was propagator of the bubble by monetary policy does not hold up to the evidence. ... Everybody missed it — academia, the Federal Reserve, all regulators.”Read full article... Read full article...
Sunday, June 15, 2014
A strange point of view is expressed in George Mason University economics professor Tyler Cowen’s NY Times article ‘The Lack of Major Wars May Be Hurting Economic Growth’, strange in more ways than just the obvious ones. Of course we find it counterintuitive to link growth to warfare. And of course we don’t like to make a link like that. But there’s a lot more here than meets the eye. For one thing, the age-old truth that correlation does not imply causality, something Cowen hardly seems to consider at all. Which is curious, and certainly makes his arguments carry a whole lot less weight, and interest. It makes his whole article just about entirely one-dimensional.Read full article... Read full article...
Friday, June 13, 2014
The missing variable in the great monetary equation is money velocity. We hear it over and over again, "There is no money velocity." And therefore, inflation cannot be a problem and is not.
Yet, there is a great divergence between the conventional financial media and the public who goes to the supermarket. The financial media swallows whole the official artifice that inflation is near-zero while ‘J.Q. Public’ sees his/her grocery costs, health insurance, etc. rising by leaps and bounds.Read full article... Read full article...
Wednesday, June 11, 2014
Ed Bugos writes: - “Things are not what they appear to be: nor are they otherwise”
At TDV we demonstrate this truth almost every day – in our blog, our tweets, and in our newsletters.
Just last week Jeff discussed the fallacy of GDP, comparing our lot to that of Jim Carey’s as Truman Burbank, the unaware mark in the Truman Show. In that blog, Jeff discussed one of the main problems with relying on GDP (Gross Domestic Product) as a measure of economic growth.Read full article... Read full article...
Tuesday, June 10, 2014
Doctor Les Woodcock Says
The former NASA consultant scientist, Dr Les Woodcock of Manchester University UK says he has had enough of Global Warming hysterics. His argument that an unsubstantiated hypothesis cannot rule supreme in climate science also applies to the flagrant and mindless meddling with the economy, for example by 'Super' Mario Draghi of the ECB using his Keynesian spin doctors for the chorus line.
Friday, June 06, 2014
The Faith Based Slope of Hope
Writing on the website The Slope of Hope, June 4, Tim Wright in 'The Persistence of Memory' said that: “....honestly, I don’t have visions of a group of thirty rich men sitting around a gigantic table at the top of a skyscraper, smoking cigars, chortling villainously and plotting humanity’s path. I do, however, firmly believe that the central bankers and political leaders of the largest countries were shocked at what happened late in 2008 and vowed Never Again”.
Wednesday, June 04, 2014
The Fed itself has stated many times over the past years that it intends to keep interest rates low. And now it starts complaining about low volatility. It looks like Yellen et al want to have their cake and eat it too. Perhaps they should have paid a little more attention to Hyman Minsky. Who long ago wrote – paraphrased – that if and when markets are perceived as being stable, it’s that very perception will make them unstable, because stability, i.e. low volatility, will drive investors into riskier asset purchases. The Fed’s manipulation-induced ultra-low rates have achieved just that, and now they’re surprised?Read full article... Read full article...
Sunday, June 01, 2014
The Oxymoron of Permanent Growth
One of the starkest non-surprises is that economic growth declines as well as advances. Why this should be “extraordinary” and a shock to civilization is hard to understand – for normal persons. Taking the case of Japan and the Asian Tigers, their miracle growth epochs or eras lasted about 30 – 40 years and then it was over. Taking the case of China and India, their period of extreme high annual growth lasted less than 20 years. In the case of the US and western European economies, high growth was commonplace for about 25 years.