Homines libenter quod volunt credunt
Posted in Money on Aug 12th, 2011
The tension between Wall Street, Main Street and K-street has been severe ever since the National Banking era got underway in the 1860s, and probably earlier. We’ll detail some of those tensions in the future. In the meantime, courtesy of the folks at Division of Labor, here is a story of how bank regulations “help” […]
The Start of the Great Depression by Michael E. Marotta (This presentation originally appeared in the Fall 2009 issue of the Mich-Matist of the Michigan State Numismatic Society.) No mythology faces fewer challenges than the folktale of The Great Depression. The Austrian economist, Ludwig von Mises, pointed out in Human Action that capitalists and socialists […]
Posted in Economic Illiteracy, Macroeconomics, Money, Price System on Mar 3rd, 2011
It is easy, even for the best economists, to get stuck thinking about only one side of a market, or on only one margin of adjustment, when discussing policy. For example, opponents of the minimum wage seem to unilaterally focus on the possibility that raising wages will cause less employment. This is undoubtedly the case. […]
Posted in Macroeconomics, Money, You Can't Have it Both Ways on Feb 24th, 2011
If you subscribe to the New (and old) Keynesian orthodoxy, you would tend to consider people that increase their demand for money balances (i.e. “hoarders”) to be somewhat akin to economic villains. The simplest version of the story is this: if people irrationally stop spending money on consumption goods and services (things that are produced) […]
Posted in Classical Liberalism, Environment, History, Macroeconomics, Money on Feb 15th, 2011
I’ve been thinking a lot lately about the classical gold standard. This was an international monetary standard that lasted from roughly 1870 to 1914. Not perhaps coincidentally, this was a time of a vast expansion in trade (the first modern wave of globalization) and a general surge in global prosperity. Without getting into the details, […]
Posted in Money, Price System on Nov 1st, 2010
Oil is an essential input into everything. Therefore, if the “price” of oil increases, it has to be the case that the price of everything else increases. For example, if oil prices rise, then gasoline prices rise, and since we need gas to make fertilizer and to harvest and clean broccoli, then broccoli prices rise, […]
Posted in Money on Oct 5th, 2010
From Ken Rogoff on whether gold prices might reach $10,000 per ounce: After all, medieval alchemists engaged in what we now consider an absurd search for ways to transform base metals into gold. Wouldn’t it be paradoxical, then, if financial alchemy could make an ingot of gold worth dramatically more? I’m no gold bug, but […]
Posted in Money, Regulation on Sep 30th, 2010
Newly appointed (if that is what you can call it) CFPB czar Elizabeth Warren in her own words: It has the power to get rid of old ones that are outdated, expensive or don’t work. OK folks. Place your bets. How many old regulations will be removed in the next two years?
Posted in Economists, Money on Aug 18th, 2010
I was just reading an excerpt from Joseph Stiglitz’s The Roaring Nineties. In it, Stiglitz makes his usual argument that market failures are everywhere and that wise government policy can and has stepped in to the rescue. An illustration he uses is that during the 1930s when Fannie Mae was organized by the government, it […]
Posted in Methodology, Money on Jul 26th, 2010
I teach a course on Money and Banking, so I try to read some of the modern literature on international financial markets. This paper came across my desk: Fetters of Gold and Paper We describe in this essay why the gold standard and the euro are extreme forms of fixed exchange rates, and how these […]