Ten Years After Lehman: An Interest-Rate Perspective

by Edward Chancellor*

Back in November 2002, Ben Bernanke, then a governor of the Federal Reserve, attended Milton Friedman’s 90th birthday party. In his writings, the legendary monetarist had pinned the Great Depression on policy failures of the American central bank. Bernanke was a keen disciple and apologised to Friedman on behalf of his employer, vowing that the Fed wouldn’t make the same mistake again. Less than six years later, Bernanke found himself at the helm of the Fed on that fateful day, Sept. 15, 2008, when Lehman Brothers collapsed. Another Great Depression beckoned. But now the Fed chairman was ready to make good on his promise. Continue reading

The Geneva School and its Ordoglobalists

by Stefan Kolev

Four cities are usually considered the birthplaces of neoliberalism: Vienna, London, Chicago, and Freiburg. In his new book, Globalists. The End of Empire and the Birth of Neoliberalism(Harvard University Press, Cambridge, MA, 2018, 393 pages), historian Quinn Slobodian points out that an important place is missing in this series: Geneva. The Genevan melting pot of neoliberal ideas in the immediate vicinity of major international institutions was formative in the various attempts to establish an order for the global economy over the past nine decades.

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The Irrelevance of Deposit Creation for Prices and Allocation: Comments on Selgin

by Arash Molavi Vasséi

In a previous post, Andreas refers to George Selgin’s recent discussion of the place of fractional reserve banking in the Austrian Business Cycle Theory (ABCT). There, Selgin takes a swipe at the monetary pillar of the ABCT. According to the Austrian model, fractional reserve banking is inclined to create money out of “thin air” and, therewith, admits investment spending in excess of “voluntary saving”. This imbalance, allegedly induced by a decline in reserve ratios, is reflected in a Wicksellian interest rate gap, which is supposed to impact prices and the allocation in a systematic way (the real pillar of the ABCT). Selgin argues that fractional reserve banking does not account for the Austrian business cycle, and Andreas expresses sympathy for this view.

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Selgin on Money Creation

by Andreas Hoffmann

George Selgin has a much-discussed post over at Alt-M. I agree with most of it.  However, I am puzzled by the following statement:

Austrian accounts of the money-creation process often exaggerate the ability of fractional reserve banks to create money “out of thin air,” even while sticking to a fixed reserve ratio, by looking at only one part of the bank money creation process.

[…]

Actually, it isn’t, for the simple reason that, more often than not, a deposit made at one bank involves a corresponding withdrawal of funds from another bank, as when the deposited sum takes the form of a check.

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The Ride-Hailing Vehicle Cap

by Liya Palagashvili

About two weeks ago, City Council in New York City voted to ban ride-hailing services (Uber, Lyft, Via, Juno) from adding new drivers for a year—with the exception of wheelchair accessible vehicles. The main justification for this cap is that ride-hailing services have been leading to reductions in vehicular speeds and causing road congestion in Manhattan’s busiest areas.

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The Virtues of the Market: Wilhelm Röpke as a Cultural Economist

Patricia Commun / Stefan Kolev (eds.): Wilhelm Röpke (1899-1966). A Liberal Political Economist and Conservative Social Philosopher, Springer, Cham 2018, 272 pages, 123 Euro.

by Erwin Dekker

Neo-liberalism is often associated with an excessive focus on the market at the expense of both the state and society. This new book, which is the outcome of a conference held to commemorate the fiftieth anniversary of Röpke’s death, demonstrates that precisely this imbalance was one of the main worries of many ordoliberals, and in particular of Wilhelm Röpke.

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Don’t Trust the CPI – Inflation is Hidden Somewhere Else!

by Gunther Schnabl

Both in Europe and in the US, interest rates have fallen to still very low levels and central banks have used unconventional measures to stimulate the economy. Nevertheless, officially measured inflation rates have remained low. While central bankers are proud of the high degree of price stability, many citizens feel their purchasing power diminishing. How does this fit together?

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Glasner: “Hayek, Hicks, Radner and Three Equilibrium Concepts”

by Andreas Hoffmann

David Glasner has posted his paper on “Hayek and equilibrium concepts” on SSRN. An earlier version of this fascinating paper was presented at the History of Economics Society in Toronto in 2017 and the NYU Colloquium.

A teaser (taken from the abstract):

The now dominant Lucas rational-expectations approach misconceives intertemporal equilibrium and ignores the fundamental Hayekian insights about the meaning of intertemporal equilibrium.

 

Fed Policy

by Jerry O’Driscoll

Fed Chairman Jerome Powell testified to the Senate Committee on Banking, Housing, and Urban Affairs. It was the semi-annual testimony mandated by the Humphrey–Hawkins Act.  Powell’s testimony was anodyne. He repeated and reiterated the Fed’s planned policy moves with respect to interest rates, and added suitable caveats on economic growth, inflation, and tariffs. Trade policy is a new factor for Fed policymakers. Continue reading

Reflections on the NYU Experience for Mario Rizzo’s 70th Birthday

by Robert P. Murphy

Like many others, I have been enjoying the birthday wishes offered to Mario. (Happy birthday Mario!) But these notes of congratulation have also included reminiscences of the Austrian Colloquium. As a PhD student on the Austrian fellowship at NYU from 1998-2003, I have some of my own reflections to share. (Disclaimer: I am fairly confident in these memories, but these events happened almost 20 years ago so proceed with caution.)

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Tanti auguri, professore!

by Malte Dold

Two of my favorite articles by Mario Rizzo are “Abstract Morality for an Abstract Order: Liberalism’s Difficult Problem” (Supreme Court Economic Review, 2015) and “Behavioral Economics and Deficient Willpower: Searching for Akrasia” (The Georgetown Journal of Law & Public Policy, 2016). Both of these recent articles wonderfully illustrate the depth, breadth, and originality of Mario’s thinking. On one hand, they reflect his deep knowledge of the history of economic and philosophical thought. On the other hand, they deal with contemporary challenges in economic, legal, and psychological theory.  Many of my co-congratulators correctly emphasized how well-read Mario is in economics and philosophy. Personally, I love and admire his ventures into psychology.

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Happy Birthday to a Great Mentor, Coauthor, and Friend

by Glen Whitman

When I arrived at NYU in Fall of 1994, I knew Mario only as a distant scholarly figure, someone whose work I had read along with Hayek and Mises.  He seemed as unapproachable as those intellectual giants – which is really something, given that both Hayek and Mises were already dead.  Fortunately, the Mario I met in person was neither dead nor unapproachable.  He invited me into the Austrian Economics Colloquium, as it was then called, where I met many other living-and-breathing Austrian thinkers and fellow travelers. In the years that followed, Mario became my teacher, then my dissertation advisor, and finally – I’m proud to say – my coauthor, with five published articles and counting.  Not to mention the long-awaited book on behavioral paternalism that we will submit to the publisher later this month.  (Mario would probably tell me to stop wasting time on a silly blog post and get back to editing.)

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On the dawn of your 8th decade…

by Sandy Ikeda

Back in the early 1980s I took Industrial Organization (two semesters) with Mario in which I got a decent grounding (and not a bad grade) in Chicago-style I.O. and antitrust, which unlike Chicago-style pizza is not too messy or excessively deep.  This has served me well in analyzing some economic problems and policies, such as why people tend to be more productive in coffeehouses than at home.  I also took a semester of Economic Analysis of Law with him – something, something, transactions costs, something….  In each of those courses, Mario’s approach was to present a well-prepared lecture followed by questions and discussion, using somewhat of a Socratic style.  If not always eloquent, they were engaging and insightful.

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Many happy returns to a 21st century Whig

by Nick Cowen

I met Mario Rizzo in person for the first time just two years ago when I joined the Classical Liberal Institute. I have since had the pleasure of teaching alongside him on his course on Classical Liberalism at the NYU School of Law. For much longer, I have benefitted from his influence from his public writing and through the academic networks that he has helped establish.

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Happy birthday to Mario, my longtime friend and associate

by Larry White

Mario and I go back many years. Decades, if truth be told. When we first met (summer 1975 Austrian Economics conference in Hartford, CT, if I recall correctly) he was a graduate student and I was an undergraduate. Six years later we became colleagues at New York University, where we shared the privilege of working with Israel Kirzner. Mario managed to stay at NYU (and it’s hard to imagine him in any other city); I had to move on in 1988. These days we frequently cross paths in New York and Fairfax and at conferences elsewhere.

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AD MAIORA, Mario!

by Giandomenica Becchio

On this special birthday, I wish Mario Rizzo all the best and I praise him for being a great Austrian economist and a great scholar. I always learn a lot when reading his works. Also, a special thanks for having been always supportive and helpful to me. Tanti auguri caro Mario, best birthday wishes, dear Mario. You are a special person.

On behalf of the Roman Empire children, Let me claim: “we are proud of you.”