by Jerry O’Driscoll In today’s Wall Street Journal, John Taylor explains why the U.S. recovery has been tepid while money growth has been very rapid. The recovery has set records for its weak pace, while money growth has set records for its rapidity. Taylor supplies some of the numbers. Taylor continues an argument he made … Continue reading Easy Money, Slow Growth
by Mario Rizzo There has been a lively debate on forecasts of high inflation made by those worried about the Fed’s recent policy of quantitative easing. For details I refer the reader to Daniel Kuehn's excellent blog. The question to which I address myself is solely “What do these predictions have to do with core Austrian … Continue reading Clarifications of the Austro-Wicksellian Business Cycle Theory
by Chidem Kurdas In two substantial New York Review of Books articles, Paul Krugman and Robin Wells offer their views on various explanations of the property bubble and ways to get out of the slump. On the latter front, they advocate aggressive deficit spending by the federal government and quantitative easing by the Federal Reserve— … Continue reading Taylor, Krugman and Quantitative Easing
by Andreas Hoffmann* The European Central Bank (ECB) and the Fed differ in many aspects. First, the ECB is considered to be more hawkish on fighting inflationary tendencies. Its primary goal is price stability and it has continued to watch money growth. Output gaps below full-employment are only considered secondary as instrument to forecast inflation. … Continue reading The European Central Bank Turns into the Fed?
by Mario Rizzo There seems to be broad agreement among economists that the current recovery from the recession will be characterized by a slowly falling unemployment rate. This makes a good deal of sense since the problem that created the recession was a misdirection of resources into a number of sectors including housing construction and … Continue reading The Fed’s Coming Indiscretion?
by Jerry O'Driscoll On the Opinion page of yesterday's Wall Street Journal, George Melloan spells out how government stimulus is stifling lending, crowding out private investment and impeding economic recovery. He writes that "the credit market has been tilted to favor a single borrower with a huge appetite for money, Washington." It has done so in … Continue reading Seizing the Commanding Heights
by Mario Rizzo I have not posted in a while since I have been on vacation. During that time an interesting dispute has arisen among friends Tyler Cowen, David Henderson, Arnold Kling, Peter Boettke, Bob Murphy, Steve Horwitz and others over whether Ben Bernanke was right to bail out specific banks. (Some of this has … Continue reading Avoiding Deflation Without Bailouts
by Mario Rizzo Today's Wall Street Journal has an opinion piece by Fed Chairman Ben Bernanke. He assures us that the Fed has the tools and the willingness to restrain inflation when that is appropriate (not now). He recognizes it is all about timing. But everything is under control: "Overall, the Federal Reserve has many … Continue reading Ben Bernanke: Ipse Dixit
by Mario Rizzo It is well-known that John Maynard Keynes favored permanently low interest rates in order to foster adequate and stable investment demand. Let us first focus on stability and then we'll see a connection to adequacy. What happens when counter-cyclical policy (aka Lerner’s “functional finance”) is practiced? The Wall Street Journal ran an excellent small … Continue reading Monetary Policy At War With Itself
by Jerry O’Driscoll Since September, 2008 the Fed has been engaged in policy of unprecedented monetary expansion. Arthur Laffer provides the numbers in The Wall Street Journal for June 11, 2009. "The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10." The stock market … Continue reading The Next Bubble