Archive | January, 2012

Time Interest

What Is Interest?

There is a large consensus among microeconomists that “messing with” prices is not good. Among these prices, there is greatest consensus that rent control distorts the efficient allocation of resources. Despite the relative consensus among economists about price controls, there is seemingly no recognition that tinkering with interest rates will similarly distort the efficient allocation…
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Breakfast_with_Barack

Waste and Fascism: Obama’s State of the Union Address

Prosperity, stability, security – these are things people generally desire. Obama did a great job alluding to these ends in his State of the Union speech a couple of days ago. Unfortunately, a disastrous problem arises when you choose the wrong means to achieve desired ends. The mistake of choosing the wrong means occurs when…
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Dollars

The Origin of Money

A few weeks ago a blogger at CNBC discussed the relative merits of Austrian monetary theory in comparison to modern monetary theory (MMT). The issue at stake is the origins of money: Austrians highlight the fact money comes into existence as the medium of exchange, while MMT points to governments requiring people to pay taxes…
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Predict

Do Bad Forecasts Mean Bad Economics?

Proper methodology is often debated in economics. Inevitably, one side points out that the other side has made some very embarrassing predictions. Pro-market folks love to reference WWII era Keynesians who thought that the United States would go back into depression after the government stopped spending vast amounts of money on war goods. As it…
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Adam Smith

The Adam Smith Illusion

“The problem is not simply that Smith was not the founder of economics.The problem is that he originated nothing that was true, and that whatever he originated was wrong.” -Murray Rothbard Adam Smith (1723-1790), author of the iconic Wealth of Nations, is widely regarded as the “founder of modern economics”. His name is revered by…
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Jean-Baptiste_Say_by_Achille_Devéria

Keynesianism is Against the Law, Say’s Law

As the recession continues, economists like Laura D’Andrea Tyson, the Chair of the Council of Economic Advisors under President Clinton, advocates spending as the pathway out of our economic banana. In her latest post on the New York Times economics blog, Tyson tells us that in order for the economy to recover we need an…
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strawman

Unlearning Economics

The Unlearning Economics blog offers a supposed list of inconsistencies inherent in the free market. Unfortunately, the reasons are themselves a convoluted, inconsistent collection of strawmen. Below is a response to each of his twenty four points. 1. Credit expansion does, indeed, cause boom-bust cycles. Many Austrians agree that outlawing fractional reserve banking would eliminate…
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File:Waiting for relief checks during Great depression.jpg

Is Joseph Stiglitz Serious?

In this month’s Vanity Fair renowned economist Joseph Stiglitz discusses important lessons economists should take from the Great Depression. The article is lengthy, but interesting if you have the time. Stiglitz, a Keynesian, gives the expected presentation: manipulating financial markets (monetary policy) is ineffective in combating recessions and we need greater government spending (fiscal policy)…
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Romney

Romney is Wrong on Minimum Wage

When asked about the minimum wage over the weekend, leading GOP presidential candidate Mitt Romney gave the following response: “My view has been to allow the minimum wage to rise with the CPI [Consumer Price Index] or with another index so that it adjusts automatically over time. I already indicated that when I was governor…
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