Category: Economic Theory
The analysis published under this category are as follows.
Saturday, February 16, 2013
Zombinomics - Paul Krugman and Zombie Financial History / Economics / Economic Theory
By: William_Anderson
Murray Rothbard liked to say that economists often tended to specialize in the area where their knowledge was the worst, and given Paul Krugman's butchery of the historical record, I'd say Rothbard had a good point. Regular readers of Krugman's columns and blog posts and other public statements would believe, for example, that World War II ended the Great Depression, that Jimmy Carter and Ted Kennedy (who were major forces in deregulation during the 1970s) were conservative Republicans, and that the only thing better than war to bring prosperity would be the nationwide preparation to fight an invasion of imaginary space aliens.
Friday, February 15, 2013
From Shipping To Shopping: Rationing To Economic Austerity / Economics / Economic Theory
By: Andrew_McKillop
MODELS AND PRECEDENTS
When World War II started in September 1939 the UK's first rationed commodity was unsurprisingly petroleum. By January 1940 food was added to the list: bacon, butter and sugar were firstly rationed, followed by meat, tea, coffee, jam, biscuits, breakfast cereals, cheese, eggs, lard, milk, canned fruits and dried fruits. This, also unsurprisingly, produced a black market within the first 12 months.
Wednesday, February 13, 2013
Politicians Waging War on Work / Economics / Economic Theory
By: MISES
Nicholas Freiling writes: Employment law is a mainstay of state economic policy. Few question its efficacy as a means to correct “market failures”—like unlivable wages for meaningful work—that would leave society in shambles. In fact, no serious debate exists among American policymakers about the benefits of such laws. Their utility is simply assumed.
But laws that restrict or stipulate the terms of voluntary employment contracts stifle economic progress and make life harder for everyone—even those for whom the laws were designed to aid.
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Sunday, February 10, 2013
The Economic Errors of Keynes / Economics / Economic Theory
By: Philipp_Bagus
[Los Errores de la Vieja Economía • Juan Ramón Rallo • UNIÓN EDITORIAL, S.A.; 1st edition]
The Austrian School of economics has provided the world with devastating critics of Keynes's magnum opus The General Theory of Employment, Interest and Money (TGT) for a long time. Friedrich A. von Hayek, Jacques Rueff, Henry Hazlitt, Murray Rothbard, Ludwig Lachmann, Ludwig von Mises, and William Hutt have already provided important arguments against Keynes and Keynesianism.
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Sunday, February 10, 2013
Fed’s Destructive Monetary Policies Expose Mainstream Economic Fallacies / Economics / Economic Theory
By: Frank_Shostak
At the annual meeting of the American Economic Association in San Diego (January 4–6, 2013), Harvard professor of economics Benjamin Friedman said,
The standard models we teach … simply have no room in them for what most of the world’s central banks have done in response to the crisis.
Friedman also advises sweeping aside the importance of the role of monetary aggregates. On this he said,
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Saturday, February 09, 2013
Veblen's Prediction: The Triumph Of Capital Rent / Economics / Economic Theory
By: Andrew_McKillop
THEN AND NOW
As early as 1921 Thorstein Veblen felt able to predict that capital rentiers in the non-communist western economies would voluntarily abandon industry, like the rentiers of the recently founded Soviet Union who had been forced at gunpoint to abandon their control of industry, and the "super profits" that industry could deliver. His argument was that capital rentiers in the "free market" economies had already proven, during and after the long depression that started in April 1873 and tailed off by the end of the 1880s, that they could extract more rent, or super profits from the "pure play" of capital, than from classic or conventional economic rent extracting activities, like industry.
Thursday, January 31, 2013
Paul Krugman May Be the World's Last Flat Earth Keynesian Economist / Economics / Economic Theory
By: Money_Morning
Keith Fitz-Gerald writes: Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again.
A favorite of the Keynesian crowd, he claimed earlier this week that fixing the deficit is important but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
At least he's consistent. I'll give him that.
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Wednesday, January 30, 2013
Keynes Said: Lets Euthanize The Rentiers, Instead, We Euthanized The Economy / Economics / Economic Theory
By: Andrew_McKillop
In the end notes to his 1936 'General Theory', John Maynard Keynes said that he looked forward to the "Euthanasia of the Rentier", to be replaced by “communal saving by the agency of the state; maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce”.
Wednesday, January 23, 2013
The Free Money Miracle? / Economics / Economic Theory
By: MISES
Jonathan Goodwin writes: The "Miracle of Wörgl," refers to the story of currency demurrage and the impact it had on the economy of Wörgl, a small town in Austria. For a bill of such currency to retain its face value, the currency holder must pay a regular, periodic payment (a tax) for a stamp or other marking. Wörgl is regularly touted by advocates of demurrage as a successful implementation of such a currency, one designed to encourage velocity due to the incentive to spend it in order to avoid the periodic tax.
The experiment at Wörgl was implemented by the town’s mayor, Michael Unterguggenberger in the midst of the Great Depression. Wörgl, like many towns throughout the world at the time, was suffering from high unemployment and low economic activity. The experiment began on the 31st of July 1932, with the issuing of "Certified Compensation Bills," a form of currency commonly known as Stamp Scrip, or Freigeld. It resulted in a boom in government projects, and a corresponding increase in employment and economic activity not just in the government sector, but throughout the town.
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Monday, January 14, 2013
Austrian Economics in 2013 / Economics / Economic Theory
By: Alasdair_Macleod
Regular readers of my articles either have some knowledge of Austrian economic theory or at least suspect that Keynesian and monetarist alternatives are flawed. Their failures are becoming more evident, which suggests we will hear more of Austrian theory in 2013. So how is Austrian theory different? Consider the following simple propositions in accordance with Austrian theory, which we can confirm from personal experience:
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Monday, December 24, 2012
Present Crisis Pattern, End of the Third Industrial Revolution / Economics / Economic Theory
By: Submissions
Wim Grommen writes: This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.
Sunday, December 23, 2012
Government Spending is Not Economic Growth: Real GDPP 2000–2011 / Economics / Economic Theory
By: Robert_Higgs
In the 1930s and 1940s, when the modern system of national income and product accounts (NIPA) was being developed, the scope of national product was a hotly debated issue. No issue stirred more debate than the question, Should government product be included in gross product? Simon Kuznets (Nobel laureate in economic sciences, 1971), the most important American contributor to the development of the accounts, had major reservations about including all government purchases in national product. Over the years, others have elaborated on these reasons and adduced others.
Sunday, December 23, 2012
Bernanke Loosens Up, Fundementally Misunderstands How Weath is Created / Economics / Economic Theory
By: Frank_Shostak
On Wednesday December 12, 2012 Fed policy makers announced that they will boost their main stimulus tool by adding $45 billion of monthly Treasury purchases to an existing program to buy $40 billion of mortgage debt a month.
This decision is likely to boost the Fed’s balance sheet from the present $2.86 trillion to $4 trillion by the end of next year. Policy makers also announced that an almost zero interest rate policy will stay intact as long as the unemployment rate is above 6.5% and the rate of inflation doesn’t exceed the 2.5% figure.
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Wednesday, November 28, 2012
Obama's Economic War on Women, The Free Market Punishes Discrimination / Politics / Economic Theory
By: MISES
With the re-election of President Barack Obama, it is increasingly evident that the tax eaters outnumber the taxpayers in America. From food stamps to free cell phones, President Obama has achieved significant political success by putting more and more Americans on the government dole. During his recent re-election bid, this effort included considerable pandering to women voters.
Tuesday, November 27, 2012
Capital Formation and the Fiscal Cliff, Economic Perception Vs Reality / Economics / Economic Theory
By: John_Mauldin
In today’s economic environment, we often complain about volatility and uncertainty, but there is one thing I think we can be fairly certain of: taxes are going up. I constantly try to impress upon my kids, most of whom are now adults, that ideas and actions have consequences. In today’s letter we will look at some of the consequences of an increase in taxes. Please note that this is different from arguing whether taxes should rise or fall. For all intents and purposes that debate is over. As investors, our job is to deal with reality. We must play the hand we are dealt. Taxation is a complex issue, but let’s see if a few word pictures can help us understand what we face.
Friday, November 23, 2012
Economics Can't Violate the Laws of Physics: Rising Systemic Risk and Multiple Black Swans / Economics / Economic Theory
By: DK_Matai
In the aftermath of the colossal damage caused around the world by extreme weather induced floods, fuel and food shortages, questions are constantly being posed about the improbability of endless growth of human population and over consumption on a planet with finite resources. There are limits to growth and humanity is colliding with them head on. High fuel and food prices and floods caused by climate chaos are all symptomatic of those growth limits.
Thursday, November 22, 2012
Ireland and Iceland : A Tale of Two PIIIGS / Economics / Economic Theory
By: Frank_Shostak
There were a lot of commentaries regarding the Ireland and Iceland 2008–2012 financial crises. Most of the commentaries were confined to the description of the events without addressing the essential causes of the crises. We suggest that providing a detailed description of events cannot be a substitute for economic analysis, which should be based on the essential causes behind a crisis.
Monday, November 12, 2012
Ron Paul In Praise of Price Gouging / Politics / Economic Theory
By: Dr_Ron_Paul
As the northeastern United States continues to recover from Hurricane Sandy, we hear the usual outcry against individuals and companies who dare to charge market prices for goods such as gasoline. The normal market response of rising prices in the wake of a natural disaster and resulting supply disruptions is redefined as "price gouging." The government claims that price gouging is the charging of ruinous or exploitative prices for goods in short supply in the wake of a disaster and is a heinous crime But does this reflect economic reality, or merely political posturing to capitalize on raw emotions?
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Monday, November 05, 2012
Abolition of Fractional Reserve Banking, Chicago, My kind of town / Economics / Economic Theory
By: Alasdair_Macleod
Quite a bit of media attention has been devoted recently to a working paper by two International Monetary Fund economists that re-examines the “Chicago Plan”. First put forward by University of Chicago economists in 1933, this proposal calls for the abolition of fractional reserve banking and the replacement of bank credit with government money in order to do away with credit-induced business cycles.
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Thursday, November 01, 2012
The Economics of Dracula / Economics / Economic Theory
By: MISES
Peter C. Earle writes: Another Halloween is upon us, bringing its late autumnal burst of costumes, candy, and merriment. Ghosts, witches, mummies, zombies, Frankenstein's monster, film and television characters, and others will make appearances, as will the quintessential Halloween figure: Dracula.
Most people are familiar with Count Dracula's first literary appearance in Bram Stoker's 1897 Gothic horror novel Dracula. And many are also aware that the undead villain was loosely based on a real historical figure, Vlad Tepes III — "Vlad the Impaler" (sometimes "Vlad Dracula") — who ruled mid-15th century Wallachia, a region of modern day Romania.
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