The Fed Doesn’t Know the Natural Rate of Interest

2024-03-23

Tu ne cede malis, sed contra audentior ito

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2024-01-12

Back when I was a construction lender, I thought the perfect construction loan would pay off after one day, just long enough to collect the loan fee. After all, time is your enemy in construction lending. Any of a myriad of unknowns can keep construction from being completed: the market may evaporate for what is being built, interest rates may rise to make a loan uneconomic, construction costs could increase to require a loan modification or more borrower equity (good luck), just to name a few.
Time is risk. As Gerald O’Driscoll and Mario Rizzo wrote in their book The Economics of Time and Ignorance, “As long as we remain in a world of real time, unexpected change is inevitable, and ignorance is ineradicable.”
In good times senior bank management would regret construction loan payoffs. In

2024-01-12

Jamaica is a small island in the British West Indies, but despite its stature, this tiny nation has elicited the attention of global elites. In politics, Jamaica’s voting behavior at the United Nations is closely monitored by her neighbors in the Caribbean and the global community because she commands influence. Due to historical and cultural complexities, Jamaica is a magnet for academic research, and writing about the country has manifested into a cottage industry. Consistent with her fame, those who study Jamaica tend to be heavyweights in academia. Luminaries from Jeffrey Williamson to Josh Lerner pen intellectual missiles on Jamaica’s economy.
Always in the den of controversy, Jamaica’s recent economic performance has motivated a lively debate between economist Noah Smith and

2024-01-09

There is an untold story in American monetary history. Some are reluctant even to discuss it.
I’m referring to the US Secret Service’s very own role in the destruction of sound money in America.
As constitutional, sound money in the form of physical gold and silver coins—whether minted privately or not—became an annoying impediment to expanding the size and power of the federal government, central planners began circulating unbacked paper proxies and formed a Gestapo-like police agency to enforce the scheme.
Founded in 1865, toward the tail end of the American Civil War, the Secret Service originated as a branch of the US Treasury Department.
The primary job of this federal police force was to prevent others from counterfeiting the U.S. currency, which had just been nationalized through