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2024-01-11
Whenever an economy falls into a recession, many economists point out that the economic slump means there will be idle capital and labor. Resources that could be employed are now unemployed because the economic slump has softened aggregate demand for goods and services.
So-called experts believe the government must increase the overall demand in the economy since stronger demand will permit idle resources to be employed again. Hence, many economists recommend that the central bank adopt an easy monetary stance to strengthen aggregate demand.
It appears to be quite simple: boost expenditure on goods and services and this, in turn, will strengthen the overall output in the economy by the multiple of the expenditure, thanks to the Keynesian multiplier. According to Ludwig von Mises,
Here,
2024-01-08
Near the end of the nineteenth century, the European intellectual scene witnessed a remarkable theoretical contest known as the “battle of methods,” or in German, Methodenstreit. This intellectual clash stood out due to the confrontation between the precepts of methodological and subjective individualization, equipped with a subjectivist and individualizing worldview of the method. It was represented by figures such as Carl Menger (considered the founder of the Austrian School and its theoretical bases) and the German Historical School, and it was guided by the collectivist and historicist assertions of economic science, whose exponents included Gustav von Schmoller and Lujo Brentano.
The conflict, prevalent in the 1880s and 1890s, was driven by fundamental differences regarding the
2024-01-05
The Fed’s Federal Open Market Committee released the minutes to its December meeting yesterday, and the minutes further strengthen the view held by many Wall Street investors and observers that the Fed plans to implement rate cuts by the middle of 2024. Specifically, the most recent Fed survey of market participants "suggested that the first reduction in the policy rate would occur in June."
This contrasts only slightly with the FOMC members themselves, who, in their own internal survey (i.e., the Summary of Economic Projections,or SEP) overwhelmingly suggests a cut to the policy rate of at least 50 basis points this year. Or as the minutes put it: "almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a
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