Category Archive: 6b) Austrian Economics

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The owl has landed: Lagarde’s new vision for the ECB

2020-01-11

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2020-01-11

On December 12, Christine Lagarde introduced her goals and vision in her first rate-setting meeting as the new President of the ECB. On the actual policy front, there were no surprises. She remained committed to the path set by her predecessor, Mario Draghi, and kept the current monetary stimulus unchanged.

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Conservation in the Free Market

2020-01-07

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2020-01-07

It should be no news by this time that intellectuals are fully as subject to the vagaries of fashion as are the hemlines of women’s skirts. Apparently, intellectuals tend to be victims of a herd mentality. Thus, when John Kenneth Galbraith published his best-selling The Affluent Society in 1958, every intellectual and his brother was denouncing America as suffering from undue and excessive affluence; yet, only two or three years later, the fashion...

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Why Paternalists Keep Calling Us “Irrational”

2020-01-06

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2020-01-06

Some economists, such as the 2017 Nobel Laureate Richard Thaler and his colleague Cass Sunstein, have proposed an unusual justification for government interference with people’s choices. They do not intend, they say, to override the preferences that people have. They don’t want to tell people what they “should” want, according to an external standard that people don’t accept. They claim, however, that accepting the actual preferences people have...

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Why the Minimum Wage Is so Bad for Young Workers

2020-01-05

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2020-01-05

In today’s political discourse, the minimum wage is frequently mentioned by the more progressive members of Congress. On a basic level, raising the minimum wage appears to be a sympathetic policy for low-income wage earners. Often kept out of the conversation, however, are the downstream effects of this proposal.

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Understanding Money Mechanics

2020-01-04

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2020-01-04

Dr. Bob Murphy joins the Human Action Podcast to discuss one of the most important issues of all: how money and credit work in today's society. Jeff Deist recently commissioned Murphy to write a series of articles on money mechanics, an exceedingly important topic for critics of the Fed—and today's podcast serves as an introduction to the project.

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Wealth Consumption vs. Growth – Precious Metals Supply and Demand

2020-01-03

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2020-01-03

Gold and Silver Prices
GDP – A Poor Measure of “Growth” Last week the prices of the metals rose $35 and $0.82. But, then, the price of a basket of the 500 biggest stocks rose 62. The price of a barrel of oil rose $1.63. Even the euro went up a smidgen. One thing that did not go up was bitcoin. Another was the much-hated asset in the longest bull market. We refer to the US Treasury.

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Is Greater Productivity a Danger?

2020-01-03

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2020-01-03

It is bad enough that opponents of the free market wrongly blame capitalism for environmental pollution, depressions, and wars. Whatever the failings of their causal theories, at least they are focused on undoubtedly bad things. We have really gone beyond the pale, though, when the market is blamed for something good.

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2019 Was a Bad Year For the “Only Cops Should Have Guns” Narrative

2020-01-02

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2020-01-02

Total New Guns, Homicide Rate, 1986-2018
On December 29, an armed gunman entered the West Freeway Church of Christ in Texas and shot two members of the congregation. Within six seconds, a third member of the congregation drew a weapon and shot the gunman dead. The events were captured on live-streamed video, with the dramatic events — in the minds of many observers — highlighting the benefits of privately-owned firearms as a defense against armed criminals.

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Economic Stats Won’t Tell Us What Really Causes Recessions

2020-01-01

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2020-01-01

Most economists are of the view that by means of economic indicators it is possible to identify early signs of an upcoming recession or prosperity. What is the rationale behind this opinion? The National Bureau of Economic Research (NBER) introduced the economic indicators approach in the 1930s.

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How to Write and Understand History

2019-12-30

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2019-12-30

[Adapted from Chapter 2 of Human Action.] The study of all the data of experience concerning human action is the scope of history. The historian collects and critically sifts all available documents. On the ground of this evidence he approaches his genuine task.

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To Be Useful, Data Needs Theory

2019-12-29

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2019-12-29

For most so-called practical economists, information regarding the state of an economy is derived from data. Thus, if an economic statistic such as real gross domestic product or industrial production shows a visible increase, it is considered indicative of a strengthening of the economy. Conversely, a decline in the growth rate is regarded as weakening. It seems that by looking at the data one can ascertain economic conditions. Is this the case,...

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How Today’s Central Bankers Threaten Civilization

2019-12-26

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2019-12-26

When I was asked to write an article about the impact of negative interest rates and negative yielding bonds, I thought it was a chance to look at the topic from a broader perspective. There have been lots of articles speculating about the possible implications and focusing on their impact in the short run, but it’s not very often that an analysis looks a bit further into the future, trying to connect money and its effect on society itself.

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Abolish the Office of the First Lady

2019-12-26

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2019-12-26

It's almost Christmas time again, and that means its time for White House politicians and staff to spend hundreds of thousands of dollars on Christmas decorations and events for the White House.

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Economics and the Revolt against Reason

2019-12-25

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2019-12-25

The Revolt Against Reason. It is true that some philosophers were ready to overrate the power of human reason. They believed that man can discover by ratiocination the final causes of cosmic events, the inherent ends the prime mover aims at in creating the universe and determining the course of its evolution.

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Real High Crimes and Misdemeanors

2019-12-24

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2019-12-24

World Class Entertainer in the Cross-Hairs. Christmas is no time to be given the old heave-ho.  This is a time of celebration, redemption, and excess libation.  A time to shop ‘til you drop; the economy depends on it. Don’t get us wrong.  There really is no best time to receive the dreaded pink slip.  But Christmas is the absolute worst.  Has this ever happened to you?

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Failing to Emigrate Does Not Mean You Give Consent to the State

2019-12-24

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2019-12-24

Eric Nelson, a Professor Government at Harvard, has published this year a brilliant and imaginative book, The Theology of Liberalism (Harvard University Press, 2019). Nelson, it should be said, is no leftist, despite what you might expect from his Harvard affiliation. To the contrary, he is a conservative and favors, though not to the fullest extent, the free market and private property rights.

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Do Negative Rates Work? Yes, But Not by Much

2019-12-23

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2019-12-23

Federal Reserve policy makers opposed to taking interest rates negative in the next recession might take comfort from the end of Sweden’s dalliance with below-zero rates. But investors shouldn’t expect the neighboring eurozone to follow suit: Just hours after the Riksbank raised its policy rate back to zero on Thursday, a group of the most senior monetary-policy staff at the European Central Bank published a long-awaited paper robustly defending...

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Good Economic Theory Focuses on Explanation, Not Prediction

2019-12-22

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2019-12-22

In order to establish the state of the economy, economists employ various theories. Yet what are the criteria for how they decide whether the theory employed is helpful in ascertaining the facts of reality? According to the popular way of thinking, our knowledge of the world of economics is elusive — it is not possible to ascertain how the world of economics really works.

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Marx and Left Revolutionary Hegelianism

2019-12-22

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2019-12-22

[This article is excerpted from volume 2, chapter 11 of An Austrian Perspective on the History of Economic Thought (1995).] Hegel's death in 1831 inevitably ushered in a new and very different era in the history of Hegelianism. Hegel was supposed to bring about the end of history, but now Hegel was dead, and history continued to march on. So if Hegel himself was not the final culmination of history, then perhaps the Prussian state of Friedrich...

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Corporate Debt Time Bomb

2019-12-21

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2019-12-21

US Non-Financial Corporate Debt as Percent of GDP, 1955-2019
While I have reportedly highlighted the many risks of the current monetary policy direction and the multiple distortions that it has created in the markets, in the economy, and even in society, one of the most pressing dangers of the unnaturally low rates and cheap money is the staggering accumulation of debt. Nowhere is this more obvious than in the ballooning corporate debt, especially in the US.

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