Post Tagged with: "Austrian Economics"
Ludwig von Mises on Austrian Business Cycle Theory
Yesterday, John Carney at CNBC had a nice little post comparing Hyman Minsky’s Financial Instability Hypothesis with some of the thinking by Friedrich von Hayek behind Austrian Business Cycle Theory. John rightly points to this passage as “a theory about banking as an endogenous destabilizer of the economy.” And this certainly fits with the Minsky view of the world. von Mises takes the view that it is in having “bank notes without gold backing or current accounts which are not entirely backed by gold reserves, the banks are in a position to expand credit considerably”. Nevertheless, whether you believe the genesis of the credit expansion is Federal Reserve interest rate policy, animal spirits, fiat currency or fractional-reserve banking, what should be clear is that it is the lower rate of interest that creates the credit growth. The question is whether this lowering of rates is beneficial over the long-term. Vom Mises argues it is not
[Premium] Quick thoughts on Fed policy and the potential for QE
Last August, the Fed went for what I call “rate easing”. If the economy weakens this year what will it do? I am not convinced it will be quantitative easing. In general, I think the Fed, while looking to support the growth side of its dual mandate, wants to look to the data before acting since monetary policy acts with a lag. This post is about those policy concerns and about what Fed policy has already done. Private portfolio preferences have shifted considerably. An article in today’s Wall Street Journal “Junk Bonds Feed a Hungry Market” shows the way, with a lot of quotes about people reaching for yield because Treasury yields have been suppressed
MMT for Austrians
We (also) do not want black helicopters flying around dropping bags of cash; and we (also) oppose government “pump-priming” demand stimulus—the libertarians and Austrians and even Milton Friedman are correct in their argument that this would generate inflation. Come to think of it, MMTers have more in common with Austerians than with “military Keynesianism” that supposes that high enough spending on the defence sector will cause full employment to “trickle down”. Most MMTers believe we’d get intolerable inflation before the jobs trickle down to Harlem. But can we “afford” full employment
[Premium] The Ultimate QE is the Fed’s Coming Purchase of Real Assets
I would bet on near-systemic collapse before the Fed starts either asset purchases or Congress resorts to fiscal activism. But eventually, the Fed is going to purchase more than just treasuries. They will purchase a lot of financial assets and probably some real assets as well
On Ideology, economics and the compatibility of Chartalists and Austrians
Below is a framework that delineates the ideology and economics of two groups of economic thought that are much talked about in the wake of the Credit Crisis: the Chartalists and the Austrians. These two groups are considered outside of the mainstream and this is important because many economists and market pundits in both camps predicted the global credit crisis while almost no mainstream economists did. The questions are why and what separates them from mainstream Keynesians and Monetarists and from each other
Austrians and MMTers should be on the same side
Austrians and MMTers should be on the same side. After all, both camps understand the relationship between money and credit, and both understand the full ramifications of having fiat money. They should be on the same side arguing against economists who argue that demand can be created by flooding the banking system with reserves, and both should be on the same side arguing against those who think that increasing inflation expectations is an effective way to get an already over-indebted economy to take on more debt
Fight of the Century: Keynes vs Hayek Round Two
These Hayek – Keynes videos are hilarious (hat tip Barry Ritholtz). This one is called “Fight of the Century” – sort of like Marvelous Marvin Hagler against Sugar Ray Leonard
Lawrence White on Friedrich von Hayek
I caught this video along with the Keynes video I just profiled. Look at this as a rebuttal to some of the themes Lord Skidelsky went through in that previous video. Lawrence White explains the genesis of the Austrian Theory of Boom and Bust in two parts. The two run fifteen minutes in total, concentrating
The Conundrum of Central Bankers
by Annaly Capital Management An interesting recent piece by Reuven Glick and Kevin J. Lansing of the San Francisco Fed looks to explain changes in the savings rate over time. On an aggregate level, the authors point out that the savings rate is mostly a function of: 1. Wealth – if I’m already wealthy, I
Why the U.S. economy is weak
My friend Rob Parenteau says "most professional investors are high frequency macro data and short run asset price driven." He basically means they have no real macro analytical framework to use when making investment decisions. Rob says "it is just a video game for them, where they trace and extrapolate the recent momentum." Rob is
David Tice Says Double-Dip Recession ‘In the Cards’ for U.S.
David Tice, chief portfolio strategist for bear markets at Federated Investors Inc, talks about the outlook for the U.S. economy. He sees a double dip coming and argues against stimulus to prevent it, saying policy makers shouldn’t act as “Good Time Charlie” preventing the deleveraging of U.S. households
On Crises of Capitalism
Great video detailing explanations for why the financial crisis happened. Big hat tip to the Pragmatic Capitalist. I like this first aspect of the video and I LOVE the drawings. Very cool. Of course, you know that you’re going to get another view which the author of the video says is the right one. He