Why output gap is an empty abstraction
According to popular thinking the key cause behind either inflation or deflation is the difference, or the gap, between what an economy is producing…
Is deflation about decline in prices?
The majority of economists view deflation as a general decline in prices of goods and services. This is viewed as a major threat to…
Downtrend in the growth rate of money supply poses a threat to bubble activities
The yearly growth rate of real gross domestic product eased to 1.9% in Q4 from 2% in the previous quarter. Using our large scale…
European Central Bank poised to strengthen further monetary pumping
On January 21 2016 the European Central Bank (ECB) President Mario Draghi signaled that the governing council may provide more stimulus at its next…
Is the US heading for an economic bust?
On Wednesday December 16 2015 Federal Reserve Bank policy makers raised the federal funds rate target by 0.25% to 0.5% for the first time…
Expectations and business cycles
According to the Austrian Business Cycle Theory (ABCT) the artificial lowering of interest rates by the central bank leads to a misallocation of resources…
How Money Disappears in a Fractional-Reserve Money System
Most experts are of the view that the massive monetary pumping by the US central bank during the 2008 financial crisis saved the US…
Money supply versus money demand
According to popular thinking not every increase in the supply of money will have an effect on economic activity. For instance, if an increase…
Should central banks fight a decline in price inflation?
The yearly growth rate of the US consumer price index (CPI) fell to 0% in September from 0.2% in August and 1.7% in September…
The essence of interest rate determination
According to mainstream thinking the Central Bank is the key factor in determining interest rates. By setting short-term interest rates the Central Bank, it…