Money multiplier is really about credit out of “thin air”
byAccording to traditional economics textbooks, the current monetary system amplifies the initial monetary injections of money. The popular story goes as follows: if the…
Austrian School
Dreams of Gerontius
byDemographics, productivity & the great central bank fallacy of interest rate determination Summary As we go to press, the Mighty Oz’s and Grand Panjandrums…
Austrian Monetary Theory vs. Federal Reserve Inflation Targeting
byOne of the leading policy guideposts for central banks and many monetary policy proponents nowadays is the idea of “inflation targeting.” Several major central…
Liquidity trap – what is it all about?
bySome economists such as Nobel Laureate Paul Krugman are of the view that if the US were to fall into liquidity trap the US…
The 2017 Stress Tests: Are US Banks Really in Good Shape?
by“… equally efficacious, and equally a hoax.” – Benjamin Disraeli, 1848[1] One of the highlights of the U.S. summer for Fed watchers is the annual ritual…
Why reduction in unemployment not the key for economic growth
byThe US unemployment rate stood at 4.3% in July against 4.4% in the month before. The number of unemployed stood at 6.981 million –…
Saving and money – what is the relationship?
byConventional wisdom says that savings is the amount of money left after monetary income was used for consumer outlays, implying that saving is synonymous…
The Fed Remains on Course – to Trouble
byThe Federal Reserve (Fed) is widely expected to continue to tighten its monetary policy this year. According to a latest Reuters Poll, the Fed…
Why economists cannot forecast recessions
byThe purpose of this article is to draw the widest attention to the chronic inability of the economic establishment to forecast recessions. Next time…
How can the Fed possibly unwind QE?
byThere are currently two important items on the Fed’s wish list. The first is to restore interest rates to more normal levels, and the…