Money & Banking

IMF SDRs and The Illusion of Inflationary Prosperity

SDRs are simply a mechanism by which to increase global currencies to meet the demands of governments to spend more than they are able to either collect in taxes or borrow from domestic and international creditors. It is a way for governments to continue to live and spend beyond their means.

Yield Purchasing Power: $100M Today Matches $100K in 1979

I wrote a story about poor Clarence who retired in 1979, and even poorer Larry who retired last year. I created these characters to challenge the notion of calculating a real interest rate by subtracting inflation. The idea is that the decline of a currency can be measured by the rate of price increases. This price-centric view leads to the concept of purchasing power—the amount of stuff that a dollar can buy. It’s the flip side of prices. When prices rise, purchasing power falls.

Currencies Depend on Faith, Gold Doesn’t

Currencies Depend on Faith, Gold Doesn’t

In his July 17th Blog, Let's Get Real About Gold, author and Wall Street Journal columnist Jason Zweig likened investor interest in gold with the "Pet Rock" craze of the 1970's, when consumers became convinced that a rock in a box would provide continuous...

The Federal Reserve: Promises vs Track Record

The Federal Reserve: Promises vs Track Record

The biggest deflation in the history of the country came after the Fed was founded, and that deflation contributed to the Great Depression of the 1930s. As for bank failures, they reached levels unheard of before there was a Federal Reserve System.

The Left’s New Straw Man: The Shareholder as Mafia Boss

The Left’s New Straw Man: The Shareholder as Mafia Boss

In a recent Washington Post op-ed, Harold Meyerson, an avowed socialist, compares corporations who buy back their own shares to Las Vegas mafia bosses who used to skim casino profits.  The basis for his smear is "a recent paper by J.W. Mason, an economist at the City...

A Parable on The Deception of Central Banking

A Parable on The Deception of Central Banking

Central banking requires that government bureaucrats act in a way to distort the entire economic system by introducing counterfeit credit into the monetary system in such a way that businessmen are continually fooled into acting in a way that mimics the behavior of businessmen operating in an actual economic boom.

Switzerland Wins As Its Central Bank Surrenders

Switzerland Wins As Its Central Bank Surrenders

The situation that forced the Swiss to abandon the peg will soon be faced by bankers of much larger countries in the coming years, the implications of which can have more profound implications for global financial markets.

A 1920-21 Recovery Myth

A 1920-21 Recovery Myth

The U.S. was able to recover relatively quickly from at least one deep slump despite authorities’ refusal to resort to either fiscal or monetary stimulus.

Free Banking and The Dollar

Free Banking and The Dollar

While I’m all for monetary freedom and competition, I’m also for reforming the U.S. dollar, which for me means freeing it from control by discretionary central bankers.

We Are All Free Banking Theorists Now*

We Are All Free Banking Theorists Now*

If even economists who’ve never heard of free banking, or who dismiss both it and the people who take it seriously, nevertheless subscribe to some free banking theories of their own, where do their theories come from?

Why is the Gold Standard Urgent?

Why is the Gold Standard Urgent?

After President Nixon’s gold default in 1971, many people advocated a return to the gold standard. One argument has been repeated: consumer prices are rising. While this is true, it wasn’t compelling in the 1970’s and it certainly doesn’t fire people up today. Rising...

The Wrong Idea About Inflation

The Wrong Idea About Inflation

I write often about inflation, and often emphasize that it is not about rising prices. It is important that we define our concepts correctly. Inflation is monetary counterfeiting. Here is a quick graph I made to underscore the point that although the quantity of...

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