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.
Money & Banking
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...
On A Woman on The $10 Bill
A woman will be on the new $10 bill, bumping Alexander Hamilton aside.
Interest – Inflation = #REF
The notion of nominal interest paints a misleading picture of losing purchasing power..
They’re Coming to Take Away Your Cash
The stories are all over the Internet. Governments are forcing us into a cashless society. Supposedly the pretext is terrorism, and the real reason is to take more control.
How Could the Fed Protect Us from Economic Waves?
Fed apologists argue that the economy would be even more unstable, if we had no monetary central planner. However, the fact is that it became a lot less stable after the Fed was created.
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 Sad Model of a Modern Monetary Economist
It isn’t clear that the Fed has brought any substantial improvement in macroeconomic stability.
Falling Yield, Rising Asset
Our monetary system is failing, but explaining that isn’t easy.
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...
Robert Samuelson’s Folly of Fed Obeisance
The Fed is a large and aloof agency that needs to be tamed.
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.
A Salvo in the Battle for the Gold Standard
The gold tax is the key to socialized money. We can never have a free market in money if gold is penalized with a tax every time the dollar loses value.
The Swiss Franc Will Collapse
The coming destruction has nothing to do with the quantity of money. It is a story of what happens when interest rates fall into a black hole.
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
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
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*
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?
The Clock is Ticking in Switzerland
While other countries were undermined by the promises politicians made with a printing press, the Swiss economy prospered thanks to the discipline provided by gold.
Fans of Central Banking Have an Achilles Heel
Central planners constantly run into the problem that people are not willing cogs.
Governments Need Inflation, Economies Don’t
Inflation is not needed to grow economies but to grow governments.
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
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...
Reforming The Global Financial System: Let Market Forces Play a Greater Role
History shows that, whenever financial institutions, whether domestic or global, have been allowed to develop freely, the results have been far more satisfactory than those from government-designed schemes.
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