Once economies stop throwing good money after bad, capital is freed up to flow into more economically viable purposes. But economists and politicians never look at the long term. Their job seems to be to manage the economy for the next election.
MARKETS
Business Ethics: Who Should Get Bonuses?
This story was shared by an MBA student who was trying to assess a personal business experience. A small technology start-up has started to see some financial success after two years of hard work. The three main shareholders, the CEO and two vice presidents, had made...
Is Fractional-Reserve Banking Inflationary?
Certain economists of the Austrian School, and followers of Murray Rothbard especially, oppose fractional reserve banking for at least three reasons. They claim that banks resorting to it defraud people, that they bring about business cycles, and that their activities...
The Fallacy of “Living Wage”
The fundamental issue is not wage rates, but productivity.
JP Morgan Loses $2 billion: Why the Government Should Not Intervene
When JP Morgan Chase & Co. announced a two billion dollar loss in its main investment office earlier this month, there were increased calls for the U.S. federal government to regulate trading by big banks and to ban speculative trading. Why should we reject such...
An Austere Recovery: The Swift Recovery from the 1920’s U.S. Recession
How “austerity” measures lead the United States’ rapid recovery from the deep recession into which it sank in the last half of 1920.
Economic Reality Bites
Many people became convinced that data releases earlier this year indicated that "recovery" in the U.S. was imminent. But as I have been saying for months, this evidence would ultimately be shown to be as reliable as sightings of Bigfoot. Lots of people claim to say...
Free Banking and Economic Development, Part 2
When Adam Smith first drew attention to the benefits of fractional-reserve banking, those benefits were but a glimmer of far more impressive gains to come. In 1776, the year of the appearance of Smith’s Wealth of Nations, Scotland had only 10 note-issuing banks, the...
How About a Union for Business Owners?
Most people look at “business” as something separate from everything else in life, and at best, a necessary evil. Something you have to do. Or a way to make money—in a practical, but never creative, artistic or (perish the thought) moral way. In today’s political...
Free Banking and Economic Development, Part 1
The most tangible achievements of the free market—the vast improvements in technology and productivity, the industrial plant and infrastructure from which these derive, and the extensive retailing networks that deliver industry’s fruits to consumers—would be far more meager were it not for past and present lending financed by fractionally-backed bank liabilities.
A Lesson from Yahoo’s Ex-CEO Scott Thompson
Scott Thompson, CEO of Yahoo Inc. just since January, resigned this week when it was found out that his resume falsely stated that he holds a degree in computer science. What motivates people to “embellish” their resume? Presumably it is the desire to impress...
The Golden Rule Reinterpreted
To many, the “Golden Rule” is an idea that underscores the value of civility and fair dealing. But there is another, less magnanimous definition: “He who has the gold makes the rules.” In the current global economy, the surplus countries have the gold and sooner or later we will be living by their rules.
The Folly that is “Local” Currency
How’s this for a great idea: we build a small fleet of cars, and market them to people in the local community. How do we compete with Ford, G.M., Toyota, and all those other huge car companies? Easy. You see, our cars will have special octane requirements that will...
Telephones, Technology, and Freedom
For decades, it has been argued that certain goods are “natural monopolies,” which Investopedia describes as: A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. … The utilities industry is a...
Where’s My Model?
Anyone who peruses my work on free banking—or my other writings for that matter—will notice that I’m not especially inclined to express my ideas mathematically. To put the matter more positively: I prefer plain English. The preference has if anything grown more marked...
Capital and Cash Reserves
I promise to make this my last post for a while concerning the matter of 100-percent versus fractional-reserve banking. However, in addressing some comments on my recent posts it occurred to me that some very serious misunderstanding is at play concerning the...
Those “Other” 100 Percent Reserve Banking Advocates
In the aftermath of the U.S. banking crises of the 1930s, it became common for American economists to speak of the “inherent” instability of fractional-reserve banking and of the “perverse elasticity” of money supply in fractional-reserve banking systems. What the...
The State and 100 Percent Reserve Banking
Free bankers have been fighting a war on two fronts. On one they face champions of central banking and managed money. On the other they struggle against advocates of 100-percent reserve banking.
Anti-Bernanke
Despite the bright light streaming into my office window, reminding me of the beautiful spring weather here in Athens, I managed to spend most of yesterday afternoon listening to the first installment of Ben Bernanke's 4-part lecture series on "The Federal Reserve and...
Government Job Creation Kills Real Jobs
President Obama has long told us that “green” energy would create thousands of jobs. His administration has “invested” billions of tax dollars in a myriad of “green” industries. Predictably, the results have been the opposite of what we were promised. As one example,...
What Is In Your Self-Interest?
The following story was related to me by a student. An acquaintance of his was frustrated and unhappy with her job and felt that her company, which was short-staffed, was not giving her sufficient support and help. The acquaintance felt stressed but was able to cope...
Greg Smith vs. Goldman Sachs
Just now I can't summon the energy to write the post that should be written to defend Goldman Sachs against the disgusting, publicity-seeking attack made on it last week by ex-employee Greg Smith. (Mr. Smith was not highly placed at the firm: he was one of 12,000...
Yet Another (Unconvincing) Argument Against Gold
It seems that various pro-gold utterances in the course of the Republican primaries have provoked critics of the gold standard to circle their wagons and start shooting. But while the sheer volume of shots fired has been impressive, the shooters' aim has been lousy....
Trade Rains on the Jobs Parade
Earlier this month the Labor Department reported that 227,000 new jobs were added to the economy in February, marking the third consecutive month of positive jobs growth. Many observers took the news as evidence that the recovery has taken hold in earnest, helping...
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