All Posts Tagged With: "monetary theory"
Biography of the Dollar: How the Mighty Buck Conquered the World and Why It’s Under Siege
Think of the various dollar-denominated bills in your pocket. They surely represent value, but with the dollar backed by nothing beyond trust in the United States and its Treasury, the greenback’s success as a worldwide store of value is something of a marvel.
Wall Street Journal reporter Craig Karmin’s Biography of the Dollar helps us to [...]
Financial Crises and the Federal Reserve’s Punch Bowl
Why did the U.S. financial system nearly collapse last year? People blame Wall Street’s excessive greed and risk-taking. But without easy money, the massive risk-taking could not have happened.
To be sure, financial firms leveraged up—that is, they did a lot of business with borrowed money. That juiced up revenues and bonuses in the boom—and exacerbated [...]
How Much Money Does an Economy Need?
In How Much Money Does an Economy Need? Hunter Lewis addresses some of the most fundamental questions of monetary policy in a question-and-answer format. For a subject often clouded by technicalities, the language is refreshingly plain. Sometimes too plain, perhaps, to satisfy an academic economist. But academic economists aren’t the intended audience. The book can [...]
15Oct2009 | Lawrence H. White | 1 comment | ContinuedDo We Need Deposit Insurance?
f banks can suspend convertibility, depositors know that runs merely precipitate suspension. This greatly reduces depositor incentive to panic and run. Allowing banks the right to suspend would probably not eliminate all runs, but it would plausibly limit them to banks that are insolvent rather than merely illiquid.
The question, then, is whether a banking system with less regulation—no prohibition on suspension and no deposit insurance—might work better than current regulation—prohibitions on suspension, combined with deposit insurance and balance-sheet regulation.
The evidence from the pre-1914 era suggests that the regime with less regulation has promise. Banks were not legally allowed to suspend convertibility during this era, but many did so anyway, sometimes with explicit approval of, or even encouragement from, regulators. This did not eliminate runs and panics, but the record suggests that suspension reduced contagion and failure in these episodes.
24Apr2009 | Jeffrey Miron | 4 comments | ContinuedA Crisis of Political Economy
The current state and the current banking sector require each other. They are so reciprocally intertwined that each is an extension of the other.
Remember this the next time somebody tells you, as New York Times columnist Bob Herbert did, that “free market madmen” caused the current financial crisis that is threatening to undermine the global economy. There is no free market. There is no “laissez-faire capitalism.” The government has been deeply involved in setting the parameters for market relations for eons; in fact, genuine “laissez-faire capitalism” has never existed. Yes, trade may have been less regulated in the nineteenth century, but not even the so-called Gilded Age featured “unfettered” markets.
24Apr2009 | Chris Matthew Sciabarra | 5 comments | ContinuedBook Reviews – October 2008
Mises: The Last Knight of Liberalism
by Jörg Guido Hülsmann
Ludwig von Mises Institute • 2007 • 1143 pages • $50.00
Reviewed by Bettina Bien Greaves
Biographer Guido Hülsmann has written a magnificent book, describing in detail not only the life of Ludwig von Mises, but also his writings, his intellectual development, and his importance. Hülsmann studied all Mises’s [...]
Milton Friedman (1912-2006)
Milton Friedman, who died last month at age 94, was one of the twentieth century’s most influential champions of individual liberty and free markets. The 1976 winner of the Nobel Prize in economics and an early associate of FEE, Friedman did more than any single person in our time to teach the public the merits [...]
1Dec2006 | Richard M. Ebeling and Sheldon | 1 comment | ContinuedBook Reviews – September 2004
The Company of Strangers: A Natural History of Economic Life
by Paul Seabright
Princeton University Press • 2004 • 304 pages • $29.95
Reviewed by Richard M. Ebeling
One of the most profound insights of economics is that the activities of billions of people can be coordinated without central direction and without most of these interdependent people knowing anything [...]
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The End of Prosperity: How Higher Taxes Will Doom the Economy–If We Let it Happen
By Arthur B. Laffer, Stephen Moore, and Peter J. Tanous
