Tag Archives: 6b) Mises.org

On April 19, 2022, at the Economic Club in New York, the Chicago Federal Reserve Bank president Charles Evans said the Fed is likely to lift by year end its federal funds rate target range close to the neutral range of between 2.25 to 2.50 percent. Furthermore, on April 21, 2022, Fed chairman Jerome Powell corroborated this by stating that the Fed wants to raise its benchmark rate to the neutral level. By popular thinking, the neutral rate is one that is consistent...

For most experts, deflation is bad news since it generates expectations for a continued decline in prices, leading consumers to postpone the purchases of present goods, since they expect to purchase them at lower prices in the future. Consequently, this weakens the overall flow of current spending and this, in turn, weakens the economy. Economic activity, believe the experts, is a circular flow of money. Spending by one individual becomes the earnings of another...

A monetary system that allows the creation of money out of thin air is vulnerable to the fits of credit expansion and credit contraction. Periods of credit expansion typically occur over many years and even decades while the phases of credit contraction happen like sudden implosions. The monetary policy makers tend to promote the prolongation of credit expansion because they fear deflation. By doing this, however, the central banks prevent monetary moderate deflation...

Washington regards the entire world as its “sphere of influence.” But now Beijing is looking to follow the US playbook on hegemony and expand Beijing’s network of military bases abroad. Original Article: “Expect Washington to Throw a Fit over China’s New Deal with the Solomon Islands” Over the past twenty years, the United States has increasingly tried to claim that Washington does not believe in spheres of influence and that only supposedly imperialist states...

The conventional view among mainstream economists, as presented by Milton Friedman, is that three factors determine market interest rates: liquidity, economic activity, and inflationary expectations. In this viewpoint, whenever the central bank raises the growth rate in the money supply by buying financial assets such as Treasurys, this pushes the prices of Treasurys higher and their yields lower. Note that this is the monetary liquidity effect, which inversely...

Since 2008, a key component of Fed policy has been to buy up mortgage-based securities and government debt so as to both prop up asset prices and increase the money supply. Over this time, the Fed has bought nearly $9 trillion in assets, thus augmenting demand and increasing prices for both government bonds and housing assets. Moreover, these purchases were made with newly created money, contributing greatly to liquidity and the easy-money policies that have...

Politicians love their buzzwords and talking points, and the Joe Biden White House and the Democratic Party use them as much or more than when Donald Trump and the Republicans ran Washington’s freak show. Last year, the mantra from the Biden administration was that inflation was “transitory,” meaning that the inflation would not last long. From Biden (when he could remember what his talking points were supposed to be) to Paul Krugman in the New York Times, the...

It was last August when Jerome Powell began to admit that inflation just might be a problem. But even then, he was only willing to say that inflation would likely be “moderately” above the arbitrary 2 percent inflation standard. Back in August, low inflation—not high inflation—was still perceived to be the “problem.” But things had certainly changed by late November when Powell was forced by reality to retire “transitory” as the preferred adjective to describe price...

Imposing economic sanctions upon Russia is tantamount to throwing gasoline on a raging fire. The sanctions will not end the Russian invasion of Ukraine and only will make things worse. Original Article: “The Economic Sanctions against Russia Are Destructive and Counterproductive: We Must Oppose Them” The Western sanctions against Russia seem to shock very few Westerners. Yet, for several reasons, these sanctions should at least be the subject of lively debate...

The US government today likes to pretend that it is the perennial champion of political independence for countries that were once behind the Iron Curtain. What is often forgotten, however, is that in the days following the fall of the Berlin Wall, Washington opposed independence for Soviet republics like Ukraine and the Baltic states. In fact, the Bush administration openly supported Mikhail Gorbachev’s efforts to hold the Soviet Union together rather than allow the...