Monetary Policy

The Collateral Is Us

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The witching hour is nigh and the threat of the U.S. defaulting on the federal debt is being bandied about as if it were the boogeyman. Fear mongers from the left and right both say the country will go belly up unless the debt ceiling is raised by the Aug. 2 deadline, that it will no longer be able to ... [click for more]

The Cause of Current U.S. Deficits and Debt

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Except for a brief period of time in 1835 under President Andrew Jackson, the United States has been in debt since the founding of the Republic. The first reported national debt in 1791 was over $75 million. Congress now spends more than that every ten minutes. Since the last year of the Bush administration, annual federal deficits have exceeded $1 ... [click for more]

Close Down the IMF

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International Monetary Fund director Dominique Strauss-Kahn is out after being charged with sexual assault against a hotel maid in New York. Unfortunately many members of the world’s governing elite stand ready to take his place. Who should succeed Strauss-Kahn — a European or someone from the developing world? If the criterion is the welfare of ordinary people, the answer ... [click for more]

Hidden Inflation and Debilitating Deficits

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After the 2008 financial collapse, many of us called on politicians to let the market correct itself. The government’s expansion of the housing sector and the Fed’s artificially low interest rates caused an unsustainable and thus ultimately destructive boom, which eventually leads to a bust. This explanation of the business cycle won F.A. Hayek the economics Nobel Prize in ... [click for more]

Time to Rein in Federal Spending

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The debate in Congress over the extension of the Bush tax cuts has obscured the issue of government spending. After all, it is because members of Congress love to spend money that isn’t theirs that we “need” an income tax to begin with. Government spending is out of control. The federal budget is fast approaching $4 trillion. The budget deficit ... [click for more]

Lessons from a Bloated Budget

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President Obama has just sent to Congress the largest federal budget ever in U.S. history. His $3.518 trillion budget is also the most unbalanced in history, with a built-in deficit of $1.413 trillion. The United States has rarely in its history had a balance of receipts and outlays. Deficit spending has been the norm, with the last real budget surplus ... [click for more]

The Distortions Wrought by the Corporatist State

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“What kind of society gives that kind of money to people who create ... nothing?” That was Chris Matthews’s comment on his MSNBC program Hardball after reporting that “the top 25 hedge fund managers made $25 billion last year.” Most libertarians will have a natural reflex against a statement like that. Indeed, Matthews packs lots of fallacies into a few ... [click for more]

Lessons for America from Germany’s Hyperinflation, Part 2

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Part 1 | Part 2 By November 1922, the German economy was collapsing. Industries shut down. The government committed itself to paying money to the thousands of workers who became unemployed. Within six months, the government was providing a trillion marks a month in emergency credits to failing banks, railroads, manufacturing businesses, and agricultural cooperatives. On July 1, 1923, ... [click for more]

Lessons for America from Germany’s Hyperinflation, Part 1

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Part 1 | Part 2 Many Americans may be inclined to assume that Germans were barbaric because they supported Hitler, and whatever happened there couldn’t possibly apply to the United States. But the Germans have had much more in common with Americans than we might realize. Germans were educated and industrious. Germany had world-class universities. Germans long led the world ... [click for more]

Bernanke Has the Whole World in His Hands

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Federal Reserve Chairman Ben S. Bernanke has a big task ahead of him. He has to withdraw most of the $2.2 trillion the Fed created and pumped into the banking system since 2007 before a monster inflation strikes and robs of us our purchasing power. But he has do it without sending the economy back into a recession in ... [click for more]
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