Capital and Interest Theory

Paul Krugman denies that the Fed artificially suppressed interest rates. As usual, Krugman neither understands interest rates nor the effects of inflationary policies.

Economists have failed to explain the mechanism by which an inverted yield curve signals an impending recession. But the Misesian explanation of the business cycle quite easily explains the pattern we observe in interest rates.

Fed chairman Jerome Powell recently claimed they were "targeting" the "neutral" interest rate. The Fed cannot set or even know that rate, for it doesn't come from government authorities.

The concept of capital is the fundamental concept of economic calculation, the foremost mental tool of the conduct of affairs in the market economy. Its correlative is the concept of income.

The typical mainstream economic view of interest rates ignores an important factor: individual time preferences.

Thanks to the Fed's monetary gyrations, we are seeing the yield curve acting abnormally. However, one cannot get something from nothing and market forces ultimately will frustrate the Fed's designs.

"Under socialism production is entirely directed by the orders of the central board. The whole nation is an 'industrial army' and each citizen is bound to obey his superior's orders."

The economic purpose of capital markets is to provide a nexus between savers and borrowers for the financing of productive investment, writes Robert Blumen.

The so-called art of central banking lies in picking the "right" target interest rate. But, there's no way to know the "correct" rate without giving markets freedom from central bankers.

It is a common idea that an increased quantity of money in an economy decreases the rate of interest. This idea is not always true or accurate.