Monetary Theory

In his new NBER working paper Martin Feldstein writes that “Reducing the large current account deficit will require both a higher rate of nat

The result of the governments' and the unions' meddling with the height of wage rates cannot be anything else than an incessant increase in the number of unemployed.

Economics is therefore not quantitative prediction. Nor is it a game or puzzle solving. Neither of the Friedman's assumptions — the rationality of economic agents and of the simplicity of preferences — is necessary.

Recorded at Mises University 2007.

Recorded at Mises University 2007.

This is a story about Linda Combs, who cleaned up the government’s

Mises knew why abandoning the principle of sound money would be so problematic: "In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about."

All action is really exchange. What the actor prefers less is exchanged for something he prefers more, including gift giving. It is a fallacy to say that the goods exchanged have equal value.

The absence of a central bank in Panama has created a completely market-driven money supply. Panama's market has also chosen the US dollar as its de facto currency. The country must buy or obtain their dollars by producing or exporting real goods or services; it cannot create money out of thin air. In this way, at least, the system is similar to the old gold standard. Annual inflation in the past 20 years has averaged 1% and there have been years with price deflation, as well: 1986, 1989, and 2003.

Where is Bernanke going to create the next bubble, the one that will mask the hangover from the housing bubble in the same way that the housing bubble masked the hangover from the tech stock bubble?