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Every few days, a senior Fed official expresses concern regarding the effect of high gasoline prices on inflation. These comments are always phrased in the way a meteorologist would report on the weather, as if the phenomenon in question is an act of nature. Even stranger, these statements imply that only the Fed can hope to save us from this

On October 24 President Bush nominated Ben S. Bernanke to replace Alan Greenspan as chairman of the Federal Reserve Board. In response, Wall Street became very excited and pushed the Dow Industrial average up by almost 1.7%. The media and the pundit class were overjoyed too. Most experts regard this successor to Greenspan as one of the greatest

Most economists are extremely alarmed about the effect of the expanding deficit on the current account. In 2004 the deficit stood at $668 billion, or 5.7% of the gross domestic product (GDP). For 2005 we have estimated that the deficit was around $788 billion, or 6.3% of GDP. As a result of the ballooning deficit, the value of US net external

According to the latest Government report the personal savings rate has plunged to negative 0.7 % in December from negative 0.2 % in November. This was the seventh consecutive negative savings rate. Note that the average of the savings rate since 1959 stood at 7.2 %. Many experts are of the view that the falling savings rate points to a growing

In his speech on March 20 the new Fed Chairman Ben Bernanke admitted that he is not so sure whether the Fed should be tightening its stance further or whether the central bank should pause. The reason, according to Bernanke, is the unusual behavior of long-term interest rates. Despite a visible increase in the federal funds rate from 1% in June

In order to cool off the strong pace of economic activity, on Thursday April 27, China’s central bank raised the one-year lending rate by 0.27% to 5.85%. The Chinese central bank tightening of the interest rate stance has unsettled world commodity markets that for the past five years have been displaying spectacular performance. For instance, the

On Wednesday May 10, Federal Reserve policy makers raised the federal funds rate target by 0.25% to 5%. This was the 16th increase in the target since June 2004 when it stood at 1%. The statement issued by Fed Chairman Bernanke and his colleagues suggested they would now pause in the cycle of interest rate increases. They say that they must assess

Is it true that changes in stock prices are predominantly set by changes in money supply? At some level, it makes sense that an increase in the rate of growth of money supply strengthens the rate of increase in stock prices. Conversely, a fall in the rate of growth of money supply should slow down the growth momentum of stock prices. The chart

According to many commentators, the recent fall in the price of oil should soften the rate of increase in the core CPI, i.e., the consumer price index less food and energy. (The price of oil fell to around $63 per barrel from $74.50 per barrel at the end of July — a fall of 15.4%). These people believe that changes in the price of oil plays an

The Causes of the Economic Crisis is a collection of articles on the business cycle, money, and exchange rates by Ludwig von Mises that appeared between 1919 and 1946. Here we have the evidence that the master economist foresaw and warned against the breakdown of the German mark, as well as the market crash of 1929 and the depression that