In his Financial Times article “ The curse of weak global demand, ” Martin Wolf writes that today’s most important economic illness is chronic demand deficiency syndrome. Wolf argues that despite massive monetary pumping by the central banks of the US and the EMU, and the policy of lowering interest rates to around zero, both the US and the EMU,
In his article “ The Big Meh ” Paul Krugman complains that despite all the information technology advances the effect so far has been negligible as far as economic growth is concerned. Krugman writes “That the whole digital era, spanning more than four decades, is looking like a disappointment. New technologies have yielded great headlines but
It is accepted by most economists that initial increases in consumer spending or other outlays tend to set in motion a reinforcing process which supposedly strengthens the economic growth by a multiple of initial spending. The Multiplier Explained An example will illustrate how initial spending raises the overall output by the multiple of this
The yearly rate of growth of the personal consumption expenditure (PCE) price index adjusted for food and energy stood at 1.3 percent in June — the same figure as in May. Note that on average since the beginning of this year the yearly rate of growth stood at 1.3 percent. Many economists have expressed satisfaction that the yearly rate of growth
John Taylor, once consider a possible Greenspan successor, has blasted the Fed for running what he he calls Mondustrial Policy , which amounts to picking winners and losers in the marketplace via monetary policy. Taylor is not an Austrian but at least he is aware that too much pumping is bad
In May, the US unemployment rate stood at 5.5 percent against the rate of 5.3 percent for the “natural unemployment,” also known as the Non-Accelerating Inflation Rate of Unemployment (NAIRU). According to the popular view, once the actual unemployment rate falls to below the NAIRU, or the natural unemployment rate, the rate of inflation tends to
The Greek government continues to negotiate with international creditors following its recent default on its 1.6 billion euro loan repayment to the International Monetary Fund (IMF). Consequently, Greece runs the risk of losing access to a 1.8 billion euro loan tranche and 10.0 billion euros for recapitalizing banks. Commentators are of the view
For many, it has now become settled wisdom that the massive monetary pumping by the US central bank during and after the 2008 financial crisis saved the US and the world from another Great Depression. Hence Federal Reserve Chairman at the time – Ben Bernanke (AKA “Helicopter Ben”) – is considered the man that saved the world. Bernanke in turn
According to the flow of funds data published by the Fed, the US debt to GDP ratio remains at a lofty level. Non-financial sector debt as a percentage of GDP stood at 251.7% in Q3 2016 against 230.1% in Q1 and 184.3% in Q1 2000. Consumer credit as a percentage of GDP also remains at a record high — it stood at 19.9% in Q3 2016 against 15.8% in Q1
It has become almost mainstream that bubbles are an important cause of economic recessions. The main question posed by experts is how one knows when a bubble is forming. The common view is that if the central bankers knew the answer to this question then they might be able to prevent bubbles from forming in the first place and thus prevent
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.
