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Chapter XVI. Prices Chapter Summary 1. The Pricing Process When two individuals trade goods as an isolated event, catallactics can only say that the exchange ratio in this act of barter will ensure that each trader gains something more valuable than what he gives up. Beyond that truism, the exchange ratio (barter “price”) could be anywhere in a

In a recent post on the popular blog Marginal Revolution, a reader asked GMU professor Tyler Cowen whether his experience with economic models shed any insight on the promise or pitfalls of climate models. I think the question is brilliant, and (in my immodest opinion) far more interesting than the answer Cowen gave. In the present article I’ll

The Paulson bailout failed in the House. If it isn’t a death blow to the plan, it should be. This is not an economic plan: it is a heist. It will go down as The Great Bank Robbery of 2008. The economics behind it are nonsense, but we are naïve if we spend much time even considering the “arguments” for it. This is a money and power grab, pure and

As I have read countless analysts, including professional economists, offer “solutions” to the financial crisis, I have become more convinced of the importance of capital theory. You see this with the dichotomy people keep drawing between the financial markets and the “real economy,” a distinction that is useful for some purposes but which in this

A recent story from the front page of the Wall Street Journal illustrates the bankruptcy of mainstream macroeconomic thinking . The piece contains so much nonsense that the only appropriate critique is to go through the article step by step: Shrugging off a flurry of grim economic news, stock investors pushed the Dow Jones Industrial Average up

There’s one saving grace about Paul Krugman’s column at the New York Times : when an Austrian economist wants to explain how mainstream economics leads to ruin, he can always trust Krugman to set up the target in a clear, concise manner. This saves us a lot of work, because we don’t have to first build up the position before knocking it down. Even

Just about the only good thing to come out of the housing bubble is that many financial analysts are coming to see the virtue of the Austrian theory of the business cycle. Specifically, though Greenspan did his best to blame deregulation and foreigners who saved too much , many people now think that the Maestro’s ultra-low interest rates in the

Dear Professor Becker: I was pleasantly surprised to see you seriously entertain the notion that “depressions”—for younger readers, the term economists used to use for what we now call “recessions”—might serve a socially useful function. This is a crucial issue, as the government has already committed more than one trillion dollars, and assumed

In this forum I have argued that Alan Greenspan’s low-interest-rate policy after the dot-com bust and 9/11 attacks sowed the seeds for our current recession and the housing bubble . I have also criticized the alternate theory that a foreign “savings glut” was the true culprit, rather than the Fed. In the present article, I want to deal with a few

It has been a work years in the making, but finally the Study Guide to the Scholar’s Edition of Ludwig von Mises’s Human Action , is available. You can order the handsome volume here , and — as we’ve come to expect — the Mises Institute is generously providing the entire book free for download here. We hope that this new guide makes Mises’s magnum