The continuing power of the US dollar was called into question this week as the International Monetary Fund added the Chinese yuan as a part of the IMF's "currency" known as Special Drawing Rights. What does this mean for the US and China?
Republicans and conservative think tanks are apparently convinced that the key to improving the Federal Reserve is to create a "rules-based" monetary policy. But, as is so often the case with economics, things are much more complicated than they seem.
There were many state and local elections in the US this week, but few of them will result in anything that will combat widely held and popular errors about central banking, drug prohibition, and the global environment.
Given the current state of the economy, the Fed appears quite unlikely to raise interest rates any time soon. But what will it do if the economy starts to really go south?
The Fed's Federal Open Market Committee renewed its commitment to easy money this week. The Fed will pretend to be committed to raising rates while doing nothing, and its ongoing war against deflation will continue to make us poorer.
The problem with the central bank's easy-money policies is not primarily that it leads to rising prices. The big problem is that it leads to the crippling of the wealth creation process and the movement of resources from productive to non-productive sectors.
The Fed has a difficult balancing act. To maintain the current easy-money induced boom, it must not raise rates. But at the same time, it must also act as if it might raise rates some day, or savers will abandon the credit markets.
