Garet Garrett warned of uncontrolled public debt in 1931, and still the lesson has yet to be heeded. A crisis of interventionism, as termed by Ludwig von Mises, is fast approaching.
Posts Tagged ‘Bubble’
China’s Bubble Economy Re-Appears
China’s economic growth is turning out to be just another financial bubble ready to pop. The lesson is clear: monetary expansion causes economic instability. This bursts two theoretical bubbles: one, that instability is inherent in global capital markets, and two, that we are preparing to lift out of recession.
Consumer Credit and the Theory of the Cycle
Economist Jesús Huerta de Soto explains the role of consumer credit in the formation of the business cycle, in accordance with the Austrian theory. From his book, “Money, Bank Credit and Economic Cycles”.
Lending Regulation is Counterproductive
The mainstream has pointed its finger on the apparent lack of regulation, and therefore calls for an increase in regulation on lending for the purpose of selling houses. These regulations will make the accumulation of wealth that much more difficult. We are being condemned to a road to serfdom
Roots of Inflation
On 21 July 2009, Chairman of the Federal Reserve Ben Bernanke defended himself from Ron Paul’s accusations of promoting inflation by defining inflation as an increase in the consumer price index. hrough this definition, Bernanke purported to refute Ron Paul’s own definition—Austrian definition—that inflation referred to an increase in the money supply. Ron Paul’s definition of inflation is, in fact, the most accurate definition of the word.
Out of Work: Lessons for Europe
The world is facing spiraling unemployment: especially Europe and the United States. According to the Economist, unemployment in the United Kingdom rose to 7.6% up to May 2009. Spain’s labor force is facing 17.4% unemployment. The Ecounemployment in eu and usnomist suggests that those unemployed are shifting the blame to foreign workers, who are willing to work for lower wages (and may have more experience), but then says that a more realistic scenario is that the increase in unemployment is due to an increase in the minimum wage.
The Depression is Not Over
On Friday, 17 July, MSNBC reported that the “recession is slowing” in twenty-three major urban centers throughout the United States. They equate a slowing recession with a “bottoming out” economy. These trends show that early signs of recovery, or more accurately “bottoming out” (recovery begins only after the markets have cleared), can be deceiving. The United States’ economy is still clearing, and it has a long ways to go.
Roosevelt’s Depression of 1937
The “Great Depression” is a thoroughly-studied event in the economic history of the United States. A less studied section of the Great Depression was the so-called “depression within a depression”, or “Roosevelt’s depression”. The monetarist theory is that the Federal Reserve ended its credit stimulus too early, or too abruptly, causing a decline in government and consumer spending. This latter argument is probably the more correct argument.
Thinking on the Margin
On a Saturday blog entry, Paul Krugman explained “marginal thinking” and applied “marginal thinking” to the stimulus and went on to claim that “when it comes to stimulus, there doesn’t seem to be a lot of marginal thinking going on.” Empirical evidence seems to disagree with his position.
Bubble Economics
A comment on Paul Krugman’s post on the housing market, interest rates and Ben Bernanke. By looking at irrelevant statistics one does nothing to avert future crises of the same nature—credit bubbles do not only form in housing.