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November 14, 2018|Brendan Brown, Bretton Woods, Central Banking, deflation, Inflation, Janet Yellen, Paul Volcker, Stanley Fischer, U.S. Federal Reserve

Perpetual Inflation vs. Sound Money

by Alex J. Pollock|Leave a Comment

United States Federal Reserve Bank building on Constitution Avenue in Washington, D.C. (Rob Crandall / Shutterstock.com).
Modern central banks keep attempting to manipulate prices to a different and “better” outcome than the market would provide, but what does this achieve?

October 3, 2018|Central Banking, European Union, Federal Reserve, Finance and Philosophy, Frank Knight, Friedrich Hayek, Inflation, Quantitative Easing

Knowledge, Risk, and the Surprised Banker: A Conversation with Alex Pollock

by Alex J. Pollock|2 Comments

Alex Pollock discusses the philosophy of finance and why the quant guys keep getting it wrong.

January 10, 2018|Adair Turner, Central Banking, Charles Kindleberger, credit, debt, Dodd-Frank, Federal Reserve, Financial Services Authority, Inflation, The Forgotten Man

Who Is This “We” that Should Manage the Economy?

by Alex J. Pollock|8 Comments

Adair Turner's account of financial markets is insightful but misunderstands the role of the state in creating financial crises.

July 27, 2017|Central Banking, employment, Entitlements, Growth, Ray Fair, Spending, taxes

Democratic Accountability and the Economy

by John O. McGinnis|6 Comments

Protest against the Macron government in Strasbourg, France, July 12, 2017 (Hadrian/Shutterstock.com).

Ray Fair, a fine Yale economist, has the best economic model for predicting the outcome of presidential and congressional elections.  The model has the virtue of simplicity, weighting incumbency, length of time a party holds the Presidency, and  news about the economy on growth and employment relatively shortly before election. It has not been perfect in predicting each party’s share of the two party vote, but it has been good–good enough to be taken seriously outside the academy. The New York Times in fact devoted a whole interview to him, sadly marred by the seeming inability of the interviewer to understand why, Fair, despite being a Democrat, used his model to predict a Republican victory!

But the relative success of his model makes one doubt how strong is democratic accountability for the economic performance of government. Few, if any economists, would say that the news about growth and unemployment shortly before an election is a good proxy for that party’s economic stewardship. Business cycles are not in the control of the government. And perhaps more importantly, the most important policies a government undertakes likely take longer than a few years to bear fruit. Thus, the tax cutting policies of the Reagan era may be largely responsible for the prosperity of the Clinton years as businesses and people invested more.

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March 15, 2017|Argentina, Bitcoin, Central Banking, China, currency law, Federal Reserve, Fiat Money, Georg Knapp

Government Failure Makes Bitcoin Succeed

by John O. McGinnis|5 Comments

Protest against the Macron government in Strasbourg, France, July 12, 2017 (Hadrian/Shutterstock.com).

Bitcoin, the premier cybercurrency, is at an all-time high in price and an all-time low in volatility. In a new article, Bitcoin: Order without Law in the Digital Age, Kyle Roche and I compare Bitcoin to fiat money and show why and how it may succeed in the long run in becoming a currency relied on by millions. In this post, we focus on the flaws in fiat currency that may enable Bitcoin’s success. In the next we will describe how Bitcoin is succeeding.

In 1924, Georg Friedrich Knapp, the father of monetary theory, wrote that “[t]he soul of currency is not in the material of the pieces, but in the legal ordinances which regulate their use.” The state must instill confidence through law that its currency will retain value. And it is the uneasy relation between a state and its currency that gives Bitcoin the opportunity to grow. Citizens in some nations rightly distrust their currencies, precisely because they have little confidence in the legal ordinances and institutions, like central banks, that regulate their use.  For instance, in the recent past nations, like Argentina and China, have undermined the value of their currencies and yet also tried to prevent citizens from using other more stable and reliable currencies to maintain the value of their assets.

Bitcoin provides many people in monetarily oppressive regimes with a better alternative.

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August 10, 2016|Central Banking, Federal Reserve, Quantitative Easing, Ruchir Sharma, US Treasury

Fear Not, the Federal Reserve’s Relevance Is Declining by the Day

by John Tamny|7 Comments

“The sole use of money is to circulate consumable goods.” – Adam Smith

 

In a recent op-ed for the Wall Street Journal, Morgan Stanley economist Ruchir Sharma observed that while the world is seemingly “turning inward,” this comes “in a period when countries are more beholden than ever to one institution, the U.S. Federal Reserve.” Interesting about Sharma’s piece is that if anything, it revealed the Fed’s growing irrelevance.

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March 7, 2016|Alan Greenspan, America's Bank, Bank of the United States, Ben Bernanke, Central Banking, Federal Reserve Act of 1913, J.P. Morgan

America’s Bunk: The Uninspiring Origins of the Federal Reserve

by Brian Domitrovic|1 Comment

In the opening paragraph of his multi-volume, quasi-official History of the Federal Reserve (2003), monetary policy scholar extraordinaire Allan H. Meltzer wrote: “The founders did not intend to create either a central bank or a powerful institution; had they been able to foresee the future accurately, they might not have acted.” They might not have acted—given a little time, those who started the Fed back in 1913 could well have looked upon the result and found it undesirable.

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Book Reviews

A Compelling and Compassionate Book about Epilepsy

by Theodore Dalrymple

Our knowledge of the human brain is limited, but neuroscientist Suzanne O’Sullivan’s observation of her patients yields astute insights.

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Andrew Roberts Takes the Measure of the “Populist” Aristocrat, Churchill

by Joao Carlos Espada

Yes, there is something new to be learned about Winston Churchill, and it's in the new 1,105-page biography by Andrew Roberts.

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Liberty Classics

Paul Heyne and the Trouble with Economists

by Nikolai G. Wenzel

Economics is often a morality-free zone, and Paul Heyne shows why this is a mistake.

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Bringing Natural Law to the Nations

by Samuel Gregg

If sovereign states ordered their domestic affairs in accordance with principles of natural law, the international sphere would benefit greatly.

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Podcasts

Born-Again Paganism: A Conversation with Steven Smith

A discussion with Steven D. Smith

Steven Smith talks with Richard Reinsch about his provocative thesis that a modern form of paganism is becoming public orthodoxy.

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"Slouching Towards Mar-a-Lago:" A Conversation with Andrew Bacevich

A discussion with Andrew J. Bacevich

Andrew Bacevich discusses his new book Twilight of the American Century

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Bureaucracy, Regulation, and the Unmanly Contempt for the Constitution

A discussion with John Marini

John Marini unmasks the century-long effort to undermine the Constitution's distribution of power.

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Beautiful Losers in American Politics: A Conversation with Nicole Mellow

A discussion with Nicole Mellow

Nicole Mellow on the beautiful losers in American politics who have redefined the country.

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Law & Liberty’s focus is on the classical liberal tradition of law and political thought and how it shapes a society of free and responsible persons. This site brings together serious debate, commentary, essays, book reviews, interviews, and educational material in a commitment to the first principles of law in a free society. Law & Liberty considers a range of foundational and contemporary legal issues, legal philosophy, and pedagogy.

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