After more than a decade of chained stimulus packages and extremely low rates, with trillions of dollars of monetary stimulus fueling elevated asset valuations and incentivizing an enormous leveraged bet on risk, the idea of a controlled explosion or a “soft landing” is impossible. In an interview with Marketplace, the Federal Reserve chairman admitted that “a soft landing is really just getting back to 2 percent inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now.” He went on to say that “nonetheless, we think there are pathways…for us...
economic growth
A Libertarian Stance on Irredentism
Irredentism is the belief that a group of people has the right to claim land or property which it was in possession of at some point in time, either according to historical fact or myth and legend. A few examples of irredentism are Zionism, the Greater Armenia, and United Ireland movements. Irredentism has been used to justify some of the worst human rights violations in human history. These include ultra-nationalist expansionism during both World Wars, ethnic cleansing during the Nagorno-Karabakh conflict, and the Palestinian expulsion during the 1948 war, just to name a few examples. It...
2% Inflation Is Killing Us
Fed chairman Jerome Powell is increasingly under fire for his apparently inability to take inflation seriously or admit it may be more than “transitory.” There’s been much talk of tapering the Fed’s enormous asset purchases, yet—as is typical for the Fed, actual action remains scheduled for some nonspecific time in the future. And if the economy weakens, as an increasing number of observers expect it to do, the Fed will surely chicken out on tapering and keep the money spigots open. Yet as recently as August the Fed and its officials routinely warned that there wasn’t enough inflation and...
The Fed Is Planning For More Inflation
In late August, Fed chairman Jerome Powell suggested that the Federal Reserve would begin tapering before the end of the year, an admission that price inflation was rising above the 2 percent target. Nonetheless, the Fed took no immediate action in the following month. This week, Powell again suggested a taper would begin soon, stating it would begin soon enough that the process could "conclud[e] around the middle of next year," and maybe could begin in November. This, of course, was highly conditional, with Powell noting this taper would only happen if "the economic recovery remains on...
Booms & Busts: An Analysis of Easy Money
According to the popular way of thinking, various economic data can provide an analyst with the necessary information regarding the state of the economy. It is held that by inspecting various economic indicators such as the gross domestic product or industrial production, an analyst could ascertain the state of the economic business cycle. Following the experts from the National Bureau of Economic Research (NBER), business cycles are seen as broad swings in many economic indicators, which upon careful inspection permit the establishment of peaks and troughs in general economic activity....
What Paul Krugman Gets Wrong About The $600 Unemployment Bonus
The federal government’s program of supplemental unemployment benefits of up to $600 per week, as provided for in the CARES Act, is set to expire at the end of July. Whether or not to extend this program is setting up to become a contentious political battle mere months before this fall’s national election. But what of the economic debate? Keynesians like Paul Krugman who support the extension of the benefits focus on getting money in the hands of people most likely to spend it—boosting ‘aggregate demand.’ On Twitter, Krugman insisted the economic shutdown was “annoying but sustainable,”...
The Fed Is Running Out of Bubbles to Create
The Fed came out with a series of unprecedented measures on March 22, 2020. They announced the Fed will buy an unlimited amount of Treasurys and mortgage-backed securities (MBS), or as Peter Schiff refers to it, “QE infinity.” This has been very positively welcomed by many in the mainstream media and by businesses. Yet, what many are ignoring is that the Fed has to do this to keep the bubbles that it has created going. Recently, I wrote that the Fed has created many structural problems in the mortgage market, corporate bond market, and the car loan market. These issues have only been...
No Bailouts
That adroit member of the British Parliament Enoch Powell once said that “the supreme function of statesmanship is to provide against preventable evils.” This duty, incumbent upon politicians endowed with wisdom, is made difficult because “by the very order of things such evils are not demonstrable until they have occurred.” Well, the market crash has finally occurred, and laid bare the “evils” of America’s monetary policy. This month saw the worst stock market crash in nearly forty years. The next month will see hundreds of thousands, if not millions, marching into unemployment. Whole...
Could the Coronavirus Be Fatal for the EU?
Since the EU’s debt crisis over Greece in 2009 and the subsequent problems with Italy, Spain, and Portugal, eurozone banks have dedicated their balance sheets to financing government deficits. At a cost to the commercial banks’ own cash flows, negative deposit rates at the ECB have ensured that no material losses have arisen from holding short-term government bonds on their balance sheets. And the only other beneficiaries have been the large corporations which through bond issues have managed to lock in zero or even negative interest rates on their debt. Officially, this has not...
End the Fed
In response to the potential economic downturn in the economy arising from the spread of the Coronavirus, the Federal Reserve dropped the federal funds rate by half a point — to a range of 1% to 1.25%. Ironically, after the Fed’s announcement, the stock market dropped 786 points or 2.9%. The Fed’s aim is to stimulate economic activity. By lowering interest rates, the idea is to get businesses to expand operations with more loans and to get consumers to go deeper into debt by purchasing more items. The result of the Fed’s artificial economic “boost” will be the same as it has been...
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