Econ 201

Economists Have No Clothes

Economics as taught and practiced these days has been severely removed from its original methodology. It is a social science that has been dominated by physical science methodologies. It suffers from what Friedrich Hayek termed “scientism.” James M. Buchanan, Nobel Laureate, is ninety years old and one of the great economists of our time. His thoughts on the profession and [...]

John Maynard Dracula will not die easily

Richard McKenzie writes on Keynesian economics: The country will learn anew an old lesson: Don’t count on the federal government to wave away the country’s economic troubles with some refurbished fiscal wand. The wand didn’t work in the 1960s and 1970s (it only contributed to “stagflation”). The wand is an illusion that should have died with Keynes long ago. We [...]

Year Ago – Monetarists vs Keynesians

Originally posted: Sep 11 2009 The referenced article is a talk given at the Chicago Fed. It discusses the Monetarist vs. “Output-gappers” views on inflation and deflation. Monetarists are probably represented best by the late Milton Friedman. Output-gappers are best represented by Keynesians such as Paul Krugman.I favor Friedman as opposed to the output-gap position. Implied in the output-gap position [...]

The Downfall of Economics

Two outstanding articles for those who want to understand how economics slipped to its dismal state. Both illustrate the wisdom and prescience of President Eisenhower who said in his farewell address:  “The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded.” Math [...]

Econophiles from the Austrian Tribe

For econophiles, you might be interested in Thinkmarkets. They specialize in Austrian Economics. I receive regular emails from them with their latest updates. I thought the following would be of interest to those interested in exploring Austrian economics in more depth. Especially useful is the reading list included in the linked-to syllabus. Broadening Economics Education Posted: 04 Sep 2010 07:34 [...]

Currency Devaluation

For those wanting a primer on QE and its effect on the value of currency, I recommend that you read John Hussman’s article. As a teaser, Hussman had this to say about Ludwig von Mises and Ben Bernanke regarding their views on inflation/devaluation: My impression is that Ben Bernanke has little sense of the damage he is about to provoke. [...]

Keynes and His Influence by Gary North

A rather interesting lecture as to Keynes’ influence. According to North, Samuelson was more responsible for the popularization of Keynes than Keynes himself. Starts slow, but becomes interesting and optimistic when the internet is dealt with as a force that cannot be stopped. A lecture by Gary North. (approx. 55 minutes)

Economic Understanding as the Basis for Liberalism and Conservatism

“The single most important proposition in economic theory, first stated by Adam Smith, is that competitive markets do a good job allocating resources. Vilfredo Pareto’s later formulation was more precise than Smith’s, and also highlighted the dependence of Smith’s proposition on assumptions that may not be satisfied in the real world. The financial crisis has spurred a debate about the [...]

Keynesian Economics Explained

Mark W. Hendrickson wrote a piece on Keynesian Economics in American Thinker today. It is an excellent read for fans or opponents of Keynes. Even better for those who want to learn, or refresh, some economics. In the piece he discusses the following four topics: 1) Thralldom to the Keynesian macro-economic paradigm. 2) Blindness to history. 3) An enormous faith [...]

The Great Depression — Revisiting the Past

Periodically, I include older articles that are pertinent to what is happening now. Here is one that about the Great Depression and the New Deal. I believe it has historical and current relevance. Myths of the New Deal By Burton W. Folsom Jr. • August 2002 • Volume: 52 • Issue: 8 A persistent myth in American history is that [...]

Where Keynes Went Wrong

Anyone following this site knows that I believe that Keynesian economics, especially as practiced by the political class, is wrong. In effect, during the 1930s we jettisoned sound economics and shifted to an incorrect paradigm that has been in force since. The application of this “medieval witchcraft” enabled governments to grow beyond reasonable size and become indebted beyond the possibilities [...]

The Anatomy of a MBS from Goldman Sachs

This article appeared in Fortune. For those unfamiliar with mortgage-backed securities and the disgraceful behavior of the parties involved, it is a simple and sickening microcosm of what was happening on Wall Street. Junk mortgages: It just gets worse In 2007 we dissected one toxic issue. The horror story continues, but can we still learn from our mistakes? By Allan [...]