Monetarist

Some Commentary On Inflation

An often asked question goes something like this: “How is it possible for the Fed to expand the money supply without inflation showing up?” There are two answers to this question. One pertains to the real rate of inflation versus the reported rate of inflation. Government continues to manipulate and change CPI calculations in ways to diminish the reported amount [...]

Politicians as Economic Arsonists

Economic problems tend to be viewed as short-term problems. John Maynard Keynes disparaged long-term thinking and solutions with his famous phrase: “In the long-run we are all dead.” His retort was clever, defensive and very appealing to politicians whose time horizon is never longer than the next election. Unfortunately, while a short-term focus may be necessary in politics, it makes [...]

Scariest Chart Ever?

The Federal Reserve’s balance sheet is a proxy for the money supply. The only way that the Fed can put assets on its balance sheet is to purchase them by using money or electronic credits. Each purchase of assets adds money into the banking system. Below is a history of the assets of the Federal Reserve. This is perhaps the [...]

A Simple Example and Explanation of Hyperinflation

To understand hyperinflation, this example from Art Cashin dealing with the price of a German loaf of bread is enlightening: To understand the incomprehensible scope of the German inflation maybe it’s best to start with something basic….like a loaf of bread. (To keep things simple we’ll substitute dollars and cents in place of marks and pfennigs.  You’ll get the picture.) [...]

Commentary on Milton Friedman and An Invite for Responses

Below is a comment received from reader Ictator61 on the recent post from Reason on Milton Friedman. I have added my comments in blue. Towards the end, a series of actions that might be effective in turning the country around were proposed. I think his comments and expanding this list would be an interesting exercise for readers plus whatever other [...]

Lacy Hunt on Economics

John Mauldin presents this introduction to a paper by Lacy Hunt. The Hunt article is a good read for econophiles: Long-time readers are familiar with the wisdom of Lacy Hunt. He is a regular feature of Outside the Box. He writes a quarterly piece for Hoisington Asset Management in Austin, and this is one of his better ones. Read it [...]

No Keynesian Saw It Coming

“No one saw it coming” is one of the great excuses used by the economics profession to rationalize our economic crisis. The statement is convenient, but demonstrably false. It would be correct if it were stated differently: “No Keynesian economist saw it coming.” Rephrasing the statement in such a fashion makes it true but damning for the charlatans that promulgate [...]

Inflation

According to Ben Bernanke, inflation is well under control, and if it isn’t he will correct it. He knows how or so he wants us to believe. Frankly, his ability to see the nose in front of his face is questionable. The following chart shows the correlation between Fed actions and commodity prices: H/T to Steve McCann from American Thinker. [...]

A Great Economist?

American Thinker provides little-known background information on Irving Fisher, considered America’s first great economist. Fisher was a monetarist, but Stephen Mauzy points out how many of his ideas are apparent in Keynesianism and a progressive agenda. Caring, Consequences, and the Commonweal By Stephen Mauzy Few terms are more sentimentalized than “I care.” When uttered by a charismatic rhetorician, audiences reflexively [...]

M2 Money Supply Beginning to Increase

For monetarists, increases in the money supply are generally believed to result in higher prices (inflation). Looking at the rate of increase from the late 1990s until today, there does not appear to be a major change.  The fear is that there is so much available in excess reserves in the banking system that once banks begin lending, M2 could [...]

Treasury Bonds Signaling Recovery or Armageddon?

The Wall Street Journal commented in a puff piece on the recent rise in interest rates: Count us among the optimists who think this is good news, a sign that markets are concluding that the economy is improving as major policy obstacles recede and the risk of deflation vanishes, if it ever existed. This graph shows the dramatic rise which [...]