Category: Economic Theory
The analysis published under this category are as follows.
Friday, December 24, 2010
Economics Is Simple But The Fat Cats Want You to Think It's Complicated So That You Won't Demand Change / Politics / Economic Theory
By: Washingtons_Blog
Economics and finance seem like complicated topics, and so many people "leave it to the experts".
However, these topics are actually simple, and if people hear a clear explanation, they will be able to form an opinion about our current economy and the government's response to economic challenges.
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Thursday, December 23, 2010
Rise of the Free Market Zombies / Economics / Economic Theory
By: Robert_Murphy
For his Sunday column, Paul Krugman wrote a piece titled "When Zombies Win." Krugman claims that "free-market fundamentalists" — including Ron Paul — have been successful politically, despite being thoroughly discredited by recent events. As we'll see, it's a good thing that these ideas of shrinking government refuse to die, no matter how often Krugman attacks them.
Thursday, December 23, 2010
No, Mr. Krugman, You're Eating America Alive / Economics / Economic Theory
By: Neeraj_Chaudhary
Here we go again. This week, Paul Krugman, the 2008 Nobel Prize winner in economics and the go-to guy for progressives who need a morale boost, launched another misguided attack on Austrian School economists. From his New York Times soapbox, he referred to the free-market Austrian "hard money" philosophy as a "zombie idea" that is inexplicably eating the brains of the voting public.Read full article... Read full article...
Wednesday, December 22, 2010
What Is the Current State of Economic Science? / Economics / Economic Theory
By: MISES
Erwin Rosen writes: What is the current state of economic science? In two words, "not good."
This is evident in the poor performance of the economics profession during the current financial crisis. Few economists saw it coming; once it started, its severity caught them by surprise; and now it is apparent that there is no agreement among them on how to end it.
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Tuesday, December 21, 2010
How Much Faith Should We Put in Keynesian Economic Models? / Economics / Economic Theory
By: Robert_Murphy
Jim Manzi is a private-sector expert in statistical analysis. He is my favorite commentator on the economics of climate change, because he dove into the IPCC reports and found that the proposed legislative "cures" (cap-and-trade or carbon-tax laws) are arguably worse than the disease, even according to the "consensus" numbers.
Thursday, December 16, 2010
The Economic Reality of the Obama Republican Tax Deal / Economics / Economic Theory
By: Robert_Murphy
Economists and other pundits have been discussing the deal struck between Obama and the Republicans. It is an interesting topic because it showcases the enormous gulf between what makes good political sense and what policies are economically beneficial.
Monday, December 13, 2010
The Fed, The Chicago School's Achilles Heel / Economics / Economic Theory
By: Robert_Murphy
In a recent post "Triumph of the Austrian Economists," David Frum laments the displacement of the respectable Chicago School as the economists of choice among the political Right. Frum fails to see that conservative Republicans are justified in switching their allegiance to the Austrian economists, because supply-side monetarists have a glaring blind spot when it comes to the Federal Reserve.
Saturday, December 04, 2010
There’s Still Hope for Modern Economists / Economics / Economic Theory
By: Barry_Elias
A recent blog of mine, dated Nov. 12, 2010, suggested that modern economists have modeled the economic decision-making process for many years with a high degree of inaccuracy.
They implemented a methodology referred to as the dynamic stochastic general equilibrium (DSGE) model.
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Saturday, November 27, 2010
Destructive Neoliberal Economic Austerity / Economics / Economic Theory
By: Stephen_Lendman
Instead of vitally needed stimulus, Washington and European governments dictate austerity. The pretext of deficit reduction is being used to transfer more wealth to those already with too much, plus the usual canard over the urgency to save national banking systems. In other words, make ordinary people bear the burden of bailing out banking giants responsible for the severest economic crisis since the Great Depression. How? The usual IMF solution, involving preservation of capital at the expense of workers - a package including wage and benefit cuts, less social spending, privatization of state resources, mass layoffs, deregulation, lower "onerous" taxes, maintaining corporate debt service, and harsh crackdowns against resisters.
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Friday, November 26, 2010
Economic Boom, Bust, and Gold / Economics / Economic Theory
By: Frank_Shostak
In his interview with the CNBC on November 9, 2010, a highly regarded Wall Street economist, Nouriel Roubini, the cofounder and chairman of Roubini Global Economics, said that a gold standard is unlikely to stabilize the financial system. On the contrary, holds Roubini, such a standard can only make things much worse.
Wednesday, November 24, 2010
Raising Taxes Is Not Reducing Government Spending / Economics / Economic Theory
By: George_Reisman
Sunday's New York Times carries an article titled "The Blur Between Spending and Taxes." The author is Harvard Professor N. Gregory Mankiw.[1] The essential theme of the article is that the government is spending when it decides to forgo tax revenue that it otherwise could have collected. Indeed, tax revenues forgone in the enactment of tax deductions, such as for interest payments on home mortgages or charitable contributions, and tax credits, such as for first-time homebuyers or adoptions, are now commonly described as "Tax Expenditures." The thought is that the government is spending money in deciding not to take it in taxes and to allow the taxpayers to keep it.
Tuesday, November 23, 2010
Bernanke vs. Keynes / Economics / Economic Theory
By: Mike_Whitney
Investment drives the economy. It creates jobs, builds factories, develops technology, and stimulates growth. When investment falls, spending slows, unemployment rises, and the economy languishes in persistent stagnation.
Saturday, November 20, 2010
Zombie Keynesianism / Economics / Economic Theory
By: Michael_S_Rozeff
The Keynesians are having a highly public quarrel on a deep and divisive issue – a fundamental issue. They are wrangling over exchange rates.
Obama and Bernanke and the U.S. Congress want the Chinese to raise the value of the Chinese currency. The Chinese don’t want to.
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Thursday, November 18, 2010
What Drives Business Profits? / Economics / Economic Theory
By: Kel_Kelly
The economic and business community constantly attempts to forecast the effects of various economic changes and government policies on corporate profits. But both the cause and effect of increasing profits are other than what most people imagine. It will therefore be helpful to gain a concrete understanding of what profits do and do not represent.[1]
Monday, November 15, 2010
Bernanke and Greenspans Pretense of Economic Knowledge Continues / Economics / Economic Theory
By: Douglas_French
Two years after the Wall Street '08 come-apart, with the economy still lingering in a funk, the Federal Reserve announced, a day after the elections, what the Associated Press called "a bold effort to invigorate the economy": the purchase of $600 billion of government bonds from now through the middle of next year, at a pace of $75 billion a month. This $600 billion is on top of the $250–$300 billion the Fed will be buying to reinvest proceeds from its mortgage portfolio.
Sunday, November 14, 2010
The Keynesian Vacuum Universe / Economics / Economic Theory
By: Ashvin_Pandurangi
"Nothing in the world is more dangerous than a sincere ignorance and conscientious stupidity" - Martin Luther King, Jr.
If only we existed in a Keynesian vacuum universe, then the current Administration's economic policies may have actually succeeded in fixing the ailing, debt-ridden economy! Here are some of the reasons why:
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Friday, November 12, 2010
Modern Economists Failed at Disaster Recovery / Economics / Economic Theory
By: Barry_Elias
When a recent Nobel Laureate in Economics, a current Federal Reserve Board president, and MIT economist with the National Bureau of Economics (NBER) agree — take serious note: It is quite rare.
"I believe that during the last financial crisis, macroeconomists (and I include myself among them) failed the country, and indeed the world,” Dr. Narayana Kocherlakota, President of the Minneapolis Federal Reserve Bank, wrote this past May.
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Tuesday, November 09, 2010
Common Sense vs. Academic Economist Formulas; Fed Concludes Structurally High Unemployment is a Myth / Economics / Economic Theory
By: Mike_Shedlock
Ben Bernanke and the Fed have great belief in academic models whether they make any real world practical sense or not.
Indeed, Bernanke's reliance on formulas instead of common sense is what told him there was no housing bubble, that unemployment would not get above 8.5%, and that Quantitative Easing in massive force would cause the unemployment rate to drop. He was wrong on all counts.
Monday, November 08, 2010
Thinking Clearly about Capital, Interest, and Income / Economics / Economic Theory
By: Robert_Murphy
Nowadays, Austrian economists are most famous for their theory of the business cycle, as developed by Ludwig von Mises and Friedrich Hayek. However, they also made many contributions to the pure theory of capital and interest, most notably in the seminal work of Eugen von Böhm-Bawerk and later in that of Hayek. In the present article we'll see that these insights are relevant today, as mainstream economist Scott Sumner lashes out justifiably against absurd tax policies but, in the process, throws economic theory out the window too.
Monday, November 08, 2010
The Business Boom-Bust Cycle in Microcosm / Economics / Economic Theory
By: George_Reisman
The essential features of the boom-bust business cycle can be understood by viewing them in terms of the financial circumstances of a single individual.
Thus, imagine that an ordinary person has been going about his life more or less living within his means. And now, one day, he receives a registered letter from a major bank. The letter informs him that he is the sole heir of a distant relative who possessed a substantial fortune, and that he should come into the bank's main office in his city to sign the necessary documents and receive all the necessary authorizations to henceforth dispose of this fortune as he sees fit. Naturally, he quickly goes in and takes possession of his newfound fortune.
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