These fake rallies will end in tears

New York Stock Exchange 1963 (Photo: Wikimedia; US News and World Report; Library of Congress)

Investors and speculators face some profound challenges today: How to deal with politicized markets, continuously “guided” by central bankers and regulators? To what extent do prices reflect support from policy, in particular super-easy monetary policy, and to what extent other, ‘fundamental’ factors? And how is all this market manipulation going to play out in the long run? It is obvious that most markets would not be trading where they are trading today were it not for the longstanding combination of ultra-low policy … [Read more...]

ECB decision: Unnecessary, ineffective but further entrenching bad habits

Euro banknotes

After months of whinging and whining by the international commentariat, and of relentlessly redefining what any sensible person would call “price stability” as a grave economic problem, the ECB has caved in, as expected, and yesterday announced further stimulus measures. Unnecessary I have pointed out repeatedly that low inflation is not a problem, and that the slow growth in money and credit that is presently its cause, is understandable and not entirely unhealthy. In many parts of the eurozone households, … [Read more...]

ECB under pressure to abandon superior policy stance

Balls of euro banknotes

The European Central Bank is under pressure. Inflation in the eurozone is at 0.7 percent but as Ben Bernanke supposedly stated, we are never sure if we measure these things correctly. So by all we know, the eurozone may already be in mild deflation. This should come as no surprise. The eurozone has practically had zero money growth and zero growth in lending for some time. As reported today, growth in the M3 money aggregate fell to a snail’s pace of 0.8 percent year-over-year in April. Loans to the private sector are 1.8 … [Read more...]

Keynesian madness: central banks waging war on price stability, savers

Eurotower In Frankfurt

There is apparently a new economic danger out there. It is called “very low inflation” and the eurozone is evidently at great risk of succumbing to this menace. “A long period of low inflation – or outright deflation, when prices fall persistently – alarms central bankers”, explains The Wall Street Journal, “because it [low inflation, DS] can cripple growth and make it harder for governments, businesses and consumers to service their debts.” Official inflation readings at the ECB are at 0.7 percent, still positive so no … [Read more...]

The a priori method in economics – In defence of Ludwig von Mises (essay)

Ludwig von MIses

I gave a speech on this topic at the Libertarian Alliance in March. A link to the video recording of that speech is here. The following essay covers similar ground but is not identical with the speech. I develop the argument differently here. My hope is that this text is a better articulation of my views and hopefully a good basis for further debate. The topic of this essay is broadly the method of economics: What phenomena does economics deal with? How do economists develop and test economic theories? What type of … [Read more...]

Martin Wolf: Only the ignorant live in fear of hyperinflation

Martin Wolf, FT

Since the financial crisis broke in 2008, the Financial Times’ resident economic expert and leading commentator, Martin Wolf, has decidedly veered to the left. Having rediscovered the Keynesian faith and having apparently terminated his long public love affair with “free market economics” loosely defined, he has become a reliable cheerleader for fiscal and monetary ‘stimulus’ of all kind. His disdain for those still attached to free market principles and fearful of the consequences of endless debt accumulation, interest rate … [Read more...]

DS joins Mises Canada

Mises Canada

Interest in the Austrian School of Economics and the work of Ludwig von Mises has been on the rise for some time, and happily, this trend seems to be continuing, as can be seen, among other things, from the spread of Mises institutes around the world. It gives me great pleasure to announce that I have just joined the advisory board of the Ludwig von Mises Institute Canada. I look forward to being part of a high-caliber and highly motivated team there. Of course, I will have to dispense my advice from the distance, that is, … [Read more...]