Written by Brent Wayne
With the world still recovering from the 2008 global financial meltdown, the Federal Reserve is using every means necessary to stave off any potential threats to the U.S. economy. On September 13 Chairman Ben Bernanke announced another round of quantitative easing to further stimulate the economy which is suffering from sustained unemployment above 8% and little growth in GDP. As seen on CNNMoney the next morning (the 14th), world markets were reacting with positively, pushing U.S. stock indices to their highest levels in five years. QE3, this round involving purchase of mortgage-backed securities by the Fed, continues the aggressive stimulus program it began after the financial crisis.
What Are Capital Goods?
In chapter 5 of Organizing Entrepreneurial Judgment, Nicolai Foss and Peter Klein articulate the real nature of capital goods. They explain how the treatment of capital goods has varied among different schools of economic thought, as well as the implications for the firm and the entrepreneur resulting from differing conceptions of capital goods. Foss and Klein (FK) argue that the Austrian School of economics offers the most realistic conception of heterogeneous capital and thus lays the best framework for developing a connection between a sound theory of entrepreneurship and a sound theory of the firm.
by Michael Pettis
I recently “debated” twice with senior Chinese officials on the future prospects for China. In both cases they made the argument that Chinese growth rates were going to rise in the next few years and that the current deep pessimism is unwarranted. I argued, of course, that growth would slow even more.
Neither of the debates, I thought, was wholly satisfying. It seems to me that while a number of officials – at least among those with limited economic backgrounds – acknowledge that perceptions of China’s economic prospects have changed dramatically in the past few years, they don’t always understand why. There seems to be a worried resistance to the idea that we may have reached a major and difficult transition. The unwillingness to acknowledge the difficulty of the transition, however, can only make the transition all the more difficult.
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Should we take inside money more seriously?
by Dirk Ehnts
This question is actually the title of ECB working paper #841 from December 2007 by Livio Stracca. Inside money is understood as "money produced by the private sector and not by the government or the central bank" (p. 5). The author incorporates inside money in the standard DSGE (Dynamic Stochastic Dynamic Equilibium) model and comes to the following conclusions:
by William K. Black, New Economic Perspectives
FDR transformed the nation when he was confronted with the Great Depression and World War II. He famously welcomed the hate of the banksters. President Obama wanted the love (and the contributions) of the banksters. He chose Timothy Geithner to be his pipeline to the banksters because Geithner shared Obama’s lack of passion for holding the banksters accountable for their frauds that drove the ongoing crisis. We have known the core of these sad facts for years, for they were revealed (irony of ironies) in a May 22, 2010 article whose theme was that we had all done Geithner and Obama a terrible injustice by criticizing them for their servile approach to the banks. (Click on cartoon for Larger image.)