In an article in the New York Times on January 15, 2004, Berkeley professor of economics Hal Varian raises a fundamental question: why are the dollar bills in people’s pockets worth anything? According to Varian, there are two possible explanations for this: the dollar bills carry value because the government in power says so or because people are
In his testimony before the Congressional Committee on Financial Services the Chairman of the Federal Reserve Board, Alan Greenspan, said that he could see good chances for a sustainable expansion of the U.S. economy. According to Greenspan: The household sector’s financial condition is stronger, and the business sector has made substantial
On Tuesday February 24, 2004, the chairman of the Federal Reserve, Alan Greenspan, in his testimony to the Senate Banking committee, issued a warning that Fannie Mae and Freddie Mac—the two giant mortgage buyers—have grown so large that they pose a threat to the entire financial system. To reduce this threat the Fed chairman recommends that
In his speech before the Independent Community of Bankers of America on March 17, 2004, the Chairman of the Federal Reserve Board, Alan Greenspan, concluded that the US banking system is in healthy shape. According to the Fed Chairman, the weakness in credit quality that accompanied the recent recession has clearly been mild for the banking
China has experienced one of the great economic transformations in the history of the world, owing to economic reforms that unleashed astonishing productive capacity that had been bottled up for long period of state controls. And yet this transformation has been endangered by the bane of all booms under fiat money: money and credit creation. The
In his speech on May 20, 2004 , a Fed Governor, Ben Bernanke, argued in favor of a gradual approach to interest rate policy settings. According to Bernanke, because policy makers do not have precise knowledge of how the economy will respond to a given change in interest rates it is logical that policy makers should proceed cautiously. In other
On June 30, the Fed lifted its Federal Funds rate target by 0.25% to 1.25%. The catalyst that brought about the reversal in the trend towards lower rates was a series of rising economic indicators, including GDP growth, job creation, and the fear of price inflation. Only a few months ago, the prospect of inflation wasn’t even discussed by Fed’s
What typifies the modern economy, writes Mises, is complex production that is a “continuous, never-ending pursuit split up into an immense variety of partial processes.” This complex structure of production generates a seemingly endless amount and variety of goods which not only maintains our life, but also makes life more pleasant. It would
This year the Nobel Prize in economics was awarded to Finn Kydland and Edward Prescott (KP) for their contributions in the design of macroeconomic policy and for the identification of the main causes of business cycle fluctuations. Here I discuss their theory of the business cycle and how it stacks up against the Austrian understanding. Since
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.