Capital and Interest Theory

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Adam Smith and Karl Marx's basic and monumental (in consequences) error

Capital and Interest TheoryMonetary TheoryValue and Exchange


What could these two thinkers, considered to be opposites, have in common? It turns out that Karl Marx inherits from Adam Smith a very basic error, one which has monumental consequences and has changed the world forever.

Adam Smith tells us in his famous treatise on the wealth of nations...

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Bove: The Fed is Bailing Out Countrywide

The FedCapital and Interest Theory


Punk, Ziegel analyst Richard X. Bove argues here that recent Fed policies and pronouncement amount to a bailout of Countrywide Financial. If so, then Bernanke's Fed is similar to Greenspan's in...

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Entrepreneurship, Arbitrage, and Capital

Calculation and KnowledgeCapital and Interest TheoryEntrepreneurship


[Cross-posted at Organizations and Markets]

Over the years I'm increasingly convinced that Israel Kirzner's metaphor of entrepreneurship as costless discovery ...

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Credit crunch + Market Rout = Central bank intervention

Booms and BustsFinancial MarketsCapital and Interest TheoryInterventionism


The turmoil in financial markets is eliciting the usual response from the central bankers, all up there in their Hueys, 'Die Walkuere' blasting out of their beat boxes. But the fixation on the 'sub-prime' angle and on the Fed's role in isolation only tells part of the story. While...

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New Record Skyscraper (and depression?) in the making

Booms and BustsCapital and Interest Theory


There is a new record setting skyscraper in the making in the United Arab Emirates. The Skyscraper Index predicts economic depression and/or...

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When Buying Sugar in Zimbabwe

Money and BanksCapital and Interest TheoryMoney and Banking

Blog08/01/2007's easier to use the new $200,000 note issued by the RBZ. It is worth US$13 at the official exchange rate or $1 on the black market.

Addendum: Lest anyone...

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US to China: Buy Mortgage-Backed Securities

Global EconomyMoney and BanksCapital and Interest Theory


As the mortgage-backed securities market meltdown accelerates, Bloomberg reports U.S. Urges China to Buy Mortgage-Backed Securities. According to the article, China buys some but not a lot of these...

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How to Ruin an Economy in One Easy Step

Capital and Interest TheoryMoney and BankingValue and Exchange


Chris McGreal reports from Harare:

Zimbabweans are shopping like there's no tomorrow. With police patrolling the aisles of Harare's electrical shops to enforce massive government-ordered price cuts, the...
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Price Control Chaos

The Police StateCapital and Interest TheoryInterventionism


From the Times:

Price inspectors and police, sometimes armed, descended on supermarkets in the Zimbabwean capital to enforce price controls. Their intervention followed the order issued by Mr...
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How Inflation Lowers Inflation

Money and BanksCapital and Interest TheoryMoney and Banking


As new money is created by the banking system, it enters the price system as the recipients spend it. As the prices of some goods rise, this should be captured in the CPI, right?

Not necesssarily. New money does not impact all...

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