Monetary Theory

Both Phelps and another Nobel Laureate Milton Friedman have introduced more confusion rather than clarity regarding the explanation of the phenomenon of stagflation.

In the New York Times, Joseph Stiglitz, a Nobel prize winner in economics, has an article titled

Presented at the Mises Circle in Manhattan: The Fed and War Finance (16 September 2006, University Club, New York, NY).

Presented at the Mises Circle in Manhattan: The Fed and War Finance (16 September 2006, University Club, New York, NY).

What is really stopping a much-needed change is public ideology. So long as the political system encourages the idea that government is the savior of mankind, the solver of all human problems, the machine that will bring freedom to the world through tanks and bombs, we are going to have the problem of monetary instability.

Jay Taylor made the case that John Maynard Keynes and Milton Friedman were wrong and that Ludwig von Mises was right. Inflation and depression are caused by excessive credit creation. The Austrians advocate for a gold standard while bankers and politicians hate gold.

What needs to be understood clearly is the mischievous nature of the governmentally sheltered fractional-reserve banking system. In terms of the relative frequency of "boom-bust" cycles, we find ourselves precisely where we were without the "monetary policy".

We can have no confidence that the Stiglitz model captures the essential aspects of real world economizing that it purports to. We therefore can have no confidence in any belief that rests upon this or similar theories that government has a proper role to play in increasing economic efficiency or social welfare by use of taxes, subsidies, and transfer payments.

Once and for all, I'm going to target the main motivation for minimum wage advocates in academia: politics.

Government officials have the incentive and the ability to manipulate economic statistics. The lesson is: don't be fooled by government statistics.