Consumer Expectations Don’t Tell Us Much about the Real State of the Economy
In order to gain insight into the current and future state of an economy, many economists hold that it is helpful to get the view on this from consumers and businesspersons. Randomly selected consumers and businesspersons are asked to provide their views about the current and the future state of the economy.
Thus if the majority of those surveyed express optimism it is regarded as good news for the economy ahead. Conversely, if the majority of surveyed are pessimistic it is taken as a bad omen for future economic activity.
Why Are Thieves Stealing So Many Catalytic Converters?
The local paper offered up this vague headline last week, “Car Part Thefts Up in Henderson in 2021, Police Say.” Most readers likely passed over the article. But, in the time it takes to read the piece, a half dozen catalytic converters can be stolen.
We Can Have Low Interest Rates Or Robust Growth. But Not Both.
Central banks should know by now that you cannot have negative interest rates with low bond yields and strong growth. One or the other.
Central banks have chosen low bond yields at any cost, despite all the evidence of stagnation ahead. This creates enormous problems and perverse incentives.
The ECB’s New Inflation Plan Is Like the Old Plan. But Worse.
Old, absurd, and unfit for purpose; how else to describe the “new” monetary framework for euro monetary policy presented by ECB Chief Lagarde amidst much fanfare on Thursday, July 8?
Why old? The “new” framework is remarkably similar to that unveiled in May 2003.
Why absurd? The main rationale put forward for the framework is to work around a problem of the “zero bound”. That problem, however, is of the ECB’s own making.
Lecture 4: Time Preference, Capital, Technology, and Economic Growth
This lecture will be on time preference, on interest and capital, and on capital accumulation. I have already to a certain extent touched upon the problem of capital accumulation. We said that agricultural societies made it possible for the first time for capital goods to be accumulated, whereas the possibilities for accumulating much in terms of capital goods in hunter-gatherer societies that move from place to place are very limited.
Lecture 3: Money and Monetary Integration: The Growth of Cities and the Globalization of Trade
I want to continue the story from yesterday about the division of labor. So far, I have presented more or less a historical tale, and now I want to add a few theoretical considerations about why there is division of labor, and then from there continue on to the development of money, which intensifies the division of labor still further. We will also discuss the role of cities and city growth, and that will be continued in the lecture this afternoon on capital and capital accumulation.
Fiat Money Economies Are Built on Lies
Now and then, it pays to take a step back to get a broader perspective on things, to look beyond the daily financial news, to see through the short-term ups and downs in the market to find out what is really at the heart of the matter. If we do that, we will not miss the fact that we are living in the age of fiat currencies, a world in which basically everything bears their fingerprints: the economic and financial system, politics—even people’s cultural norms, values, and morals will not escape the broader consequences of fiat currencies.
Paying People Not to Work Won’t Make Us Richer
One of the most important principles of economics is that people respond to incentives. You get more of whatever you incentivize. You get less of whatever you disincentivize. This is irrefutable. The supplemental unemployment payment does both—it incentivizes people not to work, and simultaneously disincentivizes them from working.
How Botswana Became the World’s Fastest-Growing Economy
From 1965 to 1995, Botswana recorded the fastest rate of economic growth in the world. The spectacular success of Botswana has baffled many analysts, because after securing independence in 1966, Botswana’s prospects were unpromising. After all, Botswana is landlocked and on average, the record of such countries is unimpressive. But geography was not Botswana’s only obstacle to development. Independent Botswana suffered from a severe shortage of human capital.
