A viral disease known as COVID-19 has been declared the cause of death of over one hundred thousand Americans. When cases first appeared in the United States, individual states considered and then implemented various forms of mandatory lockdown to “flatten the curve” of new cases and minimize the death toll. I have previously questioned the wisdom of these lockdowns here.
Imagine if, in your role as an employer, you had to explicitly list every potential offense, short of criminal activity, that would result in the firing of an employee. Would putting someone in a choke hold (resulting in a $1.4 million lawsuit) and later calling it a “semi-bear-hug hold” have made your list? This is the position that management in some police departments find themselves in.
In a previous post, I discussed how fired police officers are often able to get their jobs back by appealing their termination to independent arbitration and thus how only time will tell if the officers involved in the arrest and death of George Floyd will remain fired. Even if they are unable to return to their jobs as Minneapolis police officers, this does not mean that their law enforcement careers are over.
My social media feed tells me today is “Loving Day,” which is the anniversary of the day the US Supreme Court invalidated state laws against against interracial marriage. Specifically, the name “Loving Day” refers to the case of Loving v. Virginia (1967), in which the Warren Court struck down the criminal convictions of Richard and Mildred Loving, two people found guilty of breaking the state’s prohibition on interracial marriage. This was, at the time, a criminal act under state law.
According to mainstream thinking, the central bank is the key factor in interest rates. By setting short-term interest rates, it is argued that the central bank can influence the entire interest rate structure by creating expectations about the future course of its interest rate policy.
In this way of thinking interest rates are set by the central bank and the individuals plays almost no role except for mechnically forming expectations about the central bank’s future policy. Individuals passively respond to the possible policy of the central bank.
Protestors in Seattle have taken over whole city blocks in a neighborhood known as Capitol Hill, just a bit north of downtown. They occupy city streets and parks, as well as (apparently) a police precinct building. This enclave, dubbed the “Capitol Hill Autonomous Zone” or CHAZ, is now making headlines around the world.
[Editor’s Note: this article is adapted from a 2003 essay in the Quarterly Journal of Austrian Economics entitled “New Keynesian Monetary Views: A Comment.” As economists abandon theory in favor of makeshift plans to flood the economy with stimulus, Hülsmann here provides some helpful reminders of the fundamental problems behind the current economic consensus on money.]
The €750 billion stimulus plan announced by the European Commission has been greeted by many macroeconomic analysts and investment banks with euphoria. However, we must be cautious. Why? Many would argue that a swift and decisive response to the crisis with an injection of liquidity that avoids a financial collapse and a strong fiscal impulse that cements the recovery are overwhelmingly positive measures. But history and experience tell us that the risk of disappointment regarding the positive impact on the real economy is not small.
It’s no surprise that the June Federal Open Market Committee (FOMC) concluded with rates being held near zero. We were offered some reassurance that the Fed expects to have “no rate increase at least through 2022.” Not mentioned was the amount of bond buying required to ensure that rates remain low for the next two years. However, Chairman Powell offered other insights.
