“Interest rates are the price of capital. As profits increase, there is going to be a need for a capital-rationing process,” Treasury Secretary John Snow told a British newspaper, as quoted in the  Washington Post. “I’d be frustrated and concerned if there were not some upward movement” in rates.

The New York Times features a review of Gillian Tett’s new book Saving the Sun: A Wall Street Gamble to Rescue Japan from its Trillion-Dollar Meltdown.  In a market economy, entrepreneurs and managers make decisions about how to best use their capital goods and available savings toward future production possibilities.  Their goal is to arrange production in such a way as to best meet consumer demand.  Because the future is

The Donald Rumsfeld memo as leaked for MSBNC   is a remarkable document. Here we have the Secretary of Defense admitting that he doesn’t know if the US governnment is winning or losing the war on terror, and, more pointedly, admitting that “we lack the metrics” to know. ”Is our current situation such that ‘the harder we work, the behinder we get’?”

The Le Monde article on the Mises Institute is now on the Le Monde website. See the English translation here, and the original below.

Given the current account deficit in the United States of more than five per cent and a negative net foreign investment position of over twenty per cent of its gross domestic product, it is the relative stability of the US dollar that needs explanation and not the fact that the effective exchange rate of the dollar has declined by twenty per cent since late 2002. It is even more remarkable that U.S. interest rates did not have to rise as might have been expected in order to attract foreign investment as a compensation for the deficit in the current account.

Here is a rare photo of Ludwig von Mises and Carlo Antoni, taking during a Mont Pelerin Society meeting in the early 1950s. Click the picture for a larger image.

Greenspan’s Uncertainty Principle: Premise Accepted, Conclusion Rejected (P. Kasriel, Northern Trust):

This kid-friendly site attempts to explain the difference between a free market and socialism. It contrasts the “totalitarian leadership” of a symphony orchestra with flexibility of a leaderless rock-and-roll jam. Parents: don’t try this metaphor at home. It would imply that socialism works most of the time in the right circumstances.

Somewhat ironically, it was one of the greatest philosophers who has ever lived, Aristotle, who was perhaps most responsible for steering the discipline of economics down a false trail. Since the time that he expounded his views, economics has been struggling to rid itself of Aristotle’s first, false step.

Consider the following passage from the man known in the Middle Ages as “the philosopher”: