The importance of the Austrian school of economics is nowhere better demonstrated than in the area of monetary theory. It is in this realm that the simplifying assumptions of mainstream economic theory wreak the most havoc. In contrast, the commonsensical, “verbal logic” of the Austrians is entirely adequate to understand the nature of money and its valuation by human actors.
The GSEs, Fannie Mae and Freddie Mac, are quasi-public entities that purchase home mortgages from banks and either hold them or package them and re-sell them as mortgage-backed securities. Their profits accrue to their shareholders and well-compensated executives, while they enjoy low borrowing costs due to the implied backing of the US Treasury. They have come under considerable scrutiny lately due to a series of financial mis-steps and earnings scandals.
“In a sense we are determinists and in another sense we can’t let ourselves be,” says Milton Friedman in a Matt Miller piece in the Boston Globe. “But you can’t really justify free will.” (Thanks to margrev for the pointer.) Here is Mises on the subject of free will:
This from an interview with Allan Meltzer published in the current issue of the Minneapolis Fed’s quarterly:
Re Roger’s post: who wants to be rational when you can play with the biggest train set in the world?
As Kohn put it last week:
The New York Times runs a fascinating piece on the introduction of a new colored $20 bill. “The Bureau of Engraving and Printing will spend $33 million on advertising, marketing and education programs to promote the new bill, and it has hired a public relations firm and, in a first, a product placement firm and one of Hollywood’s top talent agencies to put the $20 bill on the publicity circuit.
Many associated with the Mises Institute have warned of this danger many times, but the closer that vouchers come to reality, the more the private schools themselves are understanding it just as well. See “Private Schools Leery of Voucher Trade-offs“ in the Washington Post. What if schools that refuse to accept them face competitive pressures from those that do?
“President Robert Mugabe has established new courts to counter Zimbabwe’s critical banknotes shortage. The Zimbabwe leader blames the four-month-old shortage on the thriving black foreign currency market. Michael Santu of the Reserve Bank of Zimbabwe told the Sunday Mail newspaper the courts would co-operate with neighbouring countries.They will eliminate the Zimbabwe dollar’s illegal externalisation, he said,” reports the BBC.
Steel Tariffs Unexpectedly Work Against White House (LATimes): The tariffs, put in place to protect companies and workers in steel-producing states such as Pennsylvania, have cost jobs in steel-consuming states such as Michigan. While the administration expected that the tariffs would not be well-received in international markets, it did not fully anticipate the backlash at home.
