Booms and Busts

Now, some of the locals are feeling the pain as lady luck, bad math and bad judgment are punishing them.

At the end of the day, inflation is a serious threat to freedom. The majority of the people, suffering badly from inflation, would most likely blame the free market for their plight, rather than blame the central bank for the debasing of the currency.

The problem for free-market economists is that their policy recommendations at the dawn of recession are not too sexy to the political mindset. They involve either doing nothing to hinder price adjustments, or actively removing extra-market barriers to price adjustments that already exist. This often involves short-term pain in exchange for long-term solutions, when politics rewards short-term solutions that result in long-term pain.

Last Tuesday, January 22, 2008, the US central bank lowered its federal funds rate target by a hefty 0.75% to 3.5%.

Policies that force consumers to spend are also policies that force them not to save…

Making consumers and businesses appreciate the real value of assets is the way out. There are no shortcuts, only placebos.

The complete transcript of the Institute's famous documentary on the Federal Reserve.

In a recession or a crisis, the right approach for individuals is to save.

Many people are finally saying the R word: Recession. The fundamentals don’t look good.

What government cannot do without causing even more problems is take positive action against symptoms, such as falling stocks or housing prices, rising unemployment, business failures, and falling incomes. This is precisely what caused the Great Depression to get its name instead of being called what it might have been called: the recession of 1929–1931.