What we see in Japan has nothing to do with the mythical liquidity trap, writes Frank Shostak, and everything to do with an explosion in debt, a reckless monetary policy, and tight government controls of businesses via the ministry of trade and industry. To put it bluntly, the Japanese have been depriving themselves of real funding in return for American government promises to repay the debt.
The alarm raised by mainstream economists that corporate cost cutting will undermine the real foundation of the economy is based on a flawed view of the essence of savings. On the contrary, writes Frank Shostak, cost cutting is an important means in correcting previous erroneous decisions so that real wealth can be generated again.
Even apart from Hans Hoppe's policy prescription--that private ownership ought to characterize all of society, economy, and government, while all public ownership should be banned as a form of theft--his thesis offers a highly fruitful framework for understanding everyday political affairs. Jeffrey Tucker explains.
Let us repeat the following: Bill Clinton did not give us an era of permanent prosperity. Nor did his administration present the picture of "fiscal restraint." His administration created the economic boom that turned to bust, and now it is George Bush's turn to make a bad situation worse. William Anderson explains.
The June 3, 2002, issue of The Nation heralds the 2001 Nobel Laureate Joseph Stiglitz as a "rebel with a cause." That characterization is certainly a stretch for an economist, who is former senior vice president of the World Bank and who adheres to orthodox Keynesian doctrine, the dominant economic paradigm of mainstream political and economic theory for the past 50 years.
The combination of collapsed pensions and accounting scandal is operating like the collapse of a dam, unleashing a torrent, not of water, but of hatred--hatred of capitalism and its most visible and valuable representatives: big businessmen. George Reisman counters propaganda with analysis.
There is a way out of the current economic mess, writes William Anderson: Stop the government merry-go-round. Malinvested resources must be permitted to be liquidated, government spending must be cut back, and the central bank must not try to "reflate" the currency or the stock market.
American business, once held in high regard and master of all it surveyed during the frenzied booming 1990s, suddenly finds itself cast upon the rocks. The economic cycle of boom and bust is fascinating stuff. Its essential elements are repeated endlessly throughout the dusty pages of financial history. All of this makes Murray Rothbard’s book, The Panic of 1819, particularly interesting, timely, and enlightening.
The headlines of the business pages have been trumpeting the arrival of recovery now for months. How do the experts decide when recession has turned to recovery? By looking at the data, which come in packages labeled in various ways: the GDP, the leading indicators, the unemployment rate, industrial production, housing starts, commercial borrowings, office vacancy rates, and a host of others. If these tend in the negative direction, we are said to be entering a recession. If they move in a positive direction, it is said that we are recovering.
What may be the more important factor in manufacturing future Enrons is the role of government in fostering the boom-bust cycle. Enron, then, is just one casualty of many--albeit the largest so far--of massive credit expansion and of manipulation of interest rates by the central bank.
