Contrary to popular thinking, the stock market does not have causative powers as far as economic activity is concerned. The prices of stocks only reflect individuals' assessments of economic reality. And while individuals can change their evaluations of economic facts, writes Frank Shostak, they cannot alter the facts themselves.
Errors are an inevitable part of human action, writes Gene Callahan. If the future were certain, we would not need to act. Yet many economic models assume all economic actors possess perfect information, all plans are coordinated, and all adjustments to new data are made instantly and without cost.
As soon as Abraham Lincoln and the new Republican Party gained power, the average tariff rate was quickly raised from a nominal 15 percent to 47 percent and higher, and remained at such levels for decades after the war. South Carolinian John C. Calhoun's free-trade arguments, as eloquent and advanced as they were, were no match for a federal military arsenal.
Insider trading laws, writes Dale Steinreich, have empowered the SEC to undertake a mission in information egalitarianism that favors certain classes of investors and strategies, and not others. Martha Stewart and ImClone have the book thrown at them, while the stock sales of Apple Computer's executives are ignored.
It is time to recognize that food prices will likely continue to fall over the long term, and that the number of commercial farmers will continue to diminish and to recognize the benefits such a trend confers upon society. It should also be made apparent that to continue to fight this trend is futile, and that it is a waste of time and money—not to mention the outright theft involved in seizing money from one group only to give it to another.
Fannie Mae's monopoly privileges have given it an ever-increasing share of the secondary conforming mortgage market, writes Robert Blumen, and it currently is seeking to expand into other parts of the mortgage market. The net result has been a nightmare of resource misallocation and massive systemic risk.
The quirky nature of credit is that it is not necessarily better in abundance, writes Christopher Mayer. It's not like beer, butter, and bananas--where more means cheaper and cheaper is good. Credit is like money; it represents buying power. More credit means more buying power, which means a bidding up of assets and a spark for an unsustainable boom.
Any manager of a private trust fund who would dare to spend the funds entrusted to him and replace them with his IOUs would face criminal charges, writes Hans Sennholz. When the U.S. Treasury does it, it is called "creative financing." But there is a price to be paid.
Argentina cannot afford to wait for an IMF rescue package, which will only prolong the current unsustainable monetary regime. It must act now to reform its paralyzed monetary and financial system. In this interview, QJAE editor Joseph Salerno discusses the financial and banking chaos in Argentina.
Arthur Andersen's transgressions have opened the doors to unbridled regulatory madness, writes Karen De Coster. The effect of legislation (like CARTA) will be to replace the oversight bodies that currently watch over the accounting profession with regulators who will do an even worse job of it.
