I am writing this, having just returned from the fourth course at the New Austrian School of Economics, in Munich. The single biggest theme was the rate of interest and its linkage to prices. Kondratieff, among several others, have observed that rising prices lead to rising interest rates and vice versa. And the opposite case […]
Keith Weiner New Austrian School of Economics Gold Standard Institute M. Benjamin Bernanke Chairman of the Federal Reserve Re: Open Letter to Discuss Your Misunderstandings About Gold Keith Weiner Dear M. Bernanke: You have publicly gone on record with some off-the-wall assertions about the gold standard. What made you think you could get away with […]
In my last piece, The Laffer Curve and Austrian Economics, I argued that the “Laffer Maxima” moves depending on where the economy is in the boom-bust credit cycle. I used an example of a marginal restaurant business in the bust phase, which fails when the income tax rate on the people who live nearby rises […]
Peter Tchir wrote a piece yesterday describing yet another hole in the banks’ balance sheets: I am not sure I fully understand it, but to me it looks something like this: A bank has a duration mismatch. Its funding is short-term, which means it must be rolled over frequently. This subjects the bank to the […]
Capitalism died when they decided to subsidize railroads for the sake of national prestige in the mid 19th century. Capitalism died when, to compensate for the consequences of subsidized railroads, they passed anti-trust laws in 1890, under which it is illegal to have lower prices, the same prices, and higher prices than one’s competitors. Capitalism […]
Zero Hedge posted an article that asks an interesting question. Every European country owes money to other European countries. This creates a web of cross-linked debt. Instead of each country laboring under the full nominal amount, why don’t they just cooperate and cancel out everything but the net debt? This remainder would be very manageable […]
For months, even before the end of QE2, analysts and prognosticators have been saying the Fed will have to do another QE and another, endlessly. These folks were surprised when it didn’t come last month, and predicted confidently that it would come this month especially because Bernanke extended the September meeting to two days. I […]
In fall, 2008, the US banned short selling of certain stocks. It triggered a massive short-covering rally. Then, without the shorts in the market, prices went into freefall. When prices are falling, the shorts (when taking profits) are the only bidders. Markets don’t crash because of short sellers. They crash because the bid is withdrawn. […]
By now, everyone knows that S&P downgraded the debt of the USA from their top rating, AAA, to their second-highest grade, AA+. Most of the commentary has been of the pin-the-blame-on-the-donkey variety. For all most people know, this is the collapse of the currency and the financial system and their biggest concern is that Obama […]
One of the conspiracy theories that’s popular in the gold community right now is that when the CME and various brokers increased the margin required to hold silver, this caused the price to fall from $49 to $34. Of course, observing the silver basis does not confirm this claim. Today, Zero Hedge has a short […]
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