Daily economy news from the American Institute for Economic Research: data, stories, research, and articles touching on economics, politics, culture, education, policy, opinion, technology, markets, healthcare, regulation, trends, and much more.

AIER’s Editorial Policy.

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Murray N. Rothbard and Jacksonian Banking

Murray N. Rothbard was the consummate scholar in several fields. From my first meeting with Murray Rothbard, attending Ludwig von Mises seminar at New York University, more than forty years before the sadness of his death, I knew him longest as an economic historian.              

“The Fed and the Crisis: A Reply to Ben Bernanke”

“Federal Reserve Board Chairman Ben Bernanke spent most of his speech to the American Economic Association on Jan. 3 responding to the critique that easy monetary policy during 2002-2005 contributed to the housing boom, to excessive risk taking, and thereby

“The Roaring Twenties and the Bullish Eighties”

“There are significant parallels between the Roaring 1920s and the Bullish 1980s. Both decades were characterized by a policy-induced artificial boom that ended with an inevitable bust. The Federal Reserve had a hand in both episodes, keeping the interest rate

How the Gold Standard Worked, 1880-1913

“This essay reinterprets the gold standard by applying the monetary theory of the balance of payments to the experience of the two most important countries on it, America and Britain. Before explaining, testing and using the theory in detail, it

“Sound Money the Safeguard of Labor”

“This government is now on a gold basis; that is to say, the nation stands pledged to redeem all its debts or obligations in gold. This is not the result of arbitrary legislation on our part, but a necessity imposed

“Another Perspective on the Effects of Inflation Uncertainty”

This paper examines the effects of inflation uncertainty on real economic activityb y utilizing a flexible, dynamic,m ultivariatef rameworkt hata ccom-modates possible interaction between the conditional means and variances. The empirical model is based on a familiar identified vector autoregressive

“The Cost of Inflation Revisited”

“Neoclassical treatments of inflation understate the costs associated with inflation, even at very low levels. A comparative institutions perspective that recognizes the epistemological properties of prices and the institutional process by which inflation takes place, reveals the costs of inflation

“Stock Returns, Real Activity, Inflation and Money”

“There is much evidence that common stock returns and inflation have been negatively related during the post-1953 period. Zvi Body, Jeffrey Jaffe and Gershon Mandelker, Charles Nelson, and my article with G. William Schwert document negative relations between between stock

Meltdown

“President Obama rammed through his new stimulus bill, warning of an irreversible recession if Congress failed to act. But bestselling author Thomas E. Woods Jr. warns that Obama’s “stimulus package” will do far more damage to our economy than even

“No More Central Banks”

“Currency crises have become more and more frequent in part because speculators can mobilize more and more money. A generation ago, central banks, like the U.S. Federal Reserve System, had more money than anyone else and weren’t afraid to use

Without Sound Money, Markets Fail

“Nobel Economics Laureate F.A. Hayek summed up the enigma of money succinctly: “Money, the very “coin” of ordinary interaction, is [hence] of all things the least understood and—perhaps with sex—the object of greatest unreasoning fantasy; and like sex it simultaneously

“Gold Standard Policy and Limited Government”

Are monetary and banking problems due to a few misguided policies or incompetent managers? Or are there fundamental flaws in monetary and financial institutions, principally central banks and the legal and monetary frameworks that accompany them? “Gold Standard Policy and

“A Match Can Cause a Forest Fire: A Response to Brad DeLong”

“My essay on causes of the financial mess focused on trying to identify the initial “impulses” that set the boom-bust cycle in motion because (as this symposium shows) economists have a variety of views about the impulses, and because identifying

“What Really Happened”

“Our ongoing financial turmoil began in the mortgage market. Real-estate loans at commercial banks grew at a remarkable 12.26 percent compound annual rate over the four-year period from the midpoint of 2003 to the midpoint of 2007.[1] The expanded volume

“The Monetary Theory”

“The Monetary Theory” Chapter 3 of: Economics as a Coordination Problem: The Contributions of Friedrich A. Hayek Gerald P. O’Driscoll, Jr. Kansas City: Sheed Andrews and MkMeel Inc., 1977.

Sense and Nonsense on Petrodollars

“Myths and hyperbole aside, the weakening US-Saudi relationship is one instance amid a growing trend of diminishing US influence in global currency markets and international finance.” ~Peter C. Earle

How Nations Defeat Poverty

“What these stories all have in common is that these nations rose from poverty by embracing a common formula: more economic freedom and free trade… not international aid or central planning.” ~Jon Miltimore

Bitcoin Is ‘Resistance Money’

“Freedom money, wielded by its users and resistant to capture, identification, and censorship, doesn’t dispel unfair laws or make evil rulers go away — but almost nothing else does that either.” ~Joakim Book

Boosters Beware: Stadiums Aren’t Magic

“Just about every economist knows publicly financed stadiums are boondoggles that, if anything, imperil cities’ financial positions.” ~Art Carden

FOMC Holds Rates, Revises Forward Guidance

“Just as the FOMC was slow to adjust policy when inflation surged in late 2021, it will be slow to adjust policy as inflation returns to and falls below its target in 2024.” ~William J Luther

Prices Stable in May: Time to Cut Rates?

“M2, the most commonly cited measure of the money supply, is up 0.53 percent from a year ago. Since real income and population are growing faster than this, current M2 growth also suggests money is tight. But this is speculative.” ~Alexander W. Salter

AIER’s Everyday Price Index Unchanged in May 2024

“The recent data, combined with the deceleration in core CPI in April, suggests the resumption of disinflation. But policymakers have indicated a need for several months of reduced price pressures before considering interest rate cuts.” ~Peter C. Earle

The Super Market

“Something that you can purchase with income you’ve earned with just a few minutes of your work-time is something that includes the work-effort of thousands or millions of strangers.” ~Donald J. Boudreaux

Protectionists Are Wrong: Free Trade is the Path to Prosperity

“Consumers and producers in America are better off with more domestic and international trade. As we don’t want to produce everything we consume daily, trading with others is the most efficient way to meet our needs.” ~Vance Ginn

Government Failure in One Lesson

“Perhaps the easiest way to explain government failure in one lesson is to remember that there is no such thing as ‘the state.’ Instead, essential decisions about resource use will be made by political actors.” ~Michael Munger

AI Eases Its Own Labor-Market Transitions

“Not long ago, search engines like Google were not understood by the masses, which forced people through experience to learn how to ‘Google’ webpages in the proper way. Submitting a search query is similarly a new language to learn, just like prompting a language model.” ~Samuel Crombie and Jack Nicastro

Trade Deficits: Accounting Masquerading as Economics 

“Reducing ‘imports’ would not, in fact, increase GDP at all. At best, doing so would leave GDP unchanged since we would be adding less to consumption, investment, and government spending while subtracting equally less from imports.” ~David Hebert

Politicizing Monetary Policy Won’t Fix the Fed’s Failings

“Even if one thinks Trump is well-suited to make interest rate decisions (and there is little reason to think he is), it does not follow that Trump’s proposed solution would improve monetary policy.” ~Nicolás Cachanosky

The Dollar and its Domestic Enemies

“The greatest threat to the soundness and utility of the US dollar comes not from shadowy figures in faraway lands, but from unremarkable apparatchiks carrying out the edicts of US officialdom.” ~Peter C. Earle

Governments Shouldn’t Be In the Lending Business

“When government officials approve and guarantee loans, lenders don’t have to worry about taking the loss. They can be very generous, pursuing what they regard as socially beneficial goals, and never worrying about the losses the taxpayers will have to bear.” ~ George Leef

Defense Manual for The War on Prices

“The book advocates for a substantial policy shift toward minimal governmental interference, allowing market mechanisms to function unimpeded. Sadly, we are moving in the opposite direction.” ~Vance Ginn

Confounding the Case for Oil and Gas Collusion

“Oil is produced and sold in a global market. Even true cartels like OPEC don’t have total control over prices. It comes down to supply and demand.” ~Alexander W. Salter