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.

“Money and Monetary Policy for the Twenty-first Century”

This essay challenges the conventional wisdom about money and monetary policy. The role of money in fostering prosperity is a function of the quality, as well as the quantity, of money. Inflation always harms the performance of an economy. Deflations

Two Philosophies of Money

Two Philosophies of Money: The Conflict of Trust and Authority S. Herbert Frankel New York: St. Martin’s Press/Basil Blackwell, 1977.

The Rationale of Central Banking and the Free Banking Alternative

“In the present century centralised banking systems have come to be regarded as the usual concomitant, if not one of the conditions of the attainment of an advanced stage of economic development. The belief in the desirability of central bank

A History of American Currency

A History of American Currency William Graham Sumner New York: Henry Holt and Company, 1884. Via Liberty Fund

Money, Bank Credit and Economic Cycles

“The economic analysis of juridical institutions has come to the fore in recent years and promises to become one of the most fruitful spheres of economics. Much of the work completed thus far has been strongly influenced by traditional neoclassical

Theory of Money and Credit

Theory of Money and Credit Ludwig von Mises Copyright 1981 by Liberty Fund Inc. Via the Library of Economics and Liberty

Fiat Money Inflation in France

Fiat Money Inflation in France: How it came, what brought it and how it ended Andrew Dickinson White New York: D. Appelton & Co., 1896. Via Liberty Fund

Where’s that Inflation

Inflation is the result of more dollars chasing the same number of (or fewer) goods. As the Nobel laureate Milton Friedman put it, in one of his main contributions to “monetarist” economics, inflation is always and everywhere a monetary phenomenon—that is, it’s caused by an expansion in the supply of money or credit. So why haven’t we seen inflation in 2009? Are we looking in the wrong places, or is it time to update monetarist theory?

“A Treatise on Money”

“A Treatise on Money” Juan de Mariana via The Acton Institute Journal of Markets & Morality, Vol. 5, No. 2, Fall 2002.

1920-21 and the Great Depression

Put differently: the 1920-21 episode was, in fact, a severe, though not particularly long, recession. Allowing the money supply to fall isn’t painless. Allowing the money supply to fall in an environment of severe downward wage rigidity is VERY “not painless.” The 1920-21 episode doesn’t demonstrate that deflation is harmless. It DOES demonstrate that if you have deflation, it will be less bad if you have nominal wages that are flexible downward. That recession is the best example of why Hoover’s wage policies were such a mistake.

Business Conditions Monthly April 2024

“The road ahead remains uncertain, though, with potential outcomes ranging from a slow, steady economic rebalancing to sluggishness or even a recession.” ~Peter C. Earle

Want Better Higher Ed? Get the Feds Out 

“Market-like responses to dissatisfaction with schools are heavily muted by subsidies. The Biden administration is working for wide cancellation of student debt, which would squelch even these limited market forces.” ~Neal McCluskey

The Magna Carta’s Constitutional Tradition

“While not perfect by any means, the Magna Carta was the first example of a bloodless revolution in which the rule of law and rights in contracts lead to the advancement of civilization.” ~Will Sellers

Foot Voting Reconsidered: How Should I Think About Leaving?

“Compared to ballot voting, moving has larger individual impacts, which mean greater incentives to acquire knowledge; it provides a better signal to both the country you’re leaving and the one you’re joining.” ~Joakim Book

Conserving the Conversation 

“The best defense of economic freedom rests not on statistics calculated yesterday, but rather the enduring knowledge of human nature at the heart of Western civilization.” ~Michael Lucchese

Democrats Play the Blame Game on Rent Inflation

“Imposing new costly regulations will not make housing more affordable — unleashing the housing supply by deregulating zoning and overly strict building codes will.” ~Louis Rouanet

Stiglitz: When Good Minds Seek Fools’ Favor

“Stiglitz believes ‘education’ should be explicitly designed to attack property rights and to weaken the sense of American exceptionalism, the tradition of classical liberalism.” ~Michael Munger

Don’t Let a Crisis Go to Waste in 2025

” By returning to principles of fiscal responsibility and market-driven activity, America can navigate away from the fiscal abyss and toward a future of economic stability and prosperity.” ~Vance Ginn

Is Promoting to Customers a Crime?

“McKinsey allegedly tried to help Purdue tailor its sales efforts…. There’s nothing mysterious or nefarious about this. To do otherwise would be inefficient and wasteful.” ~ David R. Henderson and Charles L. Hooper

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