Debt in the U.S. Fuel for Growth or Ticking Time Bomb?

– April 28, 2017

When people refer to the national debt, they almost always mean the debt owed by our government. But there are actually two important types of debt in the American economy: government debt, and private debt owed by households and businesses.

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A Border-Adjustment Tax Will Not Help the Economy Grow

– April 25, 2017

House Speaker Paul Ryan recently proposed a tax plan called A Better Way: A Vision for a Confident America. Ryan’s plan to make the United States more competitive includes a tax cut for businesses, a switch to a territorial tax system, and a border-adjustment tax. A tax cut and a switch to a territorial system would be positive for the economy. On the other hand, the border-adjustment tax would work like a tariff. It would encourage inefficient domestic production, which would raise prices and reduce real output. Over the long run the BAT would not even reduce the trade deficit.

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Government Fuel-Economy Standards: A Big Mistake

– April 25, 2017

“Nothing is so permanent,” said Milton Friedman, “as a temporary government program.”

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Deposit Insurance Is Not Fair

– April 25, 2017

Many economists have argued that government mortgage programs and low interest rates policies caused the 2008 financial crisis. We maintain that government deposits insurance, provided in the United States by the Federal Deposit Insurance Corporation (or FDIC), may have also been a contributing factor. By failing to price risk fairly, the FDIC encourages banks to increase their risk-taking activities.

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Bitcoin and the Disintermediation of the State

– April 25, 2017

Bitcoin, the world’s first form of digital cash, is a nascent invention that has overturned centuries of commonly-held assumptions about monetary policy and the role of government in the provision of money. Whereas universities have long taught that money can only be provided by a government that guarantees it and demands its use in taxation, Bitcoin has thrived for eight years without any government backing it, tantalizingly offering a glimpse of a future separation between state and money, starving government of the fuel that powers its totalitarian impulses and warlike tendencies.

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Decision Time for Bitcoin?

– April 21, 2017

In my last article and blog on Bitcoin, I discussed some issues that Bitcoin faced from consolidation and the increasing professionalization of Bitcoin “mining.” These issues may soon be coming to a head in an argument about Bitcoin’s underlying code that offers two divergent paths for the future of Bitcoin – or a third way in which it splits into two separate assets. This possibility is both a serious concern for Bitcoin users and investors.

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Dodd-Frank Only Makes Things Worse

– April 20, 2017

The ways of the regulatory state go like this: when a crisis erupts, don’t ask how earlier government interventions may have made the crisis possible or worse than it would have been. Rather, denounce private greed, declare good intentions, pile new regulations atop old, and hope for the best.

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Why Obama’s Overtime Rule Will Backfire

– April 19, 2017

We ought to know by now that good intentions alone cannot make a government policy beneficial. Since the law of economics—market forces—are inexorable, we should not expect even good will to withstand them. “Nature to be commanded,” Francis Bacon said, “must be obeyed.” Similarly, if market forces are to serve society, they must be respected.

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Private Debt: How Much is Too Much?

– April 13, 2017

The level and growth of a nation’s private debt, more than public debt, predicts the worst recessions.

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Debt Ceiling Hit: Treasury Likely to Run Out of Cash by November

– April 11, 2017

The Bipartisan Budget Act of 2015 suspended the debt ceiling through mid-March of this year. On March 16, the debt ceiling was raised to the current level. When the debt ceiling is reached, the Treasury will not be able to issue more debt to borrow new funds from the public. Instead, the Treasury must take extraordinary measures to raise cash. Extraordinary measures are policies that temporarily lower the national debt by reducing the Treasury securities held by government agencies—known as intragovernmental debt.

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Understanding Trade

– April 11, 2017

Few areas of life are as poorly understood as trade. This is remarkable because each of us engages in trade every day. We buy our groceries, clothing, electronics, etc. from other people rather than making them ourselves. If we didn’t think trade was worthwhile, we wouldn’t do it. But we do—because we know how poor we would be if each of tried to make all the things we want.

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Separating Student Aid and Student Debt

– April 3, 2017

Americans currently owe about $1.5 trillion in student debt. Issuance of student loans has risen drastically in recent decades, and as a college degree becomes increasingly important, the loans look to continue to be a part of many young Americans’ economic lives. In this article, I examine existing answers to two main questions: why student debt has risen so much, and whether or for whom the returns to education justify this level of borrowing.

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