The Regression Theorem: Summary

– May 19, 2017

The value of money today depends on the the value of money yesterday; the value of money yesterday depends on the value of money the day before that; and so on.


Two Tales of Unintended Consequences of Monetary Policy – Tale 1

Even when a policy is successful in achieving its desired ends, we have to consider its unintended and unforeseen consequences, resulting from cumulative market adjustments to policy changes that make it hard to judge the overall outcome of a policy in …


Is Money Really a Veil?

– May 11, 2017

My previous post was a crash course on the role of prices in a market economy.  Importantly, prices are money prices.  The vast majority of the time, producers accept the medium of exchange as payment for goods and services, and post prices denominated …


Escape from the Central Bank Trap

– May 10, 2017

Cheap money becomes very expensive in the long run. In my new book, “Escape from the Central Bank Trap” (Business Expert Press), I explain that central banks are using the same inflationary policies that led us to the financial crisis. However, this ti …


The Rule of Law vs the Rule of Experts

– May 8, 2017

Our worldviews shape the ways in which we approach problems, challenges, and questions. Our “worldviews,” as I refer to them in this post, are so deeply embedded in our minds that we don’t usually realize our thoughts are driven by them. Monetary polic …


Reserve Holdings and the Size of the Fed’s Balance Sheet

– May 8, 2017

Reserves are greater than they were before the crisis because, beginning in 2008, the Fed created more reserves. It did so in the process of expanding its balance sheet. Reserves will not fall—indeed, cannot fall—until the Fed shrinks its balance sheet.


What the Gold Standard Is and Why Government Killed It

– April 19, 2017

This piece originally appeared in Learn Liberty The gold standard is both a strongly advocated and vehemently opposed monetary regime. Both positions, however, usually rely on misconceptions on what the gold standard actually is and why it failed. Belo …


Here’s Where All That Chinese Money Came From

– April 12, 2017

Have you read about tens of billions of U.S. dollars — sometimes over $100 billion — “flowing out of China” every month?


Why Inflation Is Not Helping European Stocks

– April 11, 2017

The Euro zone CPI data continues to show the rising trend we commented here (read). In January inflation rose by 1.8% year-on-year, the highest reading since February 2013. However, while inflation expectations rise, markets remain stale. The stock mar …


Let’s get back to basics. What is a price?

– March 30, 2017

A price is an exchange ratio: you must give up a certain amount of one good in order to get another good.  Barter economies have prices, which are expressed as ratios of the goods themselves.  In money-using economies, prices are expressed in the econo …


Against the War on Cash

– March 27, 2017

In recent years, economists and central bankers have been advocating moving away from cash transactions towards an economy relying fully on financial transactions. At prima facie, this seems to be a good idea. Using checks and financial transfers can b …


Cash and the Zero Lower Bound

– March 22, 2017

This is the fourth (and, perhaps, final) post on Ken Rogoff’s The Curse of Cash. As summarized in an earlier post, Rogoff argues that the benefits of banning cash (e.g., preventing crime, enabling effective monetary policy) exceed the costs (e.g., a re …