Knowledge Problem in Central Banking – Part II
The previous post presented Hayek’s knowledge problem in the context of the economic calculation debate under socialism. We discussed the distinction (sometimes overlooked) between information and...
View ArticleKnowledge Problem in Central Banking – Part I
In my previous posts, Andreas Hoffmann and I discussed the problem of unintended consequences in monetary policy, particularly as applied to the U.S. Federal Reserve and the European Central Bank in...
View ArticleThe Inflation Tax
Can you name an official at a major central bank who expresses worries that inflation is now, or soon will be, too high? Can you identify any financial publication–even the Wall Street Journal–that...
View ArticleThe Regression Theorem: In Light of Bitcoin
In three previous posts, I have described the regression theorem, discussed its practical applications, and considered some misconceptions. In this post, I will consider the regression theorem in light...
View ArticleUnintended Monetary Policy Effects – Tale II: ECB Crisis Policies
The Federal Reserve’s (Fed) and European Central Bank’s (ECB) policy responses to the recent financial disasters offer two tales of unintended consequences. Our previous post outlined the undesired...
View ArticleThe Regression Theorem: Misconceptions
In two previous posts, I described the regression theorem and discussed its practical applications. In this post, I will discuss some misconceptions. Misconception 1. The regression theorem only...
View ArticleMoney in Illiberalism
A liberal society is governed by the principles of private property and freedom of contract, under the aegis of a nondiscriminatory rule of law. In such a society, money enables economic actors to...
View ArticleCantillon Effects and Money Neutrality
Money neutrality is a key principle in monetary economics. As might seem obvious, the amount of goods that can be produced depends on the availability of factors of production (such as capital and...
View ArticleMoney in Liberalism
One feature of a liberal society is that its institutions, and especially its formal institutions with coercive backing, are bound by a nondiscriminatory rule of law, and work to protect the sanctity...
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Fed’s Balance Sheet, IOR, and Uncertainty
It seems likely that in the coming months monetary policy discussion will start focusing on the problem of shrinking the Fed’s balance sheet. A particular challenge of shrinking the Fed’s balance sheet...
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The Central-Bank Trap: the Real Price of Cheap Money
This piece originally appeared in World Economic Forum At the time of writing, the pace of expansion of the main central banks in the world exceeds $200 billion per month. In fact, in the first four...
View ArticleIRS Summons of Coinbase Undermines Privacy, Discourages Innovation
The IRS is expected to respond to a recent Congressional inquiry into its summoning records from Coinbase, a San Francisco-based digital currency intermediary, by June 7. The inquiry, sent by House...
View ArticleThe Institutional Character of Money
On the one hand, money is the language of commerce; money prices are the very medium of economic experience. On the other hand, there seems to be a deeper reality behind the monetary economy. In this...
View ArticleThe Regression Theorem: Practical Applications
In my last post, I offered a brief summary of the regression theorem and provided some historical context to explain why it is an important idea. In this post, I will trace some practical applications...
View ArticleThe Regression Theorem: Summary
In the late 1800s, three economists working independently radically transformed the way we think about value. Classical economists had struggled to explain why water is typically much cheaper than...
View ArticleTwo 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...
View ArticleIs Money Really a Veil?
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...
View ArticleEscape from the Central Bank Trap
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...
View ArticleThe Rule of Law vs the Rule of Experts
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...
View ArticleReserve Holdings and the Size of the Fed’s Balance Sheet
In a recent post at FT, Sam Flemming documents growing concerns among some former Fed officials that the Fed “risks political interference and losing its independence if it maintains a large balance...
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