Category Archives: Federal Reserve

Market uncertainty w/end of QE proof of central claim of Austrian Business Cycle Theory

Many critics of Austrian economic theory on the causes of business cycles suggest that the lack of significant CPI-based inflation shows the Austrians are all wrong.  Yet, as I have argued earlier, CPI inflation is NOT what Austrians are concerned with.  Rather the central banks artificially lowering interest rates leads to malinvestment and a distortion of the capital structure.  In layman’s turns, the Fed’s lowering of interest rates causes entrepreneurs to invest in projects because of central bank policy, not… Continue Reading ››

Texas Gold going home: the latest body blow to Federal Reserve credibility?

A few months ago the big revelation to gold bugs was Germany wanted its gold back from the Federal Reserve.  What’s the world coming to when central banks don’t trust each other?  Further, with central banks net buyers of gold for the last few years, something seems afoot in the global currency markets.  In perhaps a move of political theater, Texas is the latest to jump in the fray by introducing a bill to bring $1B in gold bars stored… Continue Reading ››

Please Mr. Federal Reserve, stop worrying about income inequality!

CNBC reports today that the Federal Reserve is increasingly considering income inequality as a consideration for monetary policy.  The basic idea seems to be that monetary policy ought to be kept easy as long as those in the lower income groups are unable to gain jobs.  As CNBC reports Some on the FOMC, they said, assert that inequality “undermines the ability of the economy to grow sustainably and efficiently” and could lower the long-term growth rate. This is suspect for… Continue Reading ››

Janet Yellen: Has she ever met an inflation she didn’t like?

Janet Yellen, the current Vice-Chair of the Federal Reserve is rumored to be next in line to replace “Helicopter” Ben Bernanke.  This is troubling because, as a committed Keynesian, she is a big fan of inflation as a way to lesson the pain of unemployment.  Indeed, she is–as many others are–convinced that inflation causes small harms to society in comparison to the evils of unemployment.  While she undoubtedly doesn’t support all levels of inflation, she has a history of calling… Continue Reading ››

Bernanke–the best inflation fighter ever?

That’s at least what Mr. Bernanke suggests when challenged by Senator Corker during congressional testimony on Tuesday: Perhaps its true, IF the measure of inflation we should be concerned about is the rate of change of CPI.  But there are at least two ways to criticize this way of thinking, in addition to the serious questions raised by Senator Corker regarding the damage done to fixed income savers in our society.  First, the flawed thinking and theory that suggests the… Continue Reading ››