Economics

India’s financial prophet Raghuram Rajan to run central bank

"Mr Rajan, a Chicago professor and former chief economist at the International Monetary Fund, clashed openly with US Federal Reserve officials and top policymakers in 2005 over the risk that derivative contracts would amplify any financial crisis once the cycle turned. He said the US had created incentives for destructive behaviour, effectively pushing homeowners and banks into risky ventures. He was called a 'Luddite' by none other than Larry Summers, former US Treasury Secretary and now front-runner to take over as Fed chairman. The two men may soon be direct counterparts. Mr Rajan’s warnings were borne out by events." Continue reading →

Continue ReadingIndia’s financial prophet Raghuram Rajan to run central bank

“Startup Cities,” Honduras, and Experiments in Freedom

"Tom W. Bell, a law professor at Chapman University and a legal consultant to the Honduran 'startup city' project, spoke at Reason's Los Angeles headquarters about why libertarians should be interested in the potential for new forms of governance within the proposed 'zones of economic development' (ZEDEs) being pushed in Honduras. He addressed various legal challenges and setbacks that prior efforts faced, such as Paul Romer's failed RED zones. Bell also discussed other experiments in municipal governance, such as Co-op City in the Bronx and Sandy Springs, GA." Continue reading →

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Lebanon’s Banks Have the Highest Cash Reserve Ratios in the World

"There are three features that distinguish the Lebanese financial system: 1. The banks have the highest cash reserve ratios in the world. 2. The central bank holds the second highest gold reserves on a per person basis. 3. Real financial privacy. Lebanon is also one of the few countries left in the world that still has real financial privacy, both in theory and in practice… just not for Americans, though, thanks to FATCA, which Lebanon has indicated it will comply with. Additionally, Lebanon ranks only behind Switzerland in terms of gold reserves per person according to this chart below from The Economist." Continue reading →

Continue ReadingLebanon’s Banks Have the Highest Cash Reserve Ratios in the World

Bill Bonner: What if Mr. Summers weren’t so brilliant, after all?

"We read Mr. Summers' commentaries regularly, in the Financial Times. We don't recall a single insight worth repeating or a single proposal that merits further discussion. Like Tom Friedman, he sees problems everywhere and finds solutions for them readily. And every solution he comes up with would be neat, logical, and disastrous. Unintended consequences? Has he ever heard of the concept? For him, reason has no limits...intervention has no risks...and the world has no black swans. Seeing no danger to further monetary stimulus, he will put the pedal to the metal and run at full speed...right into a brick wall." Continue reading →

Continue ReadingBill Bonner: What if Mr. Summers weren’t so brilliant, after all?

Immigration Reform — The Time for Free Trade

"During the 19th century, tariffs and other barriers restricted international trade in goods and services. However, for the most part, labor was free to enter or leave the United States. Following World War I, the federal government enacted a series of laws restricting immigration. The interwar years also witnessed significant restrictions on trade in goods and services. Market forces are necessary to coordinate the international labor market as well. Increasing the number of H-1B visa's or temporary work permits is a small step in the right direction but governments can no better plan the international labor market than the Soviets could plan their markets." Continue reading →

Continue ReadingImmigration Reform — The Time for Free Trade

Austrian Detroit?

"As Detroit begins to sort through the ill-begotten public liabilities that have driven it to bankruptcy, an important opportunity is at hand to revitalize the city that was once the epicenter of American entrepreneurship and manufacturing, while setting an example for other municipal governments that appear to be headed toward a similar fate. Here is an 'Austrian moment' in the making, a potential libertarian awakening guided by the market-oriented, non-interventionist principles of the Austrian school of economics. The time has come to free Detroit’s entrepreneurial spirit from the legacy of government mismanagement." Continue reading →

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Jeffrey Tucker: The Triumph of Scrooge McDuck

"CNBC says, 'According to research from American Express Publishing and Harrison Group, the savings rate of the wealthiest 1% in the second quarter rose to 37%. That’s up from 34% in the second quarter of 2012 — and more than three times their savings rate in 2007.' In other words, their saving is actually increasing, even given the evidence that the everlasting recession has abated in some ways, which suggests that this class has little confidence that the high stock market and seemingly good news that trickles out are really sustainable. They are preparing for the next crisis in ways they wish they had prepared for the last one." Continue reading →

Continue ReadingJeffrey Tucker: The Triumph of Scrooge McDuck

A Central Banker with Austrian Instincts

"Raghu Rajan is a very good neoclassical economist who has made important contributions to banking, finance, the theory of the firm, corporate governance, economic development, and other fields. He is also taking over as head of India’s central bank. Rajan is no Austrian, but he has a quasi-Austrian take on the financial crisis, and far greater appreciation for free markets in general than any of the key US or European policymakers. As I tweeted this morning, Rajan is about 1,000,000 times better than either Summers or Yellen. I’d gladly trade him for any US central banker." Continue reading →

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Bill Bonner: What does money represent?

"Higher wages do not get you anywhere if prices rise too. What you really need is higher productivity. How do you get that? You need to save money (rather than spend it) and invest in things that produce more...thus providing the profits necessary to pay more to the people who produce it. Really. Is that so difficult to understand? For the last 42 years, the feds have encouraged Americans to spend their money, rather than save it. And they've encouraged people to buy things made by foreigners, rather than make things themselves. This was the consequence (perhaps unintended) of Richard Nixon's pure paper money system." Continue reading →

Continue ReadingBill Bonner: What does money represent?

Thousands now using online gun sales to avoid background checks: report

"Online gun sales have become a haven for buyers looking to avoid background checks, leading gun safety advocates concerned they are becoming more of a problem than sales at private gun shows, according to a new report by a progressive think tank. Among the advertisements for more than 15,000 guns on the sales site Armslist, in 10 states where lawmakers voted against bills that would have required background checks for private gun sales were nearly 2,000 listings by people looking to buy their firearms privately. 'Nobody’s monitoring this,' Hatalsky told the Post. 'Nobody has any ability to stop these people who are looking for private sellers.'" Continue reading →

Continue ReadingThousands now using online gun sales to avoid background checks: report