Expectations and business cycles
According to the Austrian Business Cycle Theory (ABCT) the artificial lowering of interest rates by the central bank leads to a misallocation of resources…
How Money Disappears in a Fractional-Reserve Money System
Most experts are of the view that the massive monetary pumping by the US central bank during the 2008 financial crisis saved the US…
Money supply versus money demand
According to popular thinking not every increase in the supply of money will have an effect on economic activity. For instance, if an increase…
Should central banks fight a decline in price inflation?
The yearly growth rate of the US consumer price index (CPI) fell to 0% in September from 0.2% in August and 1.7% in September…
The essence of interest rate determination
According to mainstream thinking the Central Bank is the key factor in determining interest rates. By setting short-term interest rates the Central Bank, it…
Real GDP and the strength of US economy
US real gross domestic product (GDP) grew faster than initially thought in Q2. GDP expanded at a 3.7% annual rate instead of the 2.3%…
Will China’s currency depreciation help the economy?
Last week the Chinese government decided to depreciate its currency on three consecutive occasions. On Thursday the price of the US$ was trading at…
Economic bust and stable price levels
The yearly rate of growth of the personal consumption expenditure (PCE) price index adjusted for food and energy stood at 1.3% in June –…
Should Greece loosen its fiscal and monetary stance?
The International Monetary Fund (IMF) confirmed that Greece had not made its scheduled 1.6 billion euro loan repayment to the fund. As a result…
The US natural unemployment rate and the Fed’s interest rate policy
In May the US unemployment rate stood at 5.5% against the rate of 5.3% for the natural unemployment also known as the Non-Accelerating Inflation…