Wednesday, June 26, 2013

America's Great Depression

Mark Thornton suggested "America's Great Depression" as one of the best sources to read for pursuing your question, I have linked it on the right and am loading it onto my Ipod to read in the next couple weeks.

Mr. Thorton is also talking to some grad students about joining in out conversations.

Monday, May 27, 2013

Drowning in a Liquidity Trap? - Frank Shostak - Mises Daily

This is a little off topic, but does bring good analysis to the fed's money printing/interest rate manipulation.

Drowning in a Liquidity Trap? - Frank Shostak - Mises Daily

Wednesday, May 8, 2013

The Two Interesting Graphs

So here are the graphs, sorry they look pretty weird, Microsoft office makes weird graphs. And if it is not clear: the first graph is (change in) Federal Fund Rate and ( change in )Investment. The other is Federal Fund Rate and Savings. Both graphs have two data points per year. The First graph goes back to 1947, the second goes to 1980.



Mises University

I had to post this somewhere and I thought this was a good place.

Tuesday, May 7, 2013

Thesis

Hey Sydney, Write your tentative thesis in this post. I think you can edit this post and just remove this text.

Thursday, May 2, 2013

Interest Graph

Hey this has less to do with interest rates but interesting nonetheless  If I am reading this right, in the time period where this data is recorded, banks actually held much more reserves than required. Doesn't this go against the idea that banks are always going to compete for the lowest reserves?
FRED Graph

Wednesday, May 1, 2013

Thursday, April 25, 2013

A Potential Argument Against the Austrians

Here is something interesting too, this guy is explaining the IS curve. And what he shows is theobvious: when savings goes up, interest rates go down, and when interest rates go down, investment goes up. But then he goes to say that when investment goes up, GDP goes up (which is true). Then he shows how when GDP goes up, savings go up. This would mean however that if the Fed kept interest rates low, and let investment sore, then savings would follow because the savings will be going up as GDP goes up (lets say of course that the Fed only manipulated the interest rates with the discount rate, without printing money). Where would a Austrian differ? I feel like i'm missing something, because this would say that there is no need to let the market take brakes to save when the GDP will cause the savings to back the investment.
https://www.khanacademy.org/science/macroeconomics/income-and-expenditure-topic/is-lm-model-tutorial/v/loanable-funds-interpretation-of-is-curve

Some thoughts on inflation and the business cycle

After our talk today I realized that. The connection between inflation and the business cycle is simpler than anything I said.

1. when the money supply goes up and price inflation occurs people naturally start buying stuff because they know prices will be higher the next day, week, or month.

2. Because of the demand, not only do prices go up even more but producers put all, or most, of their effort into production of consumer goods.

3a. If the government reduces the money supply then demand and prices fall and there is a bust.

3b. If the government continues to increase the money supply and even if we grant that wages can catch up, which is very unlikely, producers will be forced to continue producing consumer goods and not investing in capital goods their productive capacity will diminish because of lack of repairs. this seems strange but remember they are competing with others in the short term to produce goods at as low of a price as possible. If they divert their resources to buy new machinery they will lose out on market share in the short term and with prices increasing they might not survive.

 OK, maybe that was not so simple.

Wednesday, April 24, 2013

Interesting Graph

Eventhough this is only a little bit of evidence, but this graph shows savings rates going up significantly before almost every recession. This could show that recession are caused by the market realizing that savings are needed, then economy slows because it is correcting itself. However there are also times when the rate does spike and no recession occurs.
Graph of Personal Saving Rate

One Way an Economist Tried to Prove Theory

This is interesting, and complicated. But this economist used empirical evidence in this article to support the Austrian theory:
http://csinvesting.org/wp-content/uploads/2012/12/ABCT_Empirical-Evidence.pdf

History of Money and Banking Audio

The best way to get at this "Book" in audio format is to go to the Itunes store in "Itunes" and search "History of Money and Banking".