In Masters of Money, produced in partnership with the Open University, BBC economics editor Stephanie Flanders examines how three extraordinary thinkers, Keynes, Hayek and Marx, helped shape the 20th century and continue to exert a huge influence on our world today. Stephanie begins by looking at John Maynard Keynes. Many argue only Winston Churchill had a greater impact on British life than Keynes over the last century. Even today his ideas remain crucial to one of the most important debates of our time: how can we escape from the economic crisis? Should governments borrow and spend their way out of trouble or slash spending and reduce the national debt?
With contributions from some of the world's leading economic thinkers including a Nobel laureate and the governor of the Bank of England, Stephanie Flanders argues Keynes has never been more relevant or controversial than now.
During his life, Keynes was credited with, amongst other things, helping to save capitalism from the Great Depression, funding the war against the Nazis and building post-war decades of growth and rising prosperity. And when the global crisis struck in 2008, it was his ideas that the world's leaders turned to to help avoid another depression.
John Maynard Keynes, 1st Baron Keynes,[1] CB FBA (5 June 1883 -- 21 April 1946) was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, and informed the economic policies of governments. He refined earlier work on the causes of business cycles, and advocated the use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions. Keynes is widely considered to be one of the founders of modern macroeconomics, and the most influential economist of the 20th century. His ideas are the basis for the school of thought known as Keynesian economics, as well as its various offshoots.
In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. Keynes instead argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Following the outbreak of World War II, Keynes's ideas concerning economic policy were adopted by leading Western economies. During the 1950s and 1960s, the success of Keynesian economics resulted in almost all capitalist governments adopting its policy recommendations.
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly because of critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy. However, the advent of the global financial crisis in 2007 caused a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by Presidents George W. Bush and Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments.
In 1999, Time magazine included Keynes in their list of the 100 most important and influential people of the 20th century, commenting that: "His radical idea that governments should spend money they don't have may have saved capitalism." In addition to being an economist, Keynes was also a civil servant, a director of the British Eugenics Society, a director of the Bank of England, a patron of the arts and an art collector, a part of the Bloomsbury Group of intellectuals, an advisor to several charitable trusts, a writer, a philosopher, a private investor, and a farmer.
Masters Of Money: John Maynard Keynes ( 1/3 BBC)
According to conventional wisdom, today's global financial crisis happened because markets were not regulated enough. But what if the opposite is true? That it was excessive government meddling in the markets that caused the crash?
In Masters of Money produced in partnership with The Open University, BBC economics editor Stephanie Flanders examines the extraordinary influence of three intellectual titans - Keynes, Hayek and Marx and shows how they shaped the 20th century and continue to have a huge impact on our world today.
Stephanie turns her attention to the radical free-market economist Friedrich Hayek. Travelling from London to Vienna and America, she unravels the extraordinary life and influence of the only free-market thinker whose reputation has grown post-crisis.
With contributions from Central bankers, politicians and a Nobel laureate, she explores why despite his enormous influence, no government has ever dared to fully implement Hayek's solution to the problems of capitalism - set it virtually totally free from state control.
Friedrich August Hayek CH (8 May 1899 -- 23 March 1992), born in Austria-Hungary as Friedrich August von Hayek, was a British economist and philosopher best known for his defense of classical liberalism. In 1974, Hayek shared the Nobel Memorial Prize in Economic Sciences (with Gunnar Myrdal) for his "pioneering work in the theory of money and economic fluctuations and... penetrating analysis of the interdependence of economic, social and institutional phenomena."
Hayek is considered to be a major economist and political philosopher of the twentieth century. Hayek's account of how changing prices communicate information which enables individuals to coordinate their plans is widely regarded as an important achievement in economics. He also contributed to the fields of systems thinking, jurisprudence, neuroscience and the history of ideas.
Hayek served in World War I and said that his experience in the war and his desire to help avoid the mistakes that had led to the war led him to his career. Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. He spent most of his academic life at the London School of Economics (LSE), the University of Chicago, and the University of Freiburg.
In 1984, he was appointed as a member of the Order of the Companions of Honour by Queen Elizabeth II on the advice of Prime Minister Margaret Thatcher for his "services to the study of economics." He also received the US Presidential Medal of Freedom in 1991 from president George H. W. Bush. In 2011, his article The Use of Knowledge in Society was selected as one of the top 20 articles published in the American Economic Review during its first 100 years.
Masters Of Money: Friedrich Hayek (2/3 BBC)
Stephanie Flanders examines one of the most revolutionary and controversial thinkers of all. Karl Marx's ideas left an indelible stamp on the lives of billions of people and the world we live in today. As the global financial crisis continues on its destructive path, some are starting to wonder if he was right.
Marx argued that capitalism is inherently unfair and therefore doomed to collapse, so it should be got rid of altogether. Today as the gap between rich and poor continues to cause tension, his ideas are once again being taken seriously at the heart of global business.
Stephanie travels from Marx's birthplace to a former communist regime detention centre in Berlin and separates his economic analysis from what was carried out in his name. She asks what answers does Marx provide to the mess we are all in today.
Masters of Money: Marx (3/3 BBC)
Showing posts with label Boom and Bust. Show all posts
Showing posts with label Boom and Bust. Show all posts
Saturday, September 29, 2012
Wednesday, September 26, 2012
GREECE REVOLT - Clashes erupt as thousands of Greeks protest austerity
Greek police clashed with hooded rioters hurling petrol bombs as tens of thousands took to the streets of Athens on Wednesday in Greece's biggest anti-austerity protest in more than a year.
Violence erupted after nearly 70,000 people marched to parliament chanting "We won't submit to the troika (of lenders)" and "EU, IMF Out!" on the day of a general strike against a new round of cuts demanded by foreign lenders.
As the rally ended, dozens of black-clad youths threw stones, petrol bombs and bottles at riot police, who responded with several rounds of teargas. Police chased the protesters through Syntagma square in front of parliament as helicopters clattered overhead. Smoke rose from small blazes in the streets.
About 120 people were detained after angry protesters smashed bus stop kiosks and set fire to garbage cans.
"We can't take it anymore - we are bleeding. We can't raise our children like this," said Dina Kokou, a 54-year-old teacher and mother of four who lives on 1,000 euros a month.
"These tax hikes and wage cuts are killing us."
The 24-hour nationwide strike, called by the country's two biggest unions representing half the four-million-strong work force, is shaping up to be the first test of whether Prime Minister Antonis Samaras can stand his ground.
Police officials estimated the demonstration was the largest since a May 2011 protest, and among the biggest since near-bankrupt Greece first resorted to aid from international lenders in 2010 - which has come at the price of painful austerity cuts.
The traditional summer break has allowed the fragile conservative-led coalition to enjoy relative calm on the streets since narrowly coming to power on a pro-euro, pro-bailout platform, but unions say the lull is over.
"Yesterday the Spaniards took to the streets, today it's us, tomorrow the Italians and the day after - all the people of Europe," Yiorgos Harisis, a unionist from the ADEDY public sector group told demonstrators.
"With this strike we are sending a strong message to the government and the troika that the measures will not pass even if voted in parliament, because the government's days are numbered."
About 3,000 police - twice the number usually deployed - stood guard in the centre of Athens, which last saw serious violence in February when protesters set shops and banks ablaze as parliament approved an austerity bill.
Police formed a barricade outside parliament, and officers blocked a pensioner who tried to move towards Samaras's office holding a banner with pictures of Greek prime ministers under the title: "The biggest traitors in Greek history".
Ships stayed docked, museums and monuments were shut to visitors and air traffic controllers walked off the job for a three-hour stoppage. Train service and flights were suspended, public offices and shops were shut, and hospitals worked on skeletal staff as part of the general strike.
Continue reading - Reuters - Clashes erupt as thousands of Greeks protest austerity
Greece Molotov Rampage: Video of protesters fire petrol bombs at police
Tuesday, September 18, 2012
US REVOLT - Occupy Wall Street Reignited
Hundreds of protesters marking the first anniversary of the Occupy Wall Street movement were met by a heavy police presence as they converged on lower Manhattan Monday morning.
Officers on horseback and some in riot gear limited access to Wall Street and the surrounding area to workers or residents who have identification.
Police made 146 arrests by 3:30 p.m. Monday, mainly for disorderly conduct when protestors impeded vehicular or pedestrian traffic, NYPD chief spokesman Paul Browne said. Browne also confirmed 43 arrests were made over the weekend, including for disorderly conduct, assault and resisting arrest,.
The protesters had hoped to shut down Wall Street by blocking access to the New York Stock Exchange and create chaos in the Financial District. But while commutes were snarled and workers were inconvenienced by having to show identification to get into buildings, business appeared to go on as usual Monday.
About 1,000 protesters commemorating last year’s kick-off of the income inequality movement gathered early in the morning at four meeting points. One group met across the street from Zuccotti Park, where protesters camped out for weeks last year, and marched south along Broadway.
The group was met by police officers at the entrance to Wall Street, and a handful sat down on the sidewalk. When they refused to move, they were arrested.
Around 8:15 a.m, another group of about 400 people clogged the four corners of Nassau and Pine Streets, some hanging off scaffolding, taunting traders and police officers.
Others were more festive, popping off confetti, volleying a balloon or chatting politics with police officers. Hundreds of protesters at Bowling Green sang a version of “Happy Birthday” to the movement.
Working musicians David Ross, 28, Washington Heights and Ben Laude, 26, Washington Heights, were dressed in suits for the protest. They both attended last year and were pleased by the turnout. “It is encouraging getting 1,000 people out to do anything,’’ Ross said.
Laude was convinced of the relevance of the movement a year later.
“There are dozens of Occupy meetings happening every week that nobody reports on,’’ Laude said. “As long as the economy keeps tanking, there will always be something like Occupy Wall Street.’’
Continue reading - WSJ - Nearly 150 Protesters Arrested on Occupy Wall Street Anniversary
Dozens Arrested at Occupy Protest in NY
The Magnitude of the Mess We're In
The next Treasury secretary will confront problems so daunting that even Alexander Hamilton would have trouble preserving the full faith and credit of the United States.
Sometimes a few facts tell important stories. The American economy now is full of facts that tell stories that you really don't want, but need, to hear.
Where are we now?
Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household.
The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt which, when added to the current deficit, means Treasury must raise $4 trillion this year alone. So the debt burden will explode when interest rates go up.
The government has to get the money to finance its spending by taxing or borrowing. While it might be tempting to conclude that we can just tax upper-income people, did you know that the U.S. income tax system is already very progressive? The top 1% pay 37% of all income taxes and 50% pay none.
Did you know that, during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens' and institutions' purchases and sales netted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.
The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decentralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.
Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantitative easing—the purchase of government debt, mortgage-backed securities, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.
The Fed now pays 0.25% interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves correspondingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?
The Fed's policy of keeping interest rates so low for so long means that the real rate (after accounting for inflation) is negative, thereby cutting significantly the real income of those who have saved for retirement over their lifetime.
The Consumer Financial Protection Bureau is also being financed by the Federal Reserve rather than by appropriations, severing the checks and balances needed for good government. And the Fed's Operation Twist, buying long-term and selling short-term debt, is substituting for the Treasury's traditional debt management.
This large expansion of reserves creates two-sided risks. If it is not unwound, the reserves could pour into the economy, causing inflation. In that event, the Fed will have effectively turned the government debt and mortgage-backed securities it purchased into money that will have an explosive impact. If reserves are unwound too quickly, banks may find it hard to adjust and pull back on loans. Unwinding would be hard to manage now, but will become ever harder the more the balance sheet rises.
The issue is not merely how much we spend, but how wisely, how effectively. Did you know that the federal government had 46 separate job-training programs? Yet a 47th for green jobs was added, and the success rate was so poor that the Department of Labor inspector general said it should be shut down. We need to get much better results from current programs, serving a more carefully targeted set of people with more effective programs that increase their opportunities.
Did you know that funding for federal regulatory agencies and their employment levels are at all-time highs? In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.
This is all bad enough, but where we are headed is even worse.
President Obama's budget will raise the federal debt-to-GDP ratio to 80.4% in two years, about double its level at the end of 2008, and a larger percentage point increase than Greece from the end of 2008 to the beginning of this year.
Under the president's budget, for example, the debt expands rapidly to $18.8 trillion from $10.8 trillion in 10 years. The interest costs alone will reach $743 billion a year, more than we are currently spending on Social Security, Medicare or national defense, even under the benign assumption of no inflationary increase or adverse bond-market reaction. For every one percentage point increase in interest rates above this projection, interest costs rise by more than $100 billion, more than current spending on veterans' health and the National Institutes of Health combined.
Worse, the unfunded long-run liabilities of Social Security, Medicare and Medicaid add tens of trillions of dollars to the debt, mostly due to rising real benefits per beneficiary. Before long, all the government will be able to do is finance the debt and pay pension and medical benefits. This spending will crowd out all other necessary government functions.
What does this spending and debt mean in the long run if it is not controlled? One result will be ever-higher income and payroll taxes on all taxpayers that will reach over 80% at the top and 70% for many middle-income working couples.
Did you know that the federal government used the bankruptcy of two auto companies to transfer money that belonged to debt holders such as pension funds and paid it to friendly labor unions? This greatly increased uncertainty about creditor rights under bankruptcy law.
The Fed is adding to the uncertainty of current policy. Quantitative easing as a policy tool is very hard to manage. Traders speculate whether and when the Fed will intervene next. The Fed can intervene without limit in any credit market—not only mortgage-backed securities but also securities backed by automobile loans or student loans. This raises questions about why an independent agency of government should have this power.
When businesses and households confront large-scale uncertainty, they tend to wait for more clarity to emerge before making major commitments to spend, invest and hire. Right now, they confront a mountain of regulatory uncertainty and a fiscal cliff that, if unattended, means a sharp increase in taxes and a sharp decline in spending bound to have adverse effect on the economy. Are you surprised that so much cash is waiting on the sidelines?
What's at stake?
We cannot count on problems elsewhere in the world to make Treasury securities a safe haven forever. We risk eventually losing the privilege and great benefit of lower interest rates from the dollar's role as the global reserve currency. In short, we risk passing an economic, fiscal and financial point of no return.
Suppose you were offered the job of Treasury secretary a few months from now. Would you accept? You would confront problems that are so daunting even Alexander Hamilton would have trouble preserving the full faith and credit of the United States. Our first Treasury secretary famously argued that one of a nation's greatest assets is its ability to issue debt, especially in a crisis. We needed to honor our Revolutionary War debt, he said, because the debt "foreign and domestic, was the price of liberty."
History has reconfirmed Hamilton's wisdom. As historian John Steele Gordon has written, our nation's ability to issue debt helped preserve the Union in the 1860s and defeat totalitarian governments in the 1940s. Today, government officials are issuing debt to finance pet projects and payoffs to interest groups, not some vital, let alone existential, national purpose.
The problems are close to being unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.
The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now.
The authors are senior fellows at Stanford University's Hoover Institution. They have served in various federal government policy positions in the Treasury Department, the Office of Management and Budget and the Council of Economic Advisers.
Source: WSJ - The Magnitude of the Mess We're In
Sometimes a few facts tell important stories. The American economy now is full of facts that tell stories that you really don't want, but need, to hear.
Where are we now?
Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household.
The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt which, when added to the current deficit, means Treasury must raise $4 trillion this year alone. So the debt burden will explode when interest rates go up.
The government has to get the money to finance its spending by taxing or borrowing. While it might be tempting to conclude that we can just tax upper-income people, did you know that the U.S. income tax system is already very progressive? The top 1% pay 37% of all income taxes and 50% pay none.
Did you know that, during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens' and institutions' purchases and sales netted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.
The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decentralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.
Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantitative easing—the purchase of government debt, mortgage-backed securities, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.
The Fed now pays 0.25% interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves correspondingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?
The Fed's policy of keeping interest rates so low for so long means that the real rate (after accounting for inflation) is negative, thereby cutting significantly the real income of those who have saved for retirement over their lifetime.
The Consumer Financial Protection Bureau is also being financed by the Federal Reserve rather than by appropriations, severing the checks and balances needed for good government. And the Fed's Operation Twist, buying long-term and selling short-term debt, is substituting for the Treasury's traditional debt management.
This large expansion of reserves creates two-sided risks. If it is not unwound, the reserves could pour into the economy, causing inflation. In that event, the Fed will have effectively turned the government debt and mortgage-backed securities it purchased into money that will have an explosive impact. If reserves are unwound too quickly, banks may find it hard to adjust and pull back on loans. Unwinding would be hard to manage now, but will become ever harder the more the balance sheet rises.
The issue is not merely how much we spend, but how wisely, how effectively. Did you know that the federal government had 46 separate job-training programs? Yet a 47th for green jobs was added, and the success rate was so poor that the Department of Labor inspector general said it should be shut down. We need to get much better results from current programs, serving a more carefully targeted set of people with more effective programs that increase their opportunities.
Did you know that funding for federal regulatory agencies and their employment levels are at all-time highs? In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.
This is all bad enough, but where we are headed is even worse.
President Obama's budget will raise the federal debt-to-GDP ratio to 80.4% in two years, about double its level at the end of 2008, and a larger percentage point increase than Greece from the end of 2008 to the beginning of this year.
Under the president's budget, for example, the debt expands rapidly to $18.8 trillion from $10.8 trillion in 10 years. The interest costs alone will reach $743 billion a year, more than we are currently spending on Social Security, Medicare or national defense, even under the benign assumption of no inflationary increase or adverse bond-market reaction. For every one percentage point increase in interest rates above this projection, interest costs rise by more than $100 billion, more than current spending on veterans' health and the National Institutes of Health combined.
Worse, the unfunded long-run liabilities of Social Security, Medicare and Medicaid add tens of trillions of dollars to the debt, mostly due to rising real benefits per beneficiary. Before long, all the government will be able to do is finance the debt and pay pension and medical benefits. This spending will crowd out all other necessary government functions.
What does this spending and debt mean in the long run if it is not controlled? One result will be ever-higher income and payroll taxes on all taxpayers that will reach over 80% at the top and 70% for many middle-income working couples.
Did you know that the federal government used the bankruptcy of two auto companies to transfer money that belonged to debt holders such as pension funds and paid it to friendly labor unions? This greatly increased uncertainty about creditor rights under bankruptcy law.
The Fed is adding to the uncertainty of current policy. Quantitative easing as a policy tool is very hard to manage. Traders speculate whether and when the Fed will intervene next. The Fed can intervene without limit in any credit market—not only mortgage-backed securities but also securities backed by automobile loans or student loans. This raises questions about why an independent agency of government should have this power.
When businesses and households confront large-scale uncertainty, they tend to wait for more clarity to emerge before making major commitments to spend, invest and hire. Right now, they confront a mountain of regulatory uncertainty and a fiscal cliff that, if unattended, means a sharp increase in taxes and a sharp decline in spending bound to have adverse effect on the economy. Are you surprised that so much cash is waiting on the sidelines?
What's at stake?
We cannot count on problems elsewhere in the world to make Treasury securities a safe haven forever. We risk eventually losing the privilege and great benefit of lower interest rates from the dollar's role as the global reserve currency. In short, we risk passing an economic, fiscal and financial point of no return.
Suppose you were offered the job of Treasury secretary a few months from now. Would you accept? You would confront problems that are so daunting even Alexander Hamilton would have trouble preserving the full faith and credit of the United States. Our first Treasury secretary famously argued that one of a nation's greatest assets is its ability to issue debt, especially in a crisis. We needed to honor our Revolutionary War debt, he said, because the debt "foreign and domestic, was the price of liberty."
History has reconfirmed Hamilton's wisdom. As historian John Steele Gordon has written, our nation's ability to issue debt helped preserve the Union in the 1860s and defeat totalitarian governments in the 1940s. Today, government officials are issuing debt to finance pet projects and payoffs to interest groups, not some vital, let alone existential, national purpose.
The problems are close to being unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.
The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now.
The authors are senior fellows at Stanford University's Hoover Institution. They have served in various federal government policy positions in the Treasury Department, the Office of Management and Budget and the Council of Economic Advisers.
Source: WSJ - The Magnitude of the Mess We're In
Wednesday, September 5, 2012
Ron Paul Lecture - "The Great Enabler: The Rise of the Federal Reserve and the Growth of Government"
Congressman Ron Paul delivered this Congressional lecture on "The Great Enabler: The Rise of the Federal Reserve and the Growth of Government." The introduction was given by Senator Rand Paul. As a continuing educational tool this lecture was filmed and is provided to the public.
Congressman Paul explains in this lecture the Federal Reserve's role as the enabler of big government. Through purchases of government debt, the Fed allows the government to spend beyond its means and contributes to the growth of the welfare-warfare state. If leviathan government is to be countered, understanding monetary policy and the fundamental role it plays in the relentless growth of government is a necessary first step.
Ron Paul Lecture - "The Great Enabler: The Rise of the Federal Reserve and the Growth of Government"
Rep. Ron Paul sponsored this Congressional lecture on "What Is the Fed's Future?", the final lecture in a three part series on the Federal Reserve System for Congressional staff. As a continuing educational tool this lecture was filmed and is provided to the public. The lecture was delivered by Dr. Roger Garrison, Professor Emeritus of Economics at Auburn University.
Dr. Garrison's lecture describes how the economic precepts on which the Fed operates are fundamentally flawed, making it only a matter of time before the Fed is the creator of its own demise. By contrasting the Keynesian macroeconomic theory upon which the Fed is based with the Austrian macroeconomic theory, what Garrison calls the capital-based framework, Dr. Garrison illustrates the market-distorting effects of the Fed's actions on the structure of production. Using this comparison, Professor Garrison provides a simple yet comprehensive explanation of how the Fed's monetary policy actions created the housing bubble and the subsequent financial crisis. He concludes by highlighting the bleak future for the Fed's ability to manage the economy, and emphasizes the necessity of decentralized banking.
"What is the Fed's Future?" with Roger Garrison -- Ron Paul Fed Lecture Series, Pt 3/3
Other lectures in the Fed series:
Pt. 1: Why Was the Fed Created? -- http://www.youtube.com/watch?v=JeIljifA8Ls
Pt. 2: What Does the Fed Do? -- http://www.youtube.com/watch?v=pRipVd5wxhI
Pt. 3: What Is the Fed's Future? -- http://www.youtube.com/watch?v=IdX60JgPTmA
Related: Ron Paul Money Lecture Series
Pt. 1: "What is Money" -- http://www.youtube.com/watch?v=vowbrq_g5NM
Pt. 2: "What is Constitutional Money?" -- http://www.youtube.com/watch?v=k6gMkKmQSW4
Pt. 3: "What About Money Causes Economic Crises?" -- http://www.youtube.com/watch?v=npJ0CUT8d_Y
Congressman Paul explains in this lecture the Federal Reserve's role as the enabler of big government. Through purchases of government debt, the Fed allows the government to spend beyond its means and contributes to the growth of the welfare-warfare state. If leviathan government is to be countered, understanding monetary policy and the fundamental role it plays in the relentless growth of government is a necessary first step.
Ron Paul Lecture - "The Great Enabler: The Rise of the Federal Reserve and the Growth of Government"
Rep. Ron Paul sponsored this Congressional lecture on "What Is the Fed's Future?", the final lecture in a three part series on the Federal Reserve System for Congressional staff. As a continuing educational tool this lecture was filmed and is provided to the public. The lecture was delivered by Dr. Roger Garrison, Professor Emeritus of Economics at Auburn University.
Dr. Garrison's lecture describes how the economic precepts on which the Fed operates are fundamentally flawed, making it only a matter of time before the Fed is the creator of its own demise. By contrasting the Keynesian macroeconomic theory upon which the Fed is based with the Austrian macroeconomic theory, what Garrison calls the capital-based framework, Dr. Garrison illustrates the market-distorting effects of the Fed's actions on the structure of production. Using this comparison, Professor Garrison provides a simple yet comprehensive explanation of how the Fed's monetary policy actions created the housing bubble and the subsequent financial crisis. He concludes by highlighting the bleak future for the Fed's ability to manage the economy, and emphasizes the necessity of decentralized banking.
"What is the Fed's Future?" with Roger Garrison -- Ron Paul Fed Lecture Series, Pt 3/3
Other lectures in the Fed series:
Pt. 1: Why Was the Fed Created? -- http://www.youtube.com/watch?v=JeIljifA8Ls
Pt. 2: What Does the Fed Do? -- http://www.youtube.com/watch?v=pRipVd5wxhI
Pt. 3: What Is the Fed's Future? -- http://www.youtube.com/watch?v=IdX60JgPTmA
Related: Ron Paul Money Lecture Series
Pt. 1: "What is Money" -- http://www.youtube.com/watch?v=vowbrq_g5NM
Pt. 2: "What is Constitutional Money?" -- http://www.youtube.com/watch?v=k6gMkKmQSW4
Pt. 3: "What About Money Causes Economic Crises?" -- http://www.youtube.com/watch?v=npJ0CUT8d_Y
Saturday, June 30, 2012
Fractional Reserve Banking and the Federal Reserve: The Economic Consequences of High-Powered Money | Ron Paul | Domestic Monetary Policy and Technology Subcommittee
This hearing, entitled "Fractional Reserve Banking and the Federal Reserve: The Economic Consequences of High-Powered Money," will be held on Thursday, June 28, at 2:00 p.m. in room 2128 of the Rayburn House Office Building.
Witnesses scheduled to testify:
Dr. John Cochran, Emeritus Professor of Economics and Emeritus Dean, School of Business, Metropolitan State College of Denver Dr. Joseph Salerno, Professor of Economics, Lubin School of Business, Pace University Dr. Lawrence H. White, Professors of Economics, George Mason University
"Fractional reserve banking underpins the entire banking system, yet its effects on society are completely ignored. Our financial system consists of vast amounts of credit pyramided on top of very small amounts of real savings-- all backstopped by explicit and implicit government guarantees. This poses significant risks to the stability of the economy and monetary system, which ought to give pause to any serious observer of financial markets. Hopefully this hearing will create a greater understanding among the American people about the nature of the banking system, and begin the movement towards serious systematic reform. The American people deserve a financial system that is stable and efficient; one that operates without taxpayer subsidies and bailouts." - Congressman Ron Paul
Hearing June 28 2012 Fractional Reserve Banking
Witnesses scheduled to testify:
Dr. John Cochran, Emeritus Professor of Economics and Emeritus Dean, School of Business, Metropolitan State College of Denver Dr. Joseph Salerno, Professor of Economics, Lubin School of Business, Pace University Dr. Lawrence H. White, Professors of Economics, George Mason University
"Fractional reserve banking underpins the entire banking system, yet its effects on society are completely ignored. Our financial system consists of vast amounts of credit pyramided on top of very small amounts of real savings-- all backstopped by explicit and implicit government guarantees. This poses significant risks to the stability of the economy and monetary system, which ought to give pause to any serious observer of financial markets. Hopefully this hearing will create a greater understanding among the American people about the nature of the banking system, and begin the movement towards serious systematic reform. The American people deserve a financial system that is stable and efficient; one that operates without taxpayer subsidies and bailouts." - Congressman Ron Paul
Hearing June 28 2012 Fractional Reserve Banking
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