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IMF: QE Encourages Risk

Thursday, September 18th, 2014 by posted in Banking, Economics.

Recently the Fed released research stating that it encouraged moral hazard and risk taking with its QE programs. Never one to fall behind, now the International Monetary Fund is in on the trick. After promoting QE for years (see here

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Europe decides to eat its capital

Monday, September 15th, 2014 by posted in Banking, Economics.

Re: The Death Spiral of Capitalism, by Martin Hutchinson We now see why the profligate countries of the European Monetary Union allowed the European Central Bank to institute a negative interest rate against reserves AND now have allowed it to buy

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The Hubris of the Monetary Social Contract

Monday, September 15th, 2014 by posted in Banking, Capitalism, Economics.
money-addiction teaser

Reprinted from Casey Research Money was once in the state of nature. Goods were once bartered until especially saleable goods emerged to be used in indirect exchange. A variety of saleable items became money until gold and silver became the

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The insanity of majority vote at the ECB

Thursday, September 11th, 2014 by posted in Banking, Economics, Politics.

From today’s Open Europe news summary: The FT reports that the ECB will press ahead with its plans to purchase Asset Backed Securities (ABS) despite both the French and German government rejecting the bank’s calls for them to provide public guarantees to

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The Myth of the Unchanging Value of Gold

Wednesday, September 10th, 2014 by posted in Banking, Capitalism, Economics.
gold_standard teaser

Reprinted from Mises.org According to mainstream economics textbooks, one of the primary functions of money is to measure the value of goods and services exchanged on the market. A typical statement of this view is given by Frederic Mishkin in

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Jurgen Stark exposes ECB lawlessness

Tuesday, September 9th, 2014 by posted in Banking, Law.

From today’s Open Europe news summary: Jürgen Stark, former Chief Economist of the ECB warns in an essay in Handelsblatt that “the ECB is on its way to becoming a bad bank” citing the “enormous risks” of its recent monetary policy. He

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What Gave Bitcoin Its Value?

Tuesday, September 9th, 2014 by posted in Banking, Capitalism, Economics.
bitcoin_teaser

Reprinted from the Freeman Many people who have never used bitcoin look at it with confusion. Why does this magic Internet money have any value at all? It’s just some computer thing that someone made up. Consider the criticism of

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Why Isn’t Monetary Pumping Helping the Economy?

Monday, September 8th, 2014 by posted in Banking, Capitalism, Economics.
dollar-printing teaser

Reprinted from Mises.org Despite all the massive monetary pumping over the past six years and the lowering of interest rates to almost zero most commentators have expressed disappointment with the pace of economic growth. For instance, the yearly rate of

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Richmond Fed President See Fed as the Problem

Monday, September 8th, 2014 by posted in Banking, Economics.

How large a problem is moral hazard caused by the Fed helping out troubled bank during financial crises? Pretty large, at least according to Jeffrey Lacker, President of the Federal Reserve Bank of Richmond. One argument for central bank credit

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The Fed and Mr. Krugman: The Price of Nuts

Friday, September 5th, 2014 by posted in Banking, Economics.
Screen Shot 2014-09-05 at 4.37.42 PM

The pine nuts I like to sprinkle on my salads have become so precious the price jumped from an already outrageous $5.99 per 4 ounce container to $6.99 this past week. One person who is happy about this is the

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The IMF, the SDR, and the Dollar: One Big Happy

Thursday, September 4th, 2014 by posted in Banking, Capitalism, Economics.
International-Monetary-Fund-IMF-Logo-tease

Reprinted from GaryNorth.com The SDR is a fake currency issued by the International Monetary Fund. It was invented in 1969, the first year of the Nixon administration. It was a stop-gap measure to save the fixed exchange rate system of

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Finally, the Fed Blames Itself

Wednesday, September 3rd, 2014 by posted in Banking, Capitalism, Economics.

This is an historic time. After six years of the most novel and expansive monetary policies since its creation 100 years ago, the Fed is finally ready to admit its role in prolonging the current recession… kind of. Two economists

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Does the World Need a World Bank?

Tuesday, September 2nd, 2014 by posted in Banking, Capitalism, Economics.
worldbank-tea

[Ludwig von Mises on Money and Inflation (2010)] As a medium of exchange, the situation of money is different from that of other commodities. If there is an increase in the quantity of other commodities, this always means an improvement of

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The Perfect Banking System

Wednesday, August 27th, 2014 by posted in Banking, Capitalism, Economics.
casino teaser

Reprinted from the Carl Menger Center for the Study of Money and Banking he perfect banking system, like the perfect monetary system, is one which serves the needs of consumers and savers, and not the needs of the government. It

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IMF: Risk of Another Housing Crash

Wednesday, August 27th, 2014 by posted in Banking, Capitalism, Economics.

The International Monetary Fund is warning that the world is at risk of “another devastating housing crash.” This is true for instance for Australia, Belgium, Canada, Norway and Sweden,” he said. In the wake of the global recession central bankers

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World Reserve Currencies: What Happened During Transition?

Tuesday, August 26th, 2014 by posted in Banking, Capitalism, Economics.
dollar-bills_0 teaser

Reprinted from EconomicReason.com The decline of the US dollar hegemony is ever so clear today and this article aims to provide the reader with what exactly happened during past periods of reserve currency transitions. Historically, when a reserve currency transitioned

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Banks Can Perform Their Two Functions With 100% Reserves

Thursday, August 21st, 2014 by posted in Banking, Economics.
teller

In a recent post at Forbes, John Tamny made some very strong claims against the Austrian School. In the present post, I want to push back on just one of his points (though I think there are several problems with

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Gold versus Fractional Reserves

Thursday, August 21st, 2014 by posted in Banking, Capitalism, Economics.
goldt

[This article originally appeared in The Freeman, May 1979.] The present worldwide inflation has done, and will continue to do, immense harm. But it may eventually lead to one great achievement. It may make it possible to restore (or perhaps it

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Low Interest Rates Harm Everyone

Monday, August 18th, 2014 by posted in Banking, Capitalism, Economics.

It’s not just poor pensioners who are harmed by central banks’ ultra-low interest rate targets. Governments are now also getting squeezed. Pension plans like social security rely on, historically, fixed-income investments to provide returns for the future payouts. With interest

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Fed Fueled M & A Destroys Capital

Monday, August 11th, 2014 by posted in Banking, Economics.

The world’s central bankers have given companies the urge to merge. Merger and Acquisition (M&A) activity has already reached $2.2 trillion this year according to Thomson Reuters Deals Intelligence, up 70% from this time a year ago. The deals are

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