Like clockwork, and as projected by the few good economists who understand the trade cycle, the liquidation phase of the current cycle began — once again, due to a central-bank-induced credit crisis. And yet again the credit crisis began in year 7 of the cycle, after close to 6 years of economic expansion, that is, the artificially pushed money
The credit markets are in some turmoil, and numerous market watchers and commentators are calling for or even (like Jim Cramer ) demanding a rate cut from the Fed. The immediate question for these market watchers, of course, is this: how will the market react to cuts, or to no cuts? But the broader question is, how will the underlying economy
On Tuesday September 18, US central bank policy makers surprised financial market players by cutting the federal funds rate target by 0.5% to 4.75%. The key motivating factor behind the hefty cut in the federal funds rate target was an economic model that Fed Chairman Ben Bernanke developed while in academia. Bernanke is of the view that changes
[This article first appeared in The Review of Economic Statistics , November, 1937.] The purpose of this article is to state a proposition which underlies the modern “monetary over-investment theories” of the trade cycle in a form in which, as far as I know, it has never before been expressed but which seems to make this particular proposition so
On September 18 the Fed cut its target for the fed funds rate by 50 basis points (0.5 percentage points), from 5.25% to 4.75%. The move surprised many analysts who had been expecting a more modest cut of 25 basis points. For those versed in the Austrian theory of the business cycle, as developed by Ludwig von Mises and elaborated by Friedrich
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The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
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