There is no way to describe current Federal Reserve policy other than as monetary confusion and misdirection. In a nutshell, Janet Yellen and the other members of the Fed’s Board of Governors have no idea what to do. Do they raise certain interest rates over which they have some direct influence? Do they keep them at their current rock bottom levels, as they have for the last six years?
Author: Richard Ebeling
Since the economic downturn of 2008, the critics of capitalism have redoubled their efforts to persuade the American people and many others around the world that the system of individual freedom and free enterprise has failed.
When is the price of some marketable good or service at or near zero? When either the supply of it is so plentiful that virtually any demand, no matter how great, can be satisfied. Or when no matter how large or small the supply of it may be, people’s demand for it is so low that nobody is willing to practically pay anything for it.
For over a decade, now, the American economy has been on an economic rollercoaster, of an economic boom between 2003 and 2008, followed by a severe economic downturn, and with a historically slow and weak recovery starting in 2009 up to the present.
With the seventieth anniversary this year of the end of the Second World War, a number of commentators have focused on the presumed “unity” of America seven decades ago to “win the war” against global tyranny and international aggression by Nazi Germany and Imperial Japan. Individuals put aside their individual personal and petty interests to support and fight for a “greater collective cause.”
There is little that happens in society in general and the market economy in particular that most on the political “left” do not think needs more government intervention, regulation, and redistribution to make “better.”
One of the great voices for personal liberty was that of the British economist and political philosopher, John Stuart Mill. His essay, “On Liberty,” though penned well over 150 years ago, is a classic statement that the individual should be respected in his right of freedom of thought, speech and action.
The immigration issue has once more bubbled to the surface in America because of the provocative statements and assertions by one of the Republication contenders for their party’s presidential nomination.
For months, now, the mass media and the financial markets have anxiously watched and waited to see the outcome of a war of words, accusations, and threats that have been fought between Greece and its Eurozone and European Union partners.
Many forms of personal liberty are under attack today, from economic regulations that hinder people from their peaceful pursuits of earning a living and improving the material conditions of life to an increasingly intrusive surveillance state that is seems to follow every step we make and every breath we take.
It is seventy years, now, since near the end of the Second World War Austrian economist, and much later Nobel Prize winner, Friedrich A. Hayek published his most famous article, “The Use of Knowledge in Society,” in September 1945, demonstrating why it is impossible for a system of socialist central planning to effectively manage a complex and ever-changing economy better than a functioning, competitive free market order.
Many Social Democrats believed that democracy was both compatible with and an essential complement to a humane socialism, a socialism that did not reduce humanity to obedient cogs in a giant collectivist wheel directed by a “dictatorship of the proletariat.” They wanted socialism with traditional civil liberties, personal freedom and democratic politics.
American “progressives” portray themselves as “forward-looking,” advocates of a higher and better freedom than the traditional American conception of liberty as freedom from government coercion and control. In fact, they are the intellectual great-grandchildren of the “reactionary” nineteenth century Imperial German “Iron Chancellor,” Otto von Bismarck.
Keynesians never seem to learn. Every time an economy slows down or reverses gears and “goes negative,” in terms of growth and employment, their only answer is a call for “aggregate demand” stimulus and more government spending manipulation.
Financial markets in the United States and around the world are all waiting with “bated breath” for when the Federal Reserve modifies its “easy money” policy and starts to raise interest rates. No one, however, asks a simple question: Why is the American central bank in the interest rate setting business?
The Congressional Budget Office (CBO) reported in early May that for the month of April 2015 the Federal government ran a budget surplus, taking in more in taxes than it laid out in expenditures. Don’t be fooled by one month, especially when it was a month when people filed and pay their taxes. Government deficits and growing debt are on the horizon for as far as the human eye can predict.
Old fallacies never seem to die, they just fad away to reemerge once again later on. One such fallacy is that if there is significant unemployment and slow economic growth it must be due to not enough consumers’ spending in the economy, what Keynesian economists call a “failure of aggregate demand.”
The real purpose for his visit to Washington, D.C. and his address before Congress was to push for Congressional approval of the Trans-Pacific Partnership (TPP) between the U.S., Japan and 10 other nations (Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). Meant to extend and widen trade and related commercial relationships between the participating countries, it is also been presented as a way for the U.S. to maintain his economic and political power in East Asia in the face of the rising influence of China in that part of the world.