‘Austrian Economics’ Archives
Blogging Meltdown: Culprit 4 – The “pro-ownership” tax code
Professor Woods continues with the federal, state, and local governments' programs to encourage people to buy homes, which created more artificial demand in the housing sector. Developers received "handouts, free land, new roads, and tax privileges to build homes...even if nobody want to buy them." The federal government takes around 35 [...]
Blogging Gold: The Once and Future Money – Good Money is Stable Money, Part 3
The Fateful Day On 15 August 1971, Richard Nixon severed the dollar's link to gold and destroyed Bretton Woods, the world's monetary system. For three centuries before 1971, the world more or less had stable money. After a series of steps in the 1960s and early 1970s and ending on 15 August 1971, it no longer did. The capitalist economy long [...]
Blogging Meltdown: How Government Created the Housing Bubble – Culprit 3, The government’s artificial stimulus to speculation
Sub-prime, Prime Mortgages, and the FED Of the list of culprits, Woods believes that too much blame has focused on the sub-prime loans. Besides the government's push for minority home-ownership, the Fed's increase in reserves for the banks allowed lending innovations such as 100 percent loans to become institutionalized features in the banking [...]
Blogging Gold: The Once and Future Money – Good Money is Stable Money, Part 2
Money's Gift Money simplifies transactions, allowing an economy to develop and become more complex. In a barter system of 1000 goods, there would be 499,500 exchange rates, but with money only 1000 prices. The future may turn to electronic credits, but money's role would remain the same as a measure of value. Money allows for more than trade. It [...]
Blogging Meltdown – Culprit 2: The Community Reinvestment Act and affirmative action in lending, part 2
Henry Cisneros Henry Cisneros, former mayor of San Antonio and Bill Clinton's first secretary of the Department of Housing and Urban Development (HUD), helped loosen restrictions on lending both in government and in his own ventures in the private sector to help people buy homes who would not have qualified for loans in the past. However, even he [...]
Blogging Gold: The Once and Future Money – Gold Money is Stable Money: How People Make a Living through Monetary Cooperation, Part 1: The Development of Money
"Coinage is imprinted gold or silver, by which the prices of things bought and sold are reckoned. . . . It is therefore a measure of values. A measure, however, must always preserve a fixed and constant standard. Otherwise, public order is necessarily disturbed, with buyers and sellers being cheated in many ways, just as if the yard, bushel, or [...]
World Socialism Blog Blames Capitalism for World Economic Crisis
A friend of mine from Uganda sent me this article from the World Socialist's Website and asked me what I thought. Part 1: The conditions that prevail as humanity enters 2009 cruelly refute the illusions of a new epoch of peace and prosperity that thrived at the dawn of the new millennium. True. Any idea that the world will be perfect is an [...]
Blogging GOLD: The Once and Future Money
The price of gold continues to climb in this first decade of the twenty first century. Why is this happening? Because it is competing with the failing dollar, euro, sterling pound, and all the other fiat currencies. In today's economic crisis, ignoring gold could be devastating to your financial well being. Maybe, it would be a good idea to have [...]
Blogging Meltdown: Culprit 2 – The Community Reinvestment Act & affimative action in lending, Part 1
Fannie and Freddie not only pushed for looser lending requirements, so did other Government agencies. They pressured lenders to make riskier loans all in the name of “racial equality.” Lenders, fearing lawsuits of hundreds of million dollars in damages, followed their orders. In 1992, the sloppy and error ridden study by the Federal [...]
Blogging Meltdown: Culprit 1: Fannie Mae and Freddie Mac, Part 2
Fannie Mae and the political establishment, in the name of helping the “disadvantaged,” worked to lower lending requirements. As the New York Times reported in 1999, Fannie Mae’s initiative would encourage banks to “extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans.” The [...]
Blogging Meltdown: Culprit 1: Fannie Mae and Freddie Mac, Part I
Fannie Mae and Freddie Mac, officially known as “government sponsored enterprises” or GSEs were at the center of the collapse What do they do? Do they offer loans to home buyers? No, they instead buy loans from banks on the secondary market. After a bank offers a home loan to a customer, it then sells the loan to Fannie or Freddie. So, the [...]
Blogging Meltdown: “Change you can believe in”
Obama’s economic team seems to confirm at first glance that all his talk of “change” really means more of the same – “more bailouts, more government intervention, more addressing symptoms rather than causes – along with greater deficits, and massive increases in government spending,” which our illustrious leaders in Washington [...]
Blogging Meltdown: The Elephant in the Living Room – The Fed
The common theme recently from the media, the economists, and the government they serve is the failure of the Free Market. According to them, both the Obama and Bush administrations, and both parties in congress, more regulation, more interventionism, more spending and more debt will solve the crisis. Yet, the very people who caused the mess and [...]
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