Leverage – The Loose Joint Which Makes The Trade Cycle Inevitable

Credit and leverage are at the heart of Friedrich Hayek’s conception of the boom and bust cycle.  In the current crisis leverage and credit are receiving a good bit of attention — and even a few economists are beginning to take notice of their significance.  But in Hayek’s work, leverage and credit have always been the very heart of the story.   . . . → Read More: Leverage – The Loose Joint Which Makes The Trade Cycle Inevitable

Credit & Leverage – The Fulcrum Of The “Loose Joint” Launching Booms & Busts

Hayek identified money and the institutions it gives rise to as the “loose joint” of the economic system.  Money and finance are the massive pivot points that allow the coordination system of the market to spend years getting itself twisted all out of joint, producing unsustainable booms that “snap back” in predictable and fully inevitable . . . → Read More: Credit & Leverage – The Fulcrum Of The “Loose Joint” Launching Booms & Busts

SEMINAR: Hayek’s _Monetary Theory and the Trade Cycle_

There can be no better time than now to grapple with Hayek’s most broad ranging book on the problems of money and the trade cycle, at a time when economists are again opening their minds to the fundamental questions of monetary theory and the business cycle.  Hayek’s book brings to light many deep problems of . . . → Read More: SEMINAR: Hayek’s _Monetary Theory and the Trade Cycle_

Steve Hanke vs Ben Bernanke & the Fed

Quotable:

“During his face time [on national TV Ben] Bernanke explained many things ..  Unfortunately, he did not address my main beef with the bank: that it clings to a flawed inflation-targeting regime with a horrible history of monetary policy failures ..

In November 2002 then governor Bernanke .. misdiagnosed a benign cyclical dip in . . . → Read More: Steve Hanke vs Ben Bernanke & the Fed

It’s Back To First Principles — And Hayek — At The Bank of England

The London Telegraph:

in a strange way, the by-product of this financial collapse has been to free economics of this burden. In the corridors of the Bank of England and Treasury, there is a distinct whiff of excitement. For the first time in decades, economists have been able to throw away their textbooks and go . . . → Read More: It’s Back To First Principles — And Hayek — At The Bank of England

wikipedia: “Neutral Money”

The Wikipedia entry on “Neutral Money”:

The term “neutral money” was coined by Friedrich Hayek, and was originally defined as a market coordinating money rate of interest which did not create a boom and bust cycle by falsely misdirecting investment through the time structure of production goods.[1]

Later Keynesians economists took up the notion and . . . → Read More: wikipedia: “Neutral Money”

lit: “Hayek Translated: Some Words of Caution”

by Hansjörg Klausinger. From the Abstract:

This note points to the problems arising from the translations of Hayek’s early German-language writings on monetary theory before 1931. Two issues are emphasised. First, some examples of misleading translations of outdated terminology are provided. Second, it is shown that contemporary as well as more recent translations exhibit the . . . → Read More: lit: “Hayek Translated: Some Words of Caution”

prize money: “Sound Money” Essay Contest

The Atlas Foundation is sponsoring a “Sound Money” essay contest.  Entries are due in November.  Top prize is $5,000.

inquiry: Yield Curve Inversion

Can someone direct me to a good Hayekian explanation of the inverted yield curve phenomena:

Click to enlarge. ht Mish.

macro: Why Does Hayek Advocate Explanding Money to Avoid a “Secondary Depression”

In his recent Hayek vs Keynes article, when Mario Rizzo says, “Hayek probably should have emphasized more that his theory implied the need to avoid a “secondary deflation” during the bust period.  Increases in the demand to hold money should be offset by the banking system” lots of folks might ask, what is Rizzo talking . . . → Read More: macro: Why Does Hayek Advocate Explanding Money to Avoid a “Secondary Depression”

friedman: Stephen Moore Has the Facts Wrong

Leftist are being dishonest in their attacks on the legacy of Milton Friedman, but Stephen Moore just has the facts wrong when it comes to Milton Friedman and Federal Reserve monetary policy.  Friedman as late as July, 2006 had little but praise and support for Ben Bernanke, Alan Greenspan, and Federal Reserve policy in the . . . → Read More: friedman: Stephen Moore Has the Facts Wrong

quote: Hayek on the “Price Stabilizers”

A priceless — and timeless — quotation from Friedrich Hayek:

It is a curious fact that the general disinclination to explain the past boom by monetary factors has been quickly replaced by an even greater readiness to hold the present working of our monetary organization exclusively responsible for our present plight. And the same stabilizers . . . → Read More: quote: Hayek on the “Price Stabilizers”

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Random Quote

[Socialists suffer from] the synoptic delusion .. the fiction that all the relevant facts are known to some one mind, and that it is possible to construct from this knowledge of the particulars a desirable social order. — F. A. Hayek

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