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The global economy is beginning to resemble 1982, a deflationary environment that climaxed with that summer’s Peso Crisis and aggressive intervention by Federal Reserve Chairman Paul Volcker. Although certainly not as strong as twenty-two years ago, another bout of deflation (or ‘disinflation’) is underway. The bad news is: Federal Reserve officials are only slowly recognizing it. The good news is: they have time to avert its destructive consequences.
The parallels between 1982 and 2014 are eerily similar, although the circumstances are wholly different. During the lead-up to both…

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Though it’s highly debatable that European economic weakness is what’s “rattling” global stock markets, to the New York Times this bit of conventional wisdom makes perfect sense. Forget the IMF’s hopeless track record when it comes to predicting much of anything, to the Times the IMF’s assertion about weakness has been accepted without protest.
Not surprisingly, the Times is similarly accepting of the view that says a lack of government spending is the source of European hardship. In a front page story last Friday Times reporters Jim Yardley and Jack Ewing wrote that “the largest European…

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The latest regulatory challenge for Tesla, the upstart electric vehicle (EV) manufacturer, concerns a potential roadblock to direct consumer distribution of its luxury automobiles in Michigan. Under H.B. 5606, which passed the Michigan Senate 38-0 and the Michigan House 106-1, a new motor vehicle cannot be sold directly to a retail customer other than through a franchised dealer in Michigan, with the exceptions being a nonprofit organization or governmental agency. Moreover, Tesla cannot operate a showroom or gallery featuring its automobiles and provides information without conducting…

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European bond yields had calmed down as people believed that the worst of the European financial crisis and economic problems were behind them. Yet, in the past month the yield on Greek bonds is up over 300 basis points, with a 100 basis point rise in one day last week. This is restarting fears that interest rates on other European country bonds will rise to unaffordable levels (they have crept up a little already). The problem, however, is not the yields but the level of debt with which the countries are now burdened. After all, the Greek bond yields are just a return to the old normal.The…

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You’ve had a scary seven-year ride on the U.S. Economy Bus Line. The bus went into the ditch once, and it stayed stuck there for 18 months. Since then, it’s come close to running off the road several times. There are 319 million other passengers on the bus with you, and this vehicle is your only way forward.
The bus has wifi, your laptop is open, your E-Trade account is up, and you are trying to decide whether to buy or sell U.S. Economy Bus Line shares.
Federal Reserve Chairman Janet Yellen is driving the bus. Economist Paul Krugman is sitting to the left of Ms. Yellen, with Dallas…

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The GOP should dare Obama to do more.
Steep stock market corrections often create shrouds of pessimism that do bad things to people’s brainpower. And one of the absolutely stupidest things I have heard in recent weeks is that the recent drop in oil prices is bad. You heard me right. Serious people on financial television are saying lower oil prices are a signal of worldwide economic collapse. Here at home that translates to recession, deflation, a profits collapse, and rising unemployment.
I’ve been around for a while, and I’ve seldom heard such gibberish.
The latest stock market scare stems…

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It was about a year ago when I was busy trying to work out and describe how the intersection of the global dollar short, through eurodollars, and the Federal Reserve’s very clumsy attempt at trying to carefully back its way into an eventual (and very much predetermined) exit from years of “emergency” intrusions might lead where they never expected. At the time, the yield curve was moving quite disorderly toward interest rates everyone was convinced were harmful. How times have changed, as this week the very clear disorder is now in the opposite direction, but curiously validating in many…

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Oh! What a Lovely Pestilence!
Ebola has come to America. Paul Krugman and Joseph Stiglitz must be delighted.
The core story of Keynesian economists is that government demand, as ideally embodied in war spending, enables economic growth. To illustrate, in a column called “Oh! What A Lovely War!” Krugman asserted: “World War II is the great natural experiment in the effects of large increases in government spending, and as such has always served as an important positive example for those of us who favor an activist approach to a depressed economy.”
It is never quite explained how removing…

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Everyone knows that economic inequality has increased dramatically since the 1970s, and this has created a new cottage industry: dissecting “the top 1%.”
We now have a study from three economists that broadens what we know about these top earners.The study’s biggest news: Economic inequality is becoming more gender neutral.
Go back to the early 1980s, and almost no women were in the top 1%.
Now there are lots, says the study, though women’s representation still remains well below their overall share in the workforce, about half in 2012.
The study was conducted by Fatih Guvenen of the…

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In an article in the UK’s Telegraph on October 10, veteran economic correspondent Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that inflation is all, and always, about debt management.Every year the levels of government debt as a percentage of GDP, for both emerging market and developed economies, continue to go higher and higher. As the ratios push out into uncharted…

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Something peculiar is happening to our nation’s food assistance program. The recently renamed food stamp program - now called the Supplemental Nutrition Assistance Program or SNAP - is supposed to respond to difficult economic conditions by providing financial assistance to purchase food to poor Americans. As bad times hit and more people need assistance, SNAP caseloads should go up. And as the economy strengthens, the number of SNAP recipients should decline - at least in theory.
For most of the history of the program, that is what happened. As the accompanying chart shows, from 1969 until…

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Stanford University. The University of Glasgow. The Educational Foundation of America. The British Medical Association. The City of Seattle, Washington. The Rockefeller Brothers (!) Fund. Amid the tolling of church bells and the thunderous self-applause of the environmental left, the fossil-fuel divestment bandwagon is on a roll. In addition to those listed above, 175 institutions, local governments, and individuals, with a total of over billion in assets, as of last month have pledged to “divest” their holdings in the 200 oil, gas, and coal producers with the greatest “carbon” content of…

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Last week Mises Institute senior fellow David Gordon reviewed Money, the book released last summer by Steve Forbes and Elizabeth Ames. Gordon described it as “odd” in the sense that he disagreed with how the authors have chosen to define money. What struck this writer as odd is that in lightly attacking Forbes and Ames, Gordon only succeeded insofar as he perhaps unintentionally revealed a strong disagreement about money with the intellectual father of the Institute which employs him, Ludwig von Mises.
Gordon has a problem with the Forbes and Ames assertion that money is merely a measure…

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Many people think that when the Internet Tax Freedom Act (ITFA) expires on December 11, this will open the door for the first time to the taxation of the Internet. Wrong. The Internet is already taxed, and taxation can continue even if IFTA is extended.
IFTA was first passed in 1998 to temporarily prevent taxes on Internet access from state and local governments. It has been extended in 2001, 2004, and 2007. It prevents non-grandfathered state and local governments from taxing Internet access. The bill was set to expire on November 1, 2014, but the date was pushed back to December 11, 2014,…

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In 2010, I co-signed an open letter warning that the Fed’s experiment with an unprecedented level of loose monetary policy - in amount, and in unorthodox method - created a risk of serious inflation. Sporadically journalists and others have noted that this risk has not come to pass, particularly in consumer prices. Recently there has been an article surveying each of us as to why; seeming to relish in, when provided, our various rationales, presumably as they sounded like excuses. It seems none of the responses provided what the authors clearly wanted, a blanket admission of error. I did not…

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