Note: This post is 3460 words–about a fourteen minute read. Several presidential candidates have been in favor of the gold standard including Ron Paul in 2012 and Rand Paul and Ted Cruz in 2015. In response, Megan McArdle, explained why…
Blog Archives
Seed Corn Is Not Food & Bank Reserves Are Not Money.
Banks are merely financial intermediaries that don’t use money as a medium of exchange for buying anything that contributes to GDP. If local banks save money at the central bank (the Fed in the US), it is merely the local…
Posted in Macro
A parable of how to solve a financial crisis
Lasse Lien posted a simple story about how a change in the money supply can reduce transactions costs and eliminate debt. When the money supply increases, the circular flow of money tends to speed up. A rich tourist came to…
Posted in Macro
Hoarding causes recessions
A recession can either be caused by a lack of supply or a lack of demand. A lack of supply could be caused by a drought reducing agricultural output or a war reducing the productive capacity to supply goods and…
Posted in Macro
Why read Paul Krugman for macroeconomics?
I assign some Paul Krugman readings in my Macroeconomics class and because he is such a polarizing character, some people on both the right and the left seem to think he is just a blowhard. If you are one of…
Posted in Macro
80% of Americans have not recovered from the recession.
The Bureau of Labor Statistics has a chart showing that 80% of Americans have not recovered from the recession as of the latest annual data (2014): Note that compensation rose a lot more than wages for most people. The main reason…
GDP Was Designed For Warfare Not Welfare
When intellectuals first began to think about economics, they tended to think about the interests of the elites who controlled the government. That is how economics got its name back in the 16th century. The term economics comes from the…
Medianism 