What This Election is Really All About

The Economics of the 2016 Election Cycle The current election cycle in the United States is like none other in recent memory. At least in terms of vitriol, it is no contest. But beyond the partisan slams back and forth lies a deeper fundamental reality which really lies at the heart of the contest. In … Continue reading “What This Election is Really All About”

Pettis on Brexit

Michael Pettis is one contemporary economist whose blog is worth reading. His books The Volatility Machine and The Great Rebalancing are required reading for those who would understand the workings of international trade relations, currency movements, and financial markets. His comments regarding the recent “Brexit” vote by the UK’s electorate are worth delving into. “Last Friday’s … Continue reading “Pettis on Brexit”

The Economic Consequences of the Release (i.e., Brexit)

Much has been written on the recent decision by the UK to leave the European Union. Much of it is emotion-driven. But that is no way to assess such an important turn of events. The actual significance is, in significant degree, economic in nature. This calls for an economic analysis, to which we now turn. … Continue reading “The Economic Consequences of the Release (i.e., Brexit)”

The Mystery of Capital in Context

Given the rancorous debate unleashed by the UK electorate’s decision to depart the European Union – in particular, regarding the damage to the UK economy that independence might bring – it seems wise to re-examine the foundations of economic prosperity and its relationship to political and legal factors. I do so by examining Hernando de … Continue reading “The Mystery of Capital in Context”

Maggie’s Revenge

The British vote on June 23rd, 2016, to leave the European Union, is one of those events that will long be remembered. Yet there was another event involving Britain on the one hand and the European Union (then Community) on the other, that likewise came as a shock, and which likewise lives on in the … Continue reading “Maggie’s Revenge”

The Problem of Saving

When Schumpeter writes, “Now to the question: what is a savings account?”,[1] he is not being facetious. There is more to savings than meets the eye. Of course, the bare fact of saving is simple enough to understand. Rather than spend all of our earnings, we take some and put it to one side. What … Continue reading “The Problem of Saving”

The Trouble with Exchange Rates

Do floating exchange rates work? By which we mean, do floating exchange rates bring countries, national economies, into equilibrium? Equilibrium here means that trade between countries is in balance. Thus, exports and imports of goods and services, although in constant fluctuation as economies progress along divergent paths, balance each other over time. With this we do … Continue reading “The Trouble with Exchange Rates”

Confessions of a Free Trade Advocate

Ever since I can remember I have been a proponent of free trade. It seemed the logical thing: why should the government restrict economic activity which in itself is legal and aboveboard? And when I began exploring economic theory, lo and behold, free trade was at the forefront of most every exposition. It was the … Continue reading “Confessions of a Free Trade Advocate”

An End to Alchemy?

Michael Lewis, the author of various illuminating accounts of the events and progressions of the great financial crisis of 2008 – one of which became an Oscar-winning Hollywood movie – this time provides us with an illuminating account of someone else’s book – Mervyn King’s newly published The End of Alchemy. The thesis is a … Continue reading “An End to Alchemy?”

National Economy?

At first glance the notion of a national economy would seem to be self-evident. After all, the lion’s share of economic data comes in the form of “national accounts,” which treat the nation as a self-contained economic entity, like a business. And the talk, when it comes to the economy, is always of how the … Continue reading “National Economy?”