Tag Archives: economics



The following is a guest post by Steven Horwitz, Charles A. Dana Professor of Economics at St. Lawrence University.

Perhaps because money and finance are among the most complex and obscure parts of economics, a variety of cranks and conspiracy theorists have historically aimed their arguments against any number of monetary institutions and practices.  In the last hundred years, the US Federal Reserve System has been the subject of many wild stories about its origins and ongoing operation.  The Fed is believed by some to be part of the supposed international Jewish banking cartel of long-standing legend.  For others it is part of the supposed empire of the Rothschilds, and for yet others it is part of a plot by private bankers to control the US government.  Even among those who don’t subscribe to the more outrageous of these views, there are many who refer to the Fed as a “private bank” that has inappropriate influence over the US economy.

It is not possible to address every one of these stories about the Fed in detail, but what can be done is to offer a history of the Fed and a brief description of its structure that provides an alternative narrative about its origins and operations. That narrative relies on standard histories of both the US monetary system and the Progressive Era of US history.  The result is a story that situates the Fed as just another example of Progressive Era zeal for a larger role for the administrative state, which would remedy the supposed failures of capitalism by relying on well-meaning experts to execute its policies.

Like other legislation of that era, the Fed was a government intervention supported both by ideologically-motivated and well-meaning reformers and by the industry being regulated.  Rather than being this as some sort of unique conspiracy to take control of the US monetary system, it was a story very similar to those found in the history of everything from railroad regulation, to meatpacking regulation, to the regulation of monopolies and trusts as historians from Gabriel Kolko onward have documented.  Unique historical factors in the monetary system affected the particular form the Fed took, but its broad history places it squarely in the tradition of the Progressive Era.  If the Fed is the product of some nefarious conspiracy, so is a whole bunch of other legislation passed around that time.

The Fed emerged not as a response to failures of a free market in banking, nor as the result of shadowy banking conspiracies, but instead as a response to the failures of the National Banking System (1863-1913) that preceded it.  The US banking system has never been a free market, as the National Banking System (NBS) was itself a response to pre-existing state-level regulations on banking.  Under the NBS, and many of the state systems that came before it, banks were subject to three major regulations:  1) limits on the ability of banks to operate branches;  2) minimum reserve requirements; and 3) requirements that banks that produced currency buy up certain bonds or other financial assets as collateral.

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Some people may have missed it on their calendar, but May 5th was Karl Marx’s birthday. It is worth recalling, also, that there was a time when Marx was an anti-communist.

Karl Marx was born on May 5, 1818 in the German Rhineland town of Trier, and died on March 14, 1883 in London.

It is said that by its fruit you will know the tree. The last one hundred years is a clear testament to the consequences of Marx’s influence on modern history.

Accepting the “classical” labor theory of value, he concluded the workers were “exploited” by the “capitalists.” Marx claimed that “profit” was a portion of the workers’ output extracted by the property owners as the “price” the workers had to pay to have access to the privately owned physical means of production, without which they could not produce and survive.

The Austrian economist, Eugen von Boehm-Bawerk, demonstrated that Marx had confused “”profit” with “interest.” In a competitive market, profit is a temporary discrepancy between selling price and costs-prices, eventually competed away by businesses bidding up wages for workers (and other resource prices) to work for them, and those same businesses then competing for consumers to buy their output by offering their wares at better selling prices than their rivals.

What Marx had failed to fully understand was that production takes time, and that if workers would not or could not wait until the product was finished and sold to consumers to receive their wages, then someone had to “advance” those wages to them over the production period.

That, Boehm-Bawerk showed, is what the employers did, so that what workers received while working was the discounted value of their marginal product. The “gain” received by employers over their costs of production, even in long-run equilibrium, was the implicit interest for having ‘waited” for the product to be finished and sold, when they might have done other things with the “savings” they had advanced to those workers during the period of production.

If it is recognized that “time” has value, and, therefore, an intertemporal price, the notion that workers were or could be “exploited” in open, competitive markets for resources and finished goods was fundamentally wrong.

On this foundation of sand, Marx constructed his theory of the “injustice” of capitalism that has, in various forms, continued to plague the ideas and policies of countries around the world.

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It’s Official Barack Obama is now the 2nd Worst President in American History

Obama’s economic record is by design. Destroy the economy, while the media provides cover. The globalist best friend.
SIMPLY THE WORST=> Obama is First President Ever to Not See Single Year of 3% GDP Growth

Jim Hoft Apr 28th, 2016 11:12 am 869 Comments

Obama’s just like Reagan… Except when he isn’t.

obama reagan
The rate of real economic growth is the single greatest determinate of both America’s strength as a nation and the well-being of the American people.

On Thursday the Commerce Department announced that the US economy expanded at the slowest pace in two years. GDP growth rose at an anemic 0.5% rate after a paltry 1.4% fourth quarter advance.

Ronald Reagan brought forth an annual real GDP growth of 3.5%.
Barack Obama will be lucky to average a 1.55% GDP growth rate.

This ranks Obama as the fourth worst presidency on record.

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UC Berkeley Touts $15 Minimum Wage Law, Then Fires Hundreds Of Workers After It Passes

UC Berkeley announced that it was laying off 500 employees just a week after California Gov. Jerry Brown approved a $15 minimum wage. (AP)

UC Berkeley announced that it was laying off 500 employees just a week after California Gov. Jerry Brown approved a $15 minimum wage. (AP) 

Labor Markets: Hundreds of employees at the University of California at Berkeley are getting schooled in basic economics, as the $15 minimum wage just cost them their jobs. Too bad liberal elites “fighting for $15” don’t get it.

A week after California Gov. Jerry Brown signed the state’s $15 minimum wage boost into law, UC Berkeley Chancellor Nicholas Dirks sent a memo to employees announcing that 500 jobs were getting cut.

Coincidence? Not really.

Last year, University of California President Janet Napolitano announced plans to boost its minimum wage to $15 at the start of next school year, independent of the state law.Since UC Berkeley was already in financial trouble — it ran a $109 million deficit last year and is projecting a deficit of $150 million this year — number crunchers there had to have factored in the higher mandated wage when making their layoff decisions.

Those workers might want to have a chat with the folks at UC Berkeley’s Center for Labor Research, who just days before Brown signed the wage-hike bill released a study touting the minimum wage as a boon to low-income household breadwinners.

After that report came out, Ken Jacobs, chairman of the UC Berkeley center, told the Los Angeles Times, “This is a very big deal for low-wage workers in California, for their families and for their children.”

It is a big deal, as well, to those soon to be out of work UC Berkeley workers.

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19 Signs That American Families Are Being Economically Destroyed

 By Michael Snyder, on April 8th, 2015

19 - Public DomainThe systematic destruction of the American way of life is happening all around us, and yet most people have no idea what is happening.  Once upon a time in America, if you were responsible and hard working you could get a good paying job that could support a middle class lifestyle for an entire family even if you only had a high school education.  Things weren’t perfect, but generally almost everyone in the entire country was able to take care of themselves without government assistance.  We worked hard, we played hard, and our seemingly boundless prosperity was the envy of the entire planet.  But over the past several decades things have completely changed.  We consumed far more wealth than we produced, we shipped millions of good paying jobs overseas, we piled up the biggest mountain of debt in the history of the world, and we kept electing politicians that had absolutely no concern for the long-term future of this nation whatsoever.  So now good jobs are in very short supply, we are drowning in an ocean of red ink, the middle class is rapidly shrinking and dependence on the government is at an all-time high.  Even as we stand at the precipice of the next great economic crisis, we continue to make the same mistakes.  In the end, all of us are going to pay a very great price for decades of incredibly foolish decisions.  Of course a tremendous amount of damage has already been done.  The numbers that I am about to share with you are staggering.  The following are 19 signs that American families are being economically destroyed…

#1 The poorest 40 percent of all Americans now spend more than 50 percent of their incomes just on food and housing.

#2 For those Americans that don’t own a home, 50 percent of them spend more than a third of their incomes just on rent.

#3 The price of school lunches has risen to the 3 dollar mark at many public schools across the nation.

#4 McDonald’s “Dollar Menu & More” now includes items that cost as much as 5 dollars.

#5 The price of ground beef has doubled since 2009.

#6 In 1986, child care expenses for families with employed mothers used up 6.3 percent of all income.  Today, that figure is up to 7.2 percent.

#7 Incomes fell for the bottom 80 percent of all income earners in the United States during the 12 months leading up to June 2014.

#8 At this point, more than 50 percent of all American workers bring home less than $30,000 a year in wages.

#9 After adjusting for inflation, median household income has fallen by nearly $5,000 since 2007.

#10 According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.

#11 47 percent of all Americans do not put a single penny out of their paychecks into savings.

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from a decidedly male perspective