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"why would it be that the epistemic community of economic public policy would produce an endless intellectual cycle rather than a dovetailing toward a consensus?" I think Hayek was trying to address this question in his "Fatal Conceit." He argued for submission to traditional Western morality because of its respect for property and the bourgeois values that had appeared in the West. That morality provided the institutional setting and assumptions on which solid economic investigation could be done. In fact, it was the institutional setting in which modern economics developed. It probably could not have developed in another. The current mess in economics comes from the changing of the institutional setting in the Enlightenment. As Hayek wrote, the pseudo-rationalism of the enlightenment insisted that man could invent new morals from scratch and new institutions. It resulted in the triumph of socialism. Agreement in economics will require agreement on the morality of property, the limits of reason and intelligence, and especially the limits of mankind's ability to change human nature.
I think many of us failed to heed Mises' warning about taking the quantity theory too literally. Of course, the money supply did not expand with the Fed's balance sheet as it had in the past because the Fed paid interest on reserves. However, inflation failed to appear for similar reasons that caused the Bank of Japan to fail to create inflation for over 20 years. Low interest rates and QE infinity don't work mechanically. For low interest rates to work, someone has to borrow. Consumers are borrowing a little to buy cars and houses, but not enough to ignite price inflation. To grow the money supply fast enough to ignite inflation, businesses or the state must increase borrowing. Businesses aren't because taxes and regulations make the US a poor place to invest. The state isn't because it had hit its credit limit. For QE to work, the seller of bonds to the Fed must spend his cash on consumer goods. If he just buys another asset, in the stock market or real estate, he won't cause price inflation. I don't expect to see price inflation for probably another 20 years unless the feds reduce corporate taxes and regulations dramatically.
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Nov 14, 2013