I started writing a piece explaining why the "Founding Fathers" did not want a Democracy. Then I remembered a YouTube video featuring the late Walter Williams. I cannot do better than this: https://youtu.be/6tq_VDp2CKo
Month: June 2023
Fed Funds Explained No. 2
Fed Funds Market Explained In my previous post, I explained the difference between dollars created by The Fed and dollars created by banks. Dollars created by The Fed do not act as money. In this post, I will briefly describe the Funds Market. I realize this is pretty boring stuff, but you need to understand … Continue reading Fed Funds Explained No. 2
Fed Funds Explained No. 1
Money Creation-Popular vs. Actual Models Introduction A lot of confusion exists around the Fed funds market in the Fed funds interest rate. Some of this confusion comes from misunderstanding the money creation and distribution processes. In this blog post, I will contrast the popular model of money creation with the actual money creation process. Popular … Continue reading Fed Funds Explained No. 1
Introduction to Fed Funds Explanation
I planned to write an explanation of Fed Funds for today's post. I intended to address some of the misstatements and errors that I hear and read about Fed Funds and the Fed Funds Rate. While researching, I discovered that the erroneous and confusing statements about Fed Funds are so numerous that I could not … Continue reading Introduction to Fed Funds Explanation
Importance of the Individual
The discrete nature of humans makes the individual the center of all market activity. They decide what has value and how much. Their actions based on those evaluations make free markets operate effectively and efficiently. The subjective theory of value reveals that the individual plays the most critical role in developing all economic theory. The … Continue reading Importance of the Individual
Deficits and Debt Confusion
My comments may prove elementary for many readers, but for others (and most politicians), they should prove highly informative. I frequently hear people refer to "debt and deficit" as if they were one thing. I don't know if they know the difference, but if they do, using them together may confuse others. The Distinction To … Continue reading Deficits and Debt Confusion
Market Intervention
Intervention in Free Markets Market Intervention disrupts three main factors and, therefore, the balance of the market: Government Spending (a.k.a. redistribution) amounts to involuntary consumption. You pay for the road, bridge, or government building whether you need it or not. Government Regulation consists of dictating individual preferences. The state mandates that you wear a mask … Continue reading Market Intervention
Dangers of Modern Monetary Theory
At the core of Modern Monetary Theory (MMT) lies the implicit premise that the acquisition of money represents an end in itself. MMT bases its argument on what some people refer to as a “missing premise.” They present a proposition that contains an unstated premise that they assume everyone accepts. Give people more money, created out … Continue reading Dangers of Modern Monetary Theory
Who Actually Makes Money
Popular Assumptions Reserves held at the Federal Reserve somehow act as money — so goes popular assumption. When the Fed adds dollars to bank reserves, it simultaneously adds an equal number of dollars to the quantity of money. For a long time, empirical evidence seemed to confirm that theory. Around 1973 evidence began to appear … Continue reading Who Actually Makes Money
Who Changes Interest Rates?
Over and over, I hear that the Fed will "raise rates" to dampen inflation. Many reasons exist why rising rates would not, by necessity, affect inflation. In this post, however, I wish to explain why The Fed cannot unilaterally change interest rates. Diagram of Interest I will refer to the diagram below in the details … Continue reading Who Changes Interest Rates?