Fed Chairman Ben Bernanke loses sleep over the possibility that the United States may suffer a repeat of the 1930s Great Depression. Inflation hawks and opponents of President Obama’s Keynesian “stimulus” warn continually of a possible repeat of the 1970s stagflation. Yet recent data is beginning to suggest a more unpleasant possibility still: that the […]

The United States is often held out as the world’s principal beacon of free-market principle. To the extent that it backslides, there is thought to be little hope for such principles in other countries. Yet as last week’s housing finance debate demonstrated again, the United States was populist before it was capitalist, and free-market principles […]

July’s Scientific American carried a fascinating article “The science of economic bubbles and busts” that summarized current biological research into the economic irrationality of human behavior. At the risk of boring readers whose coverage extends to biological research literature as well as the Wall Street Journal, I thought it worth exploring its implications for how […]

Last Wednesday’s British budget did very little to rectify that country’s yawning fiscal deficit, but what little it did was almost entirely at the expense of the country’s high income earners, those making over 150,000 pounds ($210,000). The fascinating question is: if British governments return to their pre-1979 high-tax ways, as seems likely, what will […]

The credit crisis took an ugly turn this week, when a number of countries banned rice exports, causing the price of the staple to soar above $1,000 per tonne, treble its level a year ago. Politically and economically, the world has moved decisively in the direction of protectionism and seems likely to continue further along […]

It is a well known mathematical axiom that stock markets and other markets are “persistent” – in other words, trends in those markets continue for longer than they would if price movements were truly random. However it has become clear in recent months that trader psychology is even more “persistent” than the markets themselves. Thus […]

Federal Reserve Chairman Ben Bernanke first achieved fame with a November 2002 speech in which he repeated Milton Friedman’s assertion that the Fed could “drop money out of helicopters” if deflation or a credit crunch occurred. The Fed and the European Central Bank now appear to be doing this, having injected $300 billion into the […]

“We’re going to become the first African tiger” said Ghana’s President John Kufuor when hearing that a British –U.S. consortium had struck oil. Is that realistic, or is Africa a permanent basket case? And if it is realistic, what would such a development mean for the rest of us?

In a week when US Gross Domestic Product was revised disown to a level slower than the growth in population while inflation continued strong, it must surely be clear that the collection of economic policies followed since 1995 by both parties and the Federal Reserve Board has failed. The Fed can neither cut rates nor […]

China’s first quarter growth report of 11.5% and the market reaction thereto illustrated one market-forced dilemma faced by the world’s policymakers: in the long run, they can have cheap money or cheap commodities, but not both.