Economics
The Economics of the Just Price
By Dr. Hassan Shirvani — The concept of the “just” or “fair” price is as old as History. To combat predatory lending practices, price gouging, profiteering, and price discrimination, many governments throughout history have passed laws to protect their citizens against dishonest and unethical lenders and sellers. Thus, the Babylonian king Hammurabi (1792-1750 B.C.) had…
Read MoreLower the Minimum Wage
Despite the struggling economy, documented by a workforce participation rate of less than 63%, proponents have urged an increase in the Federal minimum wage. This is a bad move at the worst possible time. Even Janet Yellen, Chair of the Federal Reserve, indicated that loose monetary policies will continue due to the poor job market.…
Read MoreCatholic Economic Teaching
The recent controversy over Pope Francis’s economic views has raised the related issue of whether these views are consistent with the traditional Catholic economic teaching. While the answer is in the affirmative, the pope has decidedly added a new emphasis and a more urgent tone to this teaching. Catholicism is, of course, primarily a…
Read MoreIs the Stock Market a Casino?
Detractors of the stock market often liken it to a casino. There are certainly some similarities. Many stock traders, not unlike gamblers, develop addictive personalities, are filled with greed for easy and quick riches, and often overestimate their chances of success. In addition, just like casinos, most stock markets seem to be skewed in favor…
Read MoreWhere is the Inflation Monster Hiding?
For the past several years, there has been concern that higher inflation is just around the corner. It is a valid concern, given the damage that high inflation can wreak on an economy and the Fed’s expansion of the money supply. But caution should be exercised in attempting to preempt rising inflation since the facts…
Read MoreEmpiricism and Rationalism in Economics
Empiricism and Rationalism are two schools of philosophy, dating back to the ancient Greeks, dealing with how we obtain our knowledge of the external world. For Empiricists, such as Aristotle, this is best done through the evidence of our senses, that is, through empirical observations and experiments. For Rationalists, such as Plato, however, our senses…
Read MoreEconomic Outlook: Cyclical Recovery, Structural Challenges
The following are my reflections on the economy after attending the Cameron School of Business Advisory Board Lecture Series featuring John Silvia, Chief Economist, Wells Fargo: Recently, there has been talk about the recent recovery of the economy. Everyone is guessing: are we really out of the trough? Is it a steady growth? How does…
Read MoreIs the U.S. National Debt Excessive?
As the recent tapering of the Fed purchases of government and mortgage-backed securities indicates, the efficacy of monetary policy in stimulating the US economy has started to face diminishing returns. Indeed, much of the 3.4 trillion dollars of new money pumped into the economy by the Fed over the past six years in response to…
Read MoreA Meeting of the Minds: Alexis de Tocqueville and Thomas Piketty
Alexis de Tocqueville (1805-1859) is a French historian and political thinker who is best known in the United States for his book Democracy in America, which was published in 1835 following a trip to study the U.S prison system. Coming from Old Europe where wealth inequality was extremely large, he was impressed by the more…
Read MoreAre Financial Markets Efficient?
The efficient markets hypothesis (EMH) was developed in the 1960s to rationalize the empirical observation that security prices fluctuate randomly. According to EMH, the random character of security prices is simply a reflection of the fact that security markets are efficient. In efficient markets, new information comes to the market erratically and gets quickly reflected…
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