Posts Tagged ‘Economics’
Empiricism 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 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 MoreA European Perspective on the Future of the Euro Area
A few weeks ago I wrote on this same blog that the main economic problem facing Europe was Immigration. However, I do not want to leave the readers with the impression that the current financial crisis is any less important and critical. Thus, I will now focus on that other problem, as if the first…
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…
Read More3D Printing: Localized Production in a Globalized World
3D printing is the way goods will be produced in the world of information technology. The goods would be produced in great quantities, yet they need not be mass produced; each item produced could be customized by simply tweaking software to suit the needs and specifications of a specific customer. And the goods could be…
Read MoreEurope’s Main Economic Problem May Surprise You
On February 9, 2014, just over 50 percent of Swiss citizens voted in favor of a referendum restoring quotas for immigrants coming from other EU countries. Switzerland, a country of eight million, is not an EU member but has negotiated several agreements with the EU guaranteeing the free movement of goods, services, people and capital…
Read MoreThe Broken Window Fallacy and Keynesian Economics
Critics of Keynesian economics often use the so-called broken window fallacy, advanced in the 19th century by the French economist Frederick Bastiat, to reject the role of government spending in stabilizing the economy. According to this fallacy, if a hooligan breaks the window of a bakery, the subsequent repair expenditures by the baker will have…
Read MoreEmerging Markets: Recipe for a Sustainable Growth
After a bullish performance for more than the last decade, the emerging markets are again slowing down due to external pressures exerted by the global markets. Their aggressive growth was fueled by strong commodity prices, thanks to double digit growth of China compounded by easy and cheap capital partly due to low interest rates in…
Read MoreBitcoin as Electronic Currency
Exit the dollar, the euro, etc. Not so fast! Non-governmental currencies have existed before; however, an unregulated virtual currency is something new and different. Bitcoin is a cryptocurrency that was created in 2009 by a computer scientist known only under the pseudonym Sutoshi Nakamoto. Bitcoins are not held in bank accounts but in digital wallets…
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