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Krugman’s Liquidity Trap Claptrap

Free market capitalism is the best system of economic organisation ever devised. The 20th century demonstrated that it is consistent with both material prosperity and personal freedom. However, the Great Depression and the more recent Great Recession were major setbacks, which suggested that contemporary capitalism might be vulnerable to macro-economic instability. Critics of the free…

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Bank-bashing with a vengeance

Anunderstanding grew that profitable andwell-capitalised commercial banks shouldbe able to borrow cash from the centralbank if they had trouble maintaininga positive cash reserve balance.  ukassociated arrangements were technical andcomplex, and were of no interest whateverto politicians and journalists. Fashionableeconomic commentators regarded them,or rather ignored them, as the municipaldrainage of the financial system.Meanwhile the long period…

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What Mortgage Credit Boom?

Does inflation always rise when the American economy recovers? In an article in the Financial Times of 26th June Mr. Alan Greenspan, former chairman of the US Federal Reserve, wrote an article under the title ‘Inflation is the big threat to sustained recovery’. But – as a survey of the historical evidence shows, press here…

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