Financial Economics

Archive for Financial Economics

Can the Fed Drive Up Food Prices? Reply to Henderson

I have been putting off my reply to David R. Henderson for when I can “do it justice.” Well that’s not going to happen anytime soon, so let me fire off some quick thoughts… Let’s refresh our memories as to David’s objections: On Judge Napolitano’s “Freedom Watch” on March 25, Austrian economist Bob Murphy claimed […]

Murphy Fights Freedom Tonight on the Judge Napolitano Show

Tonight I will be one of the freedom fighters on Judge Napolitano’s show. We’re discussing the debt ceiling and a proposed “Robin Hood” tax on banks. Lots of Fed bashing for the whole family.

What Is So Hard About Fractional Reserve Banking for Economists?

I am being deliberately cheeky in my post title… But I think a quote on banking reserves from Alchian that David R. Henderson gives (without him necessarily endorsing it in the original context) is not the same as the other two things to which it is supposedly analogous. Let me just give David’s whole post: […]

The Scott Sumner Stock Sell Signal

Well Scott Sumner has hung up the keyboard. In his “I’m not really serious but actually I am” kind of way, he takes credit for quantitative easing and several trillion dollars in new wealth. It’s too long to reproduce the argument here, but he’s basically saying that bloggers forced Bernanke / gave him the support […]

Are You Ready for Bretton Woods II?

A lot of people think I’m nuts for claiming that the only sensible explanation for Bernanke’s policies, is that he’s setting up the dollar for a crash to be replaced by some other currency. Does it help my case that George Soros’ Bretton Woods II conference starts in two weeks? Here’s an excerpt from the […]

Paul Krugman Agrees With Bob Roddis For Once

Details here. Bye bye, Modern Monetary Theory.

Hidden Assumptions in Option Pricing

Here was my response yesterday to Landsburg’s discussion of option pricing. From the conclusion: Landsburg’s discussion of option pricing is fine, interpreted correctly. But whether he realizes it or not, his “lesson” is very misleading. All he has done is show that certain prices must bear a particular relationship to each other, lest arbitrageurs exploit […]

Weekend Reading Assignment on Option Pricing

Back in high school I was a Star Trek geek. I remember one episode where they capture one of the Borg and come up with a plan to feed him a brain teaser that’s so complex that it will cause the Borg collective mind to explode. (Picard eventually quashes the idea because he apparently believes […]