Author: Joseph T. Salerno

This interview was originally published in the March 2018 issue of the Lara-Murphy Report. Lara-Murphy Report: We ultimately want to ask you about the latest readings on the “true money supply” calculation, but before we do that, can you first explain to our readers why there are different concepts about “the money supply” in the first place? We don’t even mean what the Austrians say. Right now, can you just explain why there are different measures, such as M1, M2, etc., and why there is even a debate as to what counts as “money”? Joseph Salerno: The Fed calculates several monetary aggregates. M1 … Continue reading →

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JEFF DEIST: How does a kid from New Jersey get interested in economics, much less decide to get a PhD? JOE SALERNO: Well, I didn’t really plan it. I think it all began back in fifth grade when my mother’s cousin visited from Italy, and during the course of conversation, he revealed that he was a member of the Italian Communist Party. My father, a New Deal Democrat who had voted for JFK, was also an ardent anti-communist. He got into a big argument with the cousin and then threatened to throw him out. This made me wonder what made my … Continue reading →

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Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year. What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008. The Fed recently reaffirmed its commitment … Continue reading →

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Earlier this week I returned a pair of indoor/outdoor heated slippers that I purchased online from a niche retailer as a Christmas present for my wife. The problem was that they resembled outdoor boots more than they did indoor slippers. As I started to search for the retailer’s policy on returns, I steeled myself for a time-consuming and costly process of perusing ambiguous and closely packed text and then undertaking the arduous and messy task of repackaging the item and engaging a shipper to return it. As it turned out, the return process was a breeze. I began by viewing … Continue reading →

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Recently a young Austrian scholar made a very interesting observation in an informal discussion on Facebook: I have experienced that when you quote Mises instead of Rothbard (and they say basically the same in most circumstances) other Austrians are usually more receptive and willing to engage you in a discussion. Have you guys experienced the same thing? Indeed we have and the reason has become increasingly obvious. In the past ten years or so, there has been a concerted effort in some quarters of the Austrian economics movement to deny Rothbard his just due as a prodigiously productive scholar and … Continue reading →

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The title of this post—minus the reference to Finland—is shamelessly copped from a prescient essay that Ludwig von Mises wrote in 1953.  In his article Mises pointed out that in Great Britain and Europe, the system of progressive taxation was already confiscating nearly the entire  “surplus” incomes of the successful capitalists and entrepreneurs, meaning that higher tax rates would no longer produce additional funds to finance these countries’ ever-expanding welfare states.  “Henceforth,” Mises foretold, “the funds of the beneficiaries themselves have to be tapped if more handouts are to be made to them.” Today things have gotten far worse than even Mises foresaw.  … Continue reading →

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This is an excellent short video explaining the source and nature of Cultural Marxist movements like political correctness, modern feminism, pansexualism, multiculturalism, “whiteness studies,” etc.  For an in-depth critique of the thinkers whose writings shaped Cultural Marxism, see Fools, Frauds and Firebrands:  Thinkers of the New Left by the eminent British philosopher Roger Scruton.  Scruton brilliantly exposes the pretensions, obscurities, and inanities of Sartre, Foucault, Galbraith, Marcuse, Lukacs, Habermas, Adorno, Rawls, Dworkin and others of their ilk. The book is not just a philosophical tract but a work in critical political economy and contains one of the most penetrating discussions of the Marxist labor theory of value that I have ever read. Time to buy … Continue reading →

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Uh-oh. Chairman Yellen assured us today that she does not believe that there will be another financial crisis “in our lifetimes.” You may recall another perfectly timed assurance by a high-powered economist: The stability of the economy is greater than it has ever been in our history.  We really are in remarkable shape. . . .The United States is at the peak of its performance in its history.  There has never been a time in the United States when we have had the state of prosperity, its level and its spread, that we have had in the last ten or fifteen years. . . .  It’s … Continue reading →

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Austrians realize that empirical reality is unique, particularly raw statistical data.  Let that data be massaged, averaged, seasonals taken out, etc. and then the data necessarily falsify reality. — Murray Rothbard, Making Economic Sense, p. 246) For many years I—and other Austrians—have had to endure charges by monetarists that Murray Rothbard fudged the data to increase monetary growth rates during the 1920s in order to portray it as an inflationary decade.  As I argued (here and here) in an exchange with eminent monetary historian Richard Timberlake (here, here, and here) these allegations are baseless.   So, now it is with delicious irony … Continue reading →

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In the current discussion about immigration, Ludwig von Mises is often invoked by libertarians as a staunch proponent of free trade in the broad sense that pertains to the free movement of goods, capital, and labor. Mises has even been proclaimed by some libertarians as an advocate of open borders. However, Mises’s views on the free migration of labor across existing political borders were carefully nuanced and informed by political considerations based on his first-hand knowledge of the deep and abiding conflicts between nationalities in the polyglot states of Central and Eastern Europe leading up to World War One and … Continue reading →

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In the current discussion about immigration, Ludwig von Mises is often invoked by libertarians as a staunch proponent of free trade in the broad sense that pertains to the free movement of goods, capital, and labor. Mises has even been proclaimed by some libertarians as an advocate of open borders. However, Mises’s views on the free migration of labor across existing political borders were carefully nuanced and informed by political considerations based on his first-hand knowledge of the deep and abiding conflicts between nationalities in the polyglot states of Central and Eastern Europe leading up to World War One and … Continue reading →

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[This review essay of Radicals for Capitalism: A Freewheeling History of the Modern  American Libertarian Movement by Brian Doherty will appear in an upcoming issue of The Quarterly Journal of Austrian Economics. Subscribe today.] The outstanding merit of Brian Doherty’s book is that it contains a treasure trove of valuable information regarding the events, personalities, periodicals and organizations whose complex interplay influenced the intellectual and institutional development of the modern American libertarian movement. But its merit also becomes its defect in the hands of the author, who appears at times to be completely overwhelmed by the wealth of information he … Continue reading →

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REUTERS: Is it reasonable to expect to see a return to a 3 to 4 percent pace of U.S. economic growth under Trump’s policies; if so, by when, and if not, why not? SALERNO: Trump’s economic policies are still a bit too vague, inconsistent, and incomplete to make a judgment about whether they will spur the economy to re-attain sustainable growth in the 3-4 percent range.  The Fed’s inflationary monetary policy over the past two decades has caused a tremendous amount of business malinvestment and overconsumption by households, which have suppressed saving and capital accumulation and caused economic growth, labor productivity … Continue reading →

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The global war on cash is remarkably well coordinated. Less than a week after the Indian government announced it was withdrawing its two highest denomination currency notes (equivalent to about $15.00 and $7.50, respectively) from circulation, the Anti-Cash Axis, which comprises a witch’s brew of national governments, establishment media outlets, international bureaucracies and, especially, gigantic multinational banks, has launched a concerted attack on Australia. Two days ago, Citibank announced that it was going cashless at some of its Australian bank branches. Yesterday, Swiss giant UBS called for the elimination of the Australian $100 and $50 bills because it would be … Continue reading →

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Last week, Austria issued a 70-year bond, the longest dated sovereign in the Eurozone. (Italy had issued a 50-year bond on October 4.) Austria’s bond issue was a “dual tranche transaction,” involving around 3 billion euros worth of 7-year debt and 2 billion of 70-year debt. The July 2023 bond yielded -0.191% while the yield on the November 2086 bond was 1.53%. And even at these piddling yields, order books exceeded $5.4 billion euros for the 7-year bond and 7.8 billion for the 70-year bond. In today’s environment, the eagerness to invest in long-term bonds is surprising, to say the … Continue reading →

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