'Lead Essay' Category Archive

Dangerous Waffle about “the” Liquidity Trap

by Tim Congdon
Lead Essay
December 5th, 2011

Tim Congdon argues that John Maynard Keynes’s latter-day followers have badly misinterpreted the theorist they profess to follow. Led by Paul Krugman, Keynesians have claimed that a near-zero Federal Funds rate is indicative of a liquidity trap. This diagnosis has several problems. First, it is not what Keynes meant by the term; second, even a rate of zero percent does not exhaust monetary policy; and third, a genuine Keynesian liquidity trap has not happened and cannot plausibly happen, in part but not solely because Keynes assumed constant prices throughout the economy, a condition that is unlikely in the face of a rising money supply. Congdon commends to readers Milton Friedman’s monetary prescription: a gradually and predictably rising supply of money, not the wild swings we have seen in recent years.

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Public Opinion, Political Disconnect, and the Marijuana Market

by Morgan Fox
Lead Essay
November 14th, 2011

Morgan Fox argues that marijuana both can and should be integrated into the American economy and American civil society. He notes that while taxation and regulation of marijuana may be causes for concern among some growers and users, the “regulation” we have now is undoubtedly worse, because it means only criminals are allowed to grow the nation’s largest cash crop. With public support for legalization at 50%, he nonetheless acknowledges that politicians have been slow to adopt the issue, and federal Prohibition is still likely to last for quite some time.

Read: Public Opinion, Political Disconnect, and the Marijuana Market