Utopia, you are standing in it!

Typical electric car set-up
Welcome to the EU’s plan to strong-arm its way to victory in the electric car game, in the name of imaginary climate benefits. What happens if the manufacturers all start posting heavy losses due to poor EV sales, as a result of this coercion, is not yet clear. As the article says, tens of billions of euros are at stake.

Long-awaited light-duty vehicle emission rules will hit light-duty vehicle makers working in EU member countries on January 1, and automakers will soon have to deal with the consequences, says OilPrice.com.

Vehicle manufacturers will have to sell many more hybrid and electric vehicles or pay costly fines, a situation similar to China’s rules.

For automakers with product lineups with few EV offerings, they’ll need to sell lots of conventional cars and trucks, and use the profits to pay the fines.

Industry analysts expect plug-in hybrid, battery…

W.E.B. Du Bois

William Edward Burghardt Du Bois (1868-1963) was a sociologist and historian. He helped co-found the NAACP (National Association for the Advancement of Colored People) and was author of the seminal book, The Souls of Black Folk. He was one of the most important black activists and intellectuals of the 20th century.

The commission

His status was confirmed when, in 1900, Du Bois was invited to create an exhibition for the world fair in Paris – the Exposition Universelle – about the condition of black people in contemporary America.

Du Bois and his sociology students from the University of Alabama were well aware that black people were going to be overwhelmingly portrayed at the world fair as primitives and savages, living in mud huts in Africa and photographed wearing picturesque tribal costumes, with long descriptions of their customs and rites which were all written to underpin and justify…

During my little vacation recently from writing about monetary policy, it seems that there has been quite a dust-up about endogenous money in econo-blogosphere. It all started with a post by Steve Keen, an Australian economist of the post-Keynesian persuasion, in which he expounded at length the greatness of Hyman Minsky, the irrelevance of equilibrium to macroeconomic problems, the endogeneity of the money supply, and the critical importance of debt in explaining macroeconomic fluctuations. In making his argument, Keen used as a foil a paper by Krugman and Eggerston “Debt, Delevereging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach,” which he ridiculed for its excessive attachment to wrong-headed neoclassicism, as exemplified in the DSGE model in which Krugman and Eggerston conducted their analysis. I can’t help but note parenthetically that I was astounded by the following sentence in Keen’s post.

There are so many ways in which neoclassical economists misinterpret non-neoclassical…

by Arash Molavi Vasséi

In a previous post, Andreas refers to George Selgin’s recent discussion of the place of fractional reserve banking in the Austrian Business Cycle Theory (ABCT). There, Selgin takes a swipe at the monetary pillar of the ABCT. According to the Austrian model, fractional reserve banking is inclined to create money out of “thin air” and, therewith, admits investment spending in excess of “voluntary saving”. This imbalance, allegedly induced by a decline in reserve ratios, is reflected in a Wicksellian interest rate gap, which is supposed to impact prices and the allocation in a systematic way (the real pillar of the ABCT). Selgin argues that fractional reserve banking does not account for the Austrian business cycle, and Andreas expresses sympathy for this view.

(Update: Following Scott Fullwiler’s comment, I published an update here, in which I provide extra clarifications and introduce what I see as the fallacy of composition of the endogenous money theory (I moved this update to the top of my post following a few questions I received).)

Today will be a little long and technical… Many people have heard of the classic textbook story of the banking money multiplier, a characteristic of fractional reserve banking systems. Banks obtain reserves (i.e. central bank-issued high-powered money – HPM, which forms the monetary base) as customers deposit their money in, then lend out a fraction of those deposits that gets redeposited at another bank, effectively creating money in the process, and so on. In fine, reserve requirements at central banks prevent banks from expanding lending (and hence money supply) beyond a certain point. This led to the view that banks’ expansion…