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Economics is the discipline that studies how people respond to scarcity, i.e., the observed fact that individuals desire more than they already possess, whether the object of their desire is wealth, health, education, security, or some other intangible good or service. An economy can be viewed as a social mechanism that emerges when individuals cooperate with others in order to deal with the problem of scarcity. It is a vast network of individuals (and institutions guided by individuals) that make, barter, sell, and buy goods and services in order to achieve their desired ends.
Economic forces are at work virtually any time exchanges occur or resources are used. A knowledge of economic principles—fundamental truths identifying patterns or components of economic cause and effect—is essential for understanding phenomena such as prices, markets, commerce, employment, industrial output, economic growth and prosperity, and business fluctuations. The economic way of thinking (including the recognition of incentives, constraints, opportunity costs, transactions costs, and self-interested motives) is also useful for the study of non-market phenomena such as government regulations, elections, lobbying, and government decision making.
The Dilemma of Bailouts Ever because the bailout of Continental Illinois Financial institution in 1984, financial institution bailouts have been an unpopular system invoked to guard the monetary system from dangers posed by troubled banks deemed “too massive to fail.”…
They Stumble Who Run Fast Roubini and Mihm’s Crisis Economics Nouriel Roubini and Stephen Mihm rightly castigate the Federal Reserve and different central banks for insurance policies that contributed to the latest worldwide housing increase and bust, however they critically underestimate…
Ben Bernanke versus Milton Friedman The Federal Reserve’s Emergence because the U.S. Financial system’s Central Planner Chairman Bernanke agrees with Friedman that the Federal Reserve is basically responsible for the Nice Melancholy, however he attracts a unique lesson from the…
The Tragedy of the Euro Europe’s present sovereign-debt disaster was induced partially by a number of nations’ profiting from the common-property traits of the European Central Financial institution. As a result of the financial institution stood able to buy their…
Corporate Influence and Political Corruption Lessons from Stock Market Reactions to Political Events Movements in stock prices provide important clues for understanding the effect of campaign contributions on the decisions of elected officials. What they tell us challenges widespread beliefs…
The Icelandic and Irish Banking Crises Alternative Paths to a Credit-Induced Collapse Central banks set the stage for financial collapse through excessive credit expansion, but a lax monetary policy isn’t the only way that policymakers can foster a meltdown. As…
Fractional Reserves and Demand Deposits Historical Evidence from an Unregulated Banking System Would banks operating under laissez faire adopt a 100 percent reserve ratio or a fractional-reserve rule that would allow them to affect the money supply? The Chettiar banking…
We Are Not Macroprudentialists A Skeptical View of Prudential Regulation to Deal with Systemic Externalities The 2008 financial crisis is widely touted as supporting the case for more bank regulation and taxation to deal with “systemic” risk. This claim, however,…
The Legislation of Nationwide Assured Banks in Argentina, 1887–1890 Free-Banking Failure or Regulatory Failure? Many analysts have characterised Argentinas 4 years beneath the Legislation of Nationwide Assured Banks as a interval of free banking, which suggestsincorrectlythat the monetary disaster of…
Alternatives to the Federal Deposit Insurance Corporation Federal deposit insurance creates moral hazard that encourages risky banking practices and sets the stage for bank failures and financial crises. Alternatives to our current scheme include the creation of a more stable,…
