Hayek's Revenge

by Don Boudreaux on October 16, 2008

in Complexity & Emergence, Current Affairs, Financial Markets, Government Intervention

University of Illinois law professor — and Ideoblog’s — Larry Ribstein calls it "Hayek’s Revenge."

Be Sociable, Share!

Comments

Add a Comment    Share Share    Print    Email

{ 6 comments }

Marcus October 16, 2008 at 9:04 am

I commented on the Ideoblog thinking I was posting a comment here. So I'll reiterate what I wrote there.

Concerning the 2nd item: increased government debt, increased interest rates. Can you explain this one to me? I understand the relationship, I get that. But I'm looking at Treasury yields and I'm not seeing it. Not in short term rates anyway.

Short term Treasury yields are so low people are practically paying Uncle Sam to hold their money (and they ARE if you consider inflation).

Perhaps the effect is seen in long term Treasuries? But in the latest leg of this crisis they have all gone down too.

Mortgages have gone up a bit in the last month but not alarmingly so. My explanation to that though would be that everybody has their money in Treasuries making less money available for mortgages.

So, I'm making the connection here with the 2nd point.

Marcus October 16, 2008 at 9:07 am

So, I'm making the connection here with the 2nd point.

I meant to say, "So, I'm NOT making the connection here with the 2nd point."

It occurs to me that perhaps the 2nd point is an effect we should expect to see in the future?

Marcus October 16, 2008 at 9:27 am

A person in the other blog pointed out that the 10-year treasury is up 60 basis points in the last week. He's correct. I was looking at the wrong chart.

Marcus October 16, 2008 at 9:36 am

I had another comment on the other blog which apparently didn't make it through moderation. It was concerning the last point: increased FDIC protection of bank deposits may pull money away from money markets.

It is my understanding the government had already provided guarantees on money markets. They did that when there was a run on money markets.

I wondered if that guarantee had perhaps pulled money away from bank deposits. Hence, the increased FDIC protection.

I don't know, so I was asking.

John Smith October 17, 2008 at 11:25 am

With all the hoopla about Bill Ayers, I became curious and checked out his Blog.

At the time his latest blog post was a list of books he has written and he was asking those who were attacking him to read one of them and see if that didn’t answers there questions.

I posted a short:

Bill Ayers have you read?

Road to Serfdom
by F.A. Hayek

Apparently he didn’t like my question because shortly thereafter he deleted my post.

Can’t win them all. lol

Anne_NC October 19, 2008 at 8:01 pm

Marcus, I had a large sum of working "cash" frozen. The "cash" earned a whopping 1.6x% in a MM, backed by US Government securities. Couldn't be more conservative or safe, right? The US Government securities turned out to be Fannie Mae, etc. As of today, the cash is still frozen and there's no date for availability. So, I am not sure about the government guarantee of MMs.

Previous post:

Next post: