ALL BLOG POSTS
Numerous studies have shown that prediction markets performs remarkably well. For example prediction markets consistently beats opinion polls in predicting the outcome of elections. In general the wisdom of crowds is an extremely powerful tool for forecasting and there no doubt the markets are the best aggregators of information known to man.
Every other month or so Scott Sumner writes a defence of the so-called Efficient Market Hypothesis. I have noticed that the commentators already react quite aggressively to Scott’s unwavering support of EMH and my own personal experience is that people – especially people who themselves are active in the financial markets – will strongly oppose the idea of efficient markets.
My outburst over the weekend against the Rothbardian version of Austrian business cycle theory was not my normal style of blogging. I normally try to be non-confrontational in my blogging style. Krugman-style blogging is not really for me, but I must admit my outburst had some positive consequences. Most important it generated some good – friendly - exchanges with Steve Horwitz and other Austrians.
Peter Boettke over at Coordination Problem a post in which he challenge Market Monetarists to think about some political economy questions.
I have previously quoted Alan Greenspan for saying the following at a FOMC meeting in 1992:
I have promised to write an article about monetary explanations for the Great Depression for the Danish libertarian magazine Libertas (in Danish). The deadline was yesterday. It should be easy to write it because it is about stuff that I am very familiar with. Friedman's and Schwartz's "Monetary History", Clark Warburton's early monetarist writings on the Great Depression. Cassel's and Hawtrey's account of the (insane) French central bank's excessive gold demand and how that caused gold prices to spike and effective lead to an tigthening of global monetary conditions. This explanation has of course been picked up by my Market Monetarists friends - Scott Sumner (in his excellent, but unpublished book on the Great Depression), Clark Johnson's fantastic account of French monetary history in his book "Gold, France and the Great Depression, 1919-1932" and super star economic historian Douglas Irwin.
Recently I have become more positive on the outlook for the European and US economies. It seems like the ECB has finally recognised that it need to ease monetary policy to avoid a deflationary disaster and judging from the development in broad monetary aggregates in the US there are signs that things are also moving in the right direction in the US economy.
George Selgin just send me his new paper on what he has termed Quasi-Commodity Money. George spoke briefly on this topic in his recent presentation at the Italian Free Market think tank the Bruno Leoni Institute. See my comment here on the presentation and my review on a related paper - "L Street – Selgin’s prescription for Money Market reform"