As the new Russian state struggles with the transition to a market economy, the need for radical monetary reform becomes increasingly urgent. The choice of reform is crucial, for it will largely determine Russia's future economic performance.
Indian Prime Minister Narendra Modi addresses business leaders as he launches his "Make in India" initiative. President Trump has taken the Fed to the woodshed, working it over with tweets. President Erdogan has morphed into Turkey’s most noteworthy monetary crank. Most recently, Prime Minister Modi and his henchmen have gone toe-to-toe with the Reserve Bank of India (RBI). Modi, backed by the Confederation of Industry and the Federation of Chambers of Commerce and Industry, has threatened to invoke Article Seven of the Reserve Bank of India Act.
In 1944, my good friend, the late Nobelist Friedrich Hayek (1899-1992), published the Road to Serfdom. It immediately became an international sensation. In it, Hayek argued that government interventions into markets, whether they be via regulatory mandates or the outright taking of private property, will lead to an initial failure.
In short, they will be counterproductive. In an attempt to correct its initial errors, the government then does more of the same, only in greater detail. Further disappointments will lead to still more far-reaching and detailed interventionist measures, until socialism and a state of total tyranny are reached.
Such is Hayek’s Road to Serfdom, a road that Zimbabwe has taken. The pilot who took this road was Robert Mugabe. He was aided by the political party he controlled, the Zimbabwe African National Union – Patriotic Front (ZANU-PF), and henchmen, like Zimbabwe’s current President Emmerson Mnangagwa and current First Vice President Constantino Chiwenga.
Mary Kissel and Steve Hanke on Venezuela's devaluation and how money dies.
Mary Kissel Venezuela devalues its currency Turkey's Lira continues to have problems. What sparks these currency crises what happens when money dies and what does it mean for U.S. foreign policy. Welcome to Foreign edition. I'm Mary Kissel with The Wall Street Journal editorial board here in New York City and I am very pleased to welcome a special guest today Steve hankie professor of applied economics at the Johns Hopkins University and director of the troubled currency project at the Cato Institute.
Let's start just by talking about Venezuela where dictator Nicolas Maduro rolled out his latest economic reform plan and I'll put that in quotes earlier this week the Senate price of which was a giant devaluation of the local currency called the bolívar in the launch of a new currency called the quote sovereign Bolívar. Steve what is the thinking if there is thinking behind this devaluation and how is it supposed to work.
Steve Hanke Lecture on Money, Banking and Markets | Almost exactly 10 years ago, amid the rapidly worsening ‘subprime mortgage crisis’, Lehman Brothers Holdings Inc., was forced to file for bankruptcy. Shortly thereafter, actually within hours AIG collapsed, triggered a run on most money-market funds, which accelerated a cash crunch and ultimately not only wrecked the economy by abolishing millions of jobs. It also caused catastrophic material, social and moral damage. Ever since, countless biased statements and false explanations dominate the political debates.
The International Monetary Fund’s $50 billion agreement with Argentina is failing. Earlier this month a scheduled $3 billion payment was postponed while the IMF and the country’s government continued to haggle in Buenos Aires. The peso extended its precipitous fall against the greenback.The International Monetary Fund’s $50 billion agreement with Argentina is failing. Earlier this month a scheduled $3 billion payment was postponed while the IMF and the country’s government continued to haggle in Buenos Aires. The peso extended its precipitous fall against the greenback.
The backdrop to this misery is President Mauricio Macri’s weak reform program combined with the IMF’s misdiagnosis of Argentina’s problems. Mr. Macri replaced the left-wing populist Cristina Fernández de Kirchner in December 2015. He inherited a rapidly growing public sector, huge fiscal deficits due to massive subsidies for key products, annual inflation of more than 30%, capital controls, and a dual exchange-rate system. With a slim majority in the National Congress, and facing midterm elections in October 2017, Mr. Macri adopted a gradualist approach to reform.