Since President Trump tapped Stephen Moore as his pick to serve on the Federal Reserve’s Board of Governors, the pundits have gone into overdrive. Most have taken liberties with ad hominem, thrashing and trashing Moore. Few have bothered to explore Moore’s ideas on monetary policy. And, those that have have given them a superficial treatment.


as a supply-sider, Moore might add a new perspective to the Fed’s deliberations—a perspective not seen since Manley Johnson and Wayne Angell left their positions.

The human condition inhabits a vast continuum between "miserable" and "happy." In the sphere of economics, misery tends to flow from high inflation, steep borrowing costs and unemployment. The most surefire way to mitigate that misery is economic growth. All else equal, happiness tends to blossom when growth is strong, inflation and interest rates are low, and jobs are plentiful.

My modified Misery Index is the sum of the unemployment, inflation and bank lending rates, minus the percentage change in real GDP per capita.

Earlier this week, the Fed left its target Fed funds rate unchanged at 2.25-2.50%. In addition, the Fed indicated that it had turned dovish. Rather than two Fed funds rate hikes in 2019, the Fed has now signaled that there will be none. And that’s not all. Starting in May, the Fed will reduce its balance sheet unwind of its Treasury holdings to $15 billion per month from $30 billion, and that it will end the unwind in September.

This week, Argentina released its February inflation statistics. Inflation spiked, again. Indeed, the official annual inflation rate jumped to 51.3%/yr.

While this spike caught most observers off balance, it didn’t surprise me. Each day, I accurately measure Argentina’s inflation using high-frequency data and Purchasing Power Parity theory. By my measure, Argentina’s annual inflation rate is 100%/yr (see the accompanying chart). That’s nearly double the official rate reported for the end of February.

Two back-to-back, stunning economic headlines arrived in less than twenty-four hours. The first appeared in the Wall Street Journal yesterday afternoon: “U.S. Budget Gap Widened 77% in First Four Months of Fiscal Year.” Following on the heels of that shocker, Bloomberg this morning ran this headline: “U.S. Trade Gap Surged to $621 Billion in 2018, 10-year High.”

What President Trump and his team of protectionists must learn is that these two headlines are interconnected—joined at the hip. If the government runs a big fiscal deficit, the U.S. will run a big trade deficit. Alas, this fact has never crossed President Trump’s mind.

In The Fatal Conceit: The Errors of Socialism, Hayek argued that man’s “fatal conceit” is the presumption that he “is able to shape the world around him according to his wishes.” Indeed, the fatal conceit haunts the halls of foreign policy, too. That is why the U.S. has engaged in so many foreign policy interventions and why the world is strewn with the wreckage.

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.


It was just a little more than a decade ago when “Satoshi Nakamoto” ushered in what has become the era of private cryptocurrencies. Nakamoto’s vision was clearly laid out in a whitepaper: “Bitcoin: A Peer-to-Peer Cash System.”

On February 2nd, The Economist reported in a “Briefing” on Venezuela that the opposition was cozying up to Ricardo Hausmann and his “National Plan: the Day After.” ... All he told The Economist is that he favored a pegged exchange rate system, as opposed to a currency board. ... we know enough to conclude that if the opposition embraces any one of the many variants of a pegged exchange-rate regime, it will be playing with fire, and it will fail.