You are browsing the archive for 2013 April 21.

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Manna from Heaven, or a New Recession?

April 21, 2013 in Economics

By Swaminathan S. Anklesaria Aiyar

Swaminathan S. Anklesaria Aiyar

The price of gold, oil and many other commodities crashed last week. The stock markets zoomed and economists smiled, suddenly seeing positive consequences in three areas — inflation, the trade deficit and the fiscal deficit.

These three factors had earlier dragged down the economy to its lowest growth rate for a decade, just 4.7 per cent in the last quarter. But the global commodity crash should reduce inflation in India too, cheaper imports should shrink the trade deficit, and the fiscal deficit should shrink because oil and fertiliser subsidies will reduce. This is a triple helping of manna from above. Does it mean that the worst is over, and that the flagging Indian economy will now take off?

Not so fast. First, wait and see if the price crash last week was a blip that will soon be reversed. If in fact it is a new trend — which seems likely — there remains the danger that it signals another global recession. Historically, a simultaneous crash in gold, oil and other commodities has heralded falling world demand, culminating in recession. So, manna from heaven could turn into poison.

The bursting of a bubble is often a sign of a supercycle ending, and hopefully that’s what is happening today.”

Without ruling this out, I incline towards a more favourable interpretation: we are seeing the end of a global commodity super-cycle, driven for a decade by double-digit growth in China, India and other developing countries. The end of the super-cycle promises a favourable price climate for the coming decade, but this will yield fast growth only in countries with growthfriendly policies, which India lacks today.

Commodity super-cycles occur with gaps of several decades. The last big one was in the 1970s, ending in the early 1980s. Super-cycles drive up commodity prices hundreds of percent. This happened between 2002 and 2012, when oil went from $25/barrel to $120/barrel, and gold went from $ 250 per ounce to $ 1,890.

In the earlier super-cycle in the 1970s, high commodity prices induced new technologies that sharply reduced consumption of materials (stronger but lighter steel, energy-efficient vehicles and appliances). Besides, from the 1980s to 2000, global growth was dominated by the West, which had entered an area of services-intensive growth requiring relatively few materials (more entertainment, tourism and cellphone/internet rather than buying large clunky goods). So, global demand for commodities decelerated and stayed …read more

Source: OP-EDS

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Against Monetary Disequilibrium Theory and Fractional Reserve Free Banking

April 21, 2013 in Economics

By Mark Thornton

The Lawrence W. Fertig Prize in Austrian Economics for 2013 was awarded to Laura Davidson for her paper Against Monetary Disequilibrium Theory and Fractional Reserve Free Banking. It is a rigorous and insightful paper. The Fertig Prize is awarded to the author of a paper that best advances economic science in the Austrian tradition and includes a $1000 prize.

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Summer 2013 Broadcast Schedule

April 21, 2013 in History

April 21, 2013 11:17 a.m.

Mark your calendars for American Experience, airing on your local PBS station this summer! We will broadcast two films from our ever-so-popular Wild West Collection, biographies of two American titans, and on July 2, Mount Rushmore will air as part of PBS’s Independence Day programming. We hope you enjoy our upcoming Summer schedule, which kicks off with “Jesse James” on May 7 at 8/7C.

May 7, 8pm ET: Jesse James
May 14, 8pm ET: Annie Oakley
June 18, 8pm ET: The Rockefellers
June 25, 8pm ET: Henry Ford
July 2, 8pm ET: Mount Rushmore

Jesse James, May 7, 8pm ET

The story of Jesse James is one of America’smost familiar myths — and one of its most wrong-headed. James, so the legend goes, was a Western outlaw, but in reality, he never went west. He has been called America’s own Robin Hood, yet he robbed both rich and poor, and was never seen to share his ill-gotten gains. He was known as a gunfighter — but his victims were almost always unarmed. Less heroic than brutal, James was a member of a vicious band of Missouri guerrillas during the Civil War, and sought vengeance for the Confederate defeat afterwards. In a life steeped in prolific violence and bloodshed, he met what was perhaps the most fitting end.

AMERICAN EXPERIENCE presents Jesse James, the true story of an outlaw who has captured the imagination of generations of Americans. “There’s something about this legend that Americans have a hard time letting go of,” says film producer Mark Zwonitzer. “Perhaps it’s the much-needed idea of a hero or the allure of an outlaw. Either way, I hope this film will set the record straight.”

Annie Oakley, May 14, 8pm ET

In 1926, just a few months before Annie Oakley’s death, Will Rogers describedher as “the greatest woman rifle shot the world has ever produced.” As the star attraction of Buffalo Bill’s Wild West Show, she thrilled audiences around the world with her daring shooting feats. Her act helped fuel turn-of-the-century nostalgia for the vanished, mythical world of the American West. Over time she became an American legend — the loud, brassy, cocksure shooter celebrated in the musical “Annie Get Your Gun.” But that legend had little to do with the real Annie Oakley. Although …read more