To see more details for the “Economics of ObamaCare” online course, see: http://academy.mises.org/courses/obamacare/

It now appears that Housing Bubble II is cooling. After the Fed drove mortgage rates down to around 3.35% in May for a 30 year fixed-rate mortgage, home prices started climbing. In the sand states of California, Nevada, Arizona, and Florida, among the hardest hit areas, home prices increased by an average of about 25%. Bloomberg reports that mortgage applications have declined 17% since May and that price reductions are occurring on 25% of listed homes. Now that the rate on 30 year fixed-rate mortgages has risen to 4.35% buyers now face a 12% increase in their monthly payments.

For Austrian economists doing economics is not about measuring things. However, it still can be useful to gauge the economic environment, whether that is the near term or long ago. Michael Pollaro here provide such an update of the money supply from over at Forbes . According to Pollaro:

TMS2, which represents our broadest and preferred U.S. money supply aggregate, posted a year-over-year rate of growth of 8.4% in October up from 8.1% in September. While still a robust rate, the U.S. monetary inflation rate is now substantially off its highs and in a decelerating trend. This is something not to be taken lightly. Indeed, as we discussed here, given the size of this our current monetary largesse, any substantive deceleration in the rate of monetary inflation from here ushers in the real possibility of another financial and economic bust, and a monumental one at that.

Many young people want to know what has caused this ongoing economic crisis and many are looking for places to study Austrian free market economics. One University that is often overlooked is Troy University. Its faculty contain several free market economists who are sympathetic to the Austrian School of economics including former Mises Summer Fellows Dr. G. P. Manish and Dr. Malavika Nair. Troy University is located in Troy, Alabama not far from the Mises Institute.

Review
| SATURDAY, NOVEMBER 16, 2013
The Skyscraper Index: Edifice Complex

By ROBIN GOLDWYN BLUMENTHAL | MORE ARTICLES BY AUTHOR
The U.S. has a new tallest building?One World Trade Center in New York?and that has conjured up some novel reading of economic tea leaves.

To some, a new skyscraper is a sign that hubris has again swept the land. The announcement last week that the U.S. has a new tallest building?the 1,776-foot-high World Trade Center, according to the Council on Tall Buildings and Urban Habitat?conjured up a novel reading of economic tea leaves.

The reason: a theory loosely known as the Skyscraper Index, developed in 1999 by Andrew Lawrence, then research director at Dresdner Kleinwort Wasserstein. The index argues that record-tall buildings are evidence of a business cycle peaking out and thus predict economic distress. The index has seemingly been on the mark at times. Lawrence claims record buildings foreshadowed the Panic of 1907 (New York’s Singer and Met Life towers), the Great Depression (the Empire State Building), the Asia Crisis (Malaysia’s Petronas Twin Towers) and Great Recession (Dubai’s Burj Khalifa).

Too Tall: The index argues that record-tall buildings are a sign of a business cycle peaking out.

One fan is Mark Thornton, a senior fellow at the Ludwig von Mises Institute in Auburn, Ala., who recently penned a paper titled “Skyscraper Curse to Hit New York.” Thornton applies Austrian business-cycle theory to big buildings. “You’re seeing these symbolic points of information coming out,” he says.

Still, the index should be treated with caution. One World Trade has been in the works for over a decade, spanning several cycles. And New York’s office-building market is “beginning to see some positive momentum,” says Laurel Durkay, a REIT analyst at Cohen & Steers. Last year, when asked about the index, Lawrence called it “an anecdotal guide to the cycle,” according to the Council on Tall Buildings. A grain of salt, maybe two, is in order.

– Lawrence C. Strauss

Guest Post: Galling Government

by Gary Galles

Americans live with paternalist government that nudges (and shoves) them to do what it deems best and “help” everyone with everything. But government is just flawed people with worse information and worse incentives than the individuals directly involved, putting reason and evidence on liberty’s side.

One of liberty’s most insightful defenders against the ever-encroaching state was Thomas Babington, Lord Macaulay. Statesman, historian and writer, “the most influential of the British classical liberals” advocated freedom, contrasted with the failings and abuses of government control.

Macaulay defended what he opened his? History of England ?with: “the authority of law and the security of property were found to be compatible with a liberty of discussion and of individual action never before known…from the auspicious union of order and freedom, sprang a prosperity from which the annals of human affairs had furnished no example.” In particular, he devastated statism in “Southey’s Colloquies on Society,” still relevant today.

Washington today lectures Americans on what is true, fair, ethical, and moral. But Macaulay asked “is there any reason for believing that a government is more likely to lead the people in the right way than the people…themselves?” The answer: “[W]e see no reason for thinking that the opinions of the magistrate on speculative questions are more likely to be right than those of any other man.” Where individuals really agree on such issues, government is unnecessary; where we don’t, government simply imposes one group’s will on others.

Washington also intrudes into virtually every decision, “not merely to see that the persons and property of the people are secure from attack, but… spending our money for us, and choosing our opinions for us…that no man can do anything so well for himself as his rulers.” The problem is that government “may be quite competent to protect the persons and property of the rest, yet quite unfit to direct our opinions, or to superintend our private habits.”

Government is handicapped in directing our opinions because “Government…carries on controversy, not with reasons, but with threats and bribes…instead of a contest between argument and argument, we have a contest between argument and force…in which truth can be victorious only by accident.”

Government is hamstrung in its efforts “for our own good” because “The duties of government would be…paternal, if a government were necessarily… superior in wisdom…and …loved a people as fathers generally love their children. But there is no reason to believe that a government will have either the paternal warmth of affection or the paternal superiority of intellect…any man in the streets may know as much and think as justly.”

Behind government’s efforts to bend its citizens into better ones lies a confusion between the voluntary arrangements of society and the involuntary ones imposed by the state. Civilization “is not [created] by…the omniscient and omnipotent State, but by the prudence and energy of the people…rulers will best promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by diminishing the price of law, and by observing strict economy in every department of the state. Let the Government do this: the People will assuredly do the rest.”

Unfortunately, government as undertaker of everything cannot perform its essential job. That is defending liberty and property. But dictating to the unwilling violates liberty and giving to some beyond what is voluntary violates property. That is why, despite do-gooders’ self-congratulations, “Nothing is so galling to a people…as a paternal, or in other words, a meddling government.”

The statist presumptions Thomas Babington Macaulay exposed dominate public policy today without convincing logic or demonstrated success. Yet unlike those who now find any reason sufficient to force their will on others, her recognized government coercion as the problem, not the universal solution.

Monday:? Human Reason and A Priori Economics ?by David Gordon

Tuesday:? Europeans Looking To Inflate Their Debts Away ?by Andrew Cullen

Wednesday:? Lawyers, Film, and Money: Copyrighting the First Movies ?by Brian LaSorsa

Thursday:? The Economics of ObamaCare ?by Robert P. Murphy

Friday:? 90 Years Ago: The End of German Hyperinflation ?by Thorsten Polleit

Weekend:? The Skyscraper Curse Hits New York ?by Mark Thornton

The Full Archive?

Writes Robyn Blumenthal at Barron’s today:

The index argues that record-tall buildings are evidence of a business cycle peaking out and thus predict economic distress. The index has seemingly been on the mark at times. Lawrence claims record buildings foreshadowed the Panic of 1907 (New York’s Singer and Met Life towers), the Great Depression (the Empire State Building), the Asia Crisis (Malaysia’s Petronas Twin Towers) and Great Recession (Dubai’s Burj Khalifa).

As I explained in my Mises Daily article on Friday , on 15 November 1923, German hyperinflation was finally brought to a halt. That was 90 years ago.

This image is titled: “Gutenberg and the billion press”.

The subtitle is: “I never intended this”.

It is taken from the German satirical magazine? Simplicissimus , 1923.

It was put out after the terrible and devastating experience with paper money ? over which a central bank, the Reichsbank, had full control.

The truth value of the image is unchanged, though, it seems: If you put into place a machine with the capacity to churn out new money without any limit, the machine will do exactly this ? like today’s central banks!

They a picture is worth a thousand words. This is a picture of the government statistic on the Civilian Labor Participation rate. That rate is now at a 35 year low. The steep decline in the rate is indicative of people giving up hope of ever finding a job, so they stop looking for a job and therefore are no longer considered part of the labor force = (employed and unemployed). In October the number of people no longer in the labor force decline by over 700,000. As the labor participation rate fall, it puts downward pressure on the calculated unemployment rate (U3). To put it another way, if all these “discouraged workers” were still included in the labor force the unemployment rate would be much higher and rising.