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Joseph T. Salerno

Joseph T. Salerno

Joseph T. Salerno is an Austrian School economist in the United States. He is a professor at Pace University, an editor of the Quarterly Journal of Austrian Economics, and Academic Vice President of the Mises Institute. Salerno specializes in monetary theory and policy, comparative economics, and the history of economic thought. Dr. Salerno received his Ph.D. in economics from Rutgers University. His most recent publication is Money: Sound and Unsound.

Articles by Joseph T. Salerno

Murray Rothbard: ‘Pioneer of Praxeological Analysis’

July 12, 2019

In the last decade or so there has been a concerted attempt by some economists associated more or less closely with the Austrian school to deny Rothbard’s central role in the modern revival of Austrian economics and to downplay his status as a leading proponent of the Misesian paradigm.  In response, I have provided what I believe to be compelling textual evidence that Mises himself, as well as some of his closest followers, regarded Rothbard as Mises’s foremost intellectual heir (here, here, and here).  Now from the Rothbard archives comes a small treasure that corroborates the evidence I adduced in my earlier posts.  This is in the form of Mises’s charming and pithy inscription in Rothbard’s copy of the third edition of Human

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Money and Gold in the 1920s and 1930s: An Austrian View

June 20, 2019

In consecutive issues of The Freeman, Richard Timberlake has contributed an interesting trilogy of articles advancing a monetarist critique of the conduct of U.S. monetary policy during the 1920s and 1930s.1 In the first of these articles, Timberlake disputes the late Murray Rothbard’s “Austrian” account of the boom-bust cycle of the 1920s and 1930s. Timberlake contends that …

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There Is No Neutral Tax: Lessons from the the Amazon HQ2 “Subsidy”

June 19, 2019

Capitalism breathes through those loopholes . ~Ludwig von Mises1 I. Introduction A little noted aspect of the media brouhaha that erupted in the wake of Amazon’s reneging on its deal to locate part of its headquarters in New York City was that almost all participants, pro or con, routinely referred to the tax breaks included …

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Tax Breaks Aren’t Subsidies

June 15, 2019

Capitalism breathes through those loopholes . ~Ludwig von Mises1

I. Introduction
A little noted aspect of the media brouhaha that erupted in the wake of Amazon’s reneging on its deal to locate part of its headquarters in New York City was that almost all participants, pro or con, routinely referred to the tax breaks included in the deal as “government subsidies.” Given the abysmal state of economic knowledge prevailing in the mainstream media this was to be expected and is hardly worth noting. What is remarkable is that a great number of free-market economists and policy experts who wrote about the deal, before or after it collapsed, also treated the tax cuts as, in effect, government subsidies. Accordingly, they declared the

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Fed Nominee Judy Shelton Wants Sound Money

May 17, 2019

Bloomberg reported this week that the Trump Administration is considering Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free-market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it.
The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most

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Fed-Board Nominee Judy Shelton May be the Best We Can Hope For From Donald Trump

May 16, 2019

Bloomberg reported this week that the Trump Administration is considering Judy Shelton for one of the two vacant positions on the Federal Reserve Board of Governors. The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University …

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The Sociology of the Development of Austrian Economics

May 1, 2019

Although this paper was presented as a lecture in 1996, I have chosen to publish it in this volume in nearly its original manuscript form.1 It was never previously published or posted electronically, but the paper achieved a limited circulation in manuscript form via copy and fax machines during the primitive days of the Internet. …

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A Conspiracy of Silence on The French Liberal School

April 10, 2019

There exists today in Anglo-American economics a veritable “conspiracy of silence” regarding the works and achievements of the French Liberal School of Economics. This is at once a sad commentary on the state of disinterested historical scholarship in the economics profession and a resounding confirmation of Thomas Kuhn’s theory of scientific progress and its applicability …

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Hoppe and the Art of Economic Controversy

March 31, 2019

[Presented at the “Panel on the Significance of Hans Hermann-Hoppe” at the 2019 Austrian Economics Research Conference.] I will recount a single episode which epitomizes Hans Hoppe’s singular approach to economic controversy. On May 14, 2009, a Mises Daily piece appeared by Hoppe entitled “‘ The Yield from Money Held’ Reconsidered.” It was the text …

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Fractional Reserves and the Fed

March 20, 2019

The Free Market 30, no. 6 (June 2012) The following is a testimony before the U.S. House Committee on Financial Services, Subcommittee on Monetary Policy (Chairman: Ron Paul). Dr. Salerno was able to give this testimony thanks to the generous support of Mises Institute donors. Chairman Paul and members of the Subcommittee, I am deeply …

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The Grandson of “I, Pencil”

February 22, 2019

Steven Kates is an Australian economist and the author of Say’s Law and the Keynesian Revolution: How Macroeconomic Theory Lost Its Way and Free Market Economics: An Introduction for the General Reader, now in its third edition  He has long been a perceptive and unrelenting critic of current Keynesian-style macroeconomics and an unabashed defender of …

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Are Ownership Rent and Pure Profit Separate Returns to the Entrepreneur?

February 6, 2019

ABSTRACT: Murray Rothbard developed the concept of decision-making rent as a return to a kind of unhirable labor performed by the entrepreneur in his role as owner and ultimate decision-maker of the firm. Rothbard conceived owner’s rent as separate from profit and loss and the decision-making function as concerned with productive organization and technique, which …

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The True Money Supply

December 21, 2018

Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year. What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008.
The Fed recently reaffirmed its commitment to increasing the fed funds rate three more times in 2018 and has just begun its program of shrinking

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Forerunners of the Austrian School: The French Liberal School

December 16, 2018

The French Liberal School had been dominant through four generations because they were privately funded, but when the government intervened in the French universities the Liberal School lost its hold. Richard Cantillon, Etienne Bonnot de Condillac, A.R.J. Turgot, Jean-Baptiste Say, Frederic Bastiat, and Michel Chevalier were responsible for economic concepts such as opportunity cost, the …

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Keynesianism and World Inflation

December 13, 2018

Keynes believed that all economic problems could be overcome with global inflation. This would bring about a new utopian age in which only social and scientific problems would remain. In this 38-minute talk, Joseph Salerno discusses Keynes’s beliefs in how economic systems could be manipulated by the state to the point at which scarcity would …

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Mises Predicted the “Meat Tax”

November 22, 2018

Last week, a team of researchers under the auspices of the Nuffield Department of Population Health (NDPH) at Oxford University published an article in the online journal Public Library of Science ONE. The article purports to calculate “economically optimal tax levels for 149 world regions that would account for (internalize) the health costs associated with …

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Economics as a Vocation

November 8, 2018

The Free Market 26, no. 1 (January 2005) Should economics be pursued as a profession or a vocation? The choice isn’t about the job title of a particular economist or what tasks he or she fulfills in the course of a day’s work. It is about the motivation behind the work and the subjective orientation …

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Easy Money, Easy Morals

October 31, 2018

In this 33-minute talk, Joseph Salerno discusses the right way to define inflation, and how it impacts both economic prosperity and culture. Delivered at the conference titled “The Twentieth Century: An Austrian Critique,” sponsored by the Mises Institute and held in Atlanta, Georgia; 26-27 September 1997. [33:04]

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The Market Isn’t a Schoolmarm

October 13, 2018

There are profound methodological differences between the Austrian and Chicago schools that lead to very different characterizations of the nature and function of the market economy. I was recently reminded of this by an article entitled “The Racist Premium Is Just One Way the Market Punishes Racism” by Andrew Moran. The point that Moran makes is basically correct. In certain circumstances taking race into account in market transactions does involve a cost to the one inclined to do so.
What I take issue with is the Chicago-school approach that the author implicitly adopts and the resulting rhetoric that he invokes, namely, that the market metes out punishment to “irrational” preferences that tends to inhibit their expression.

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The Market Isn’t a Schoolmarm: The Austrian School versus Chicago

October 13, 2018

There are profound methodological differences between the Austrian and Chicago schools that lead to very different characterizations of the nature and function of the market economy. I was recently reminded of this by an article entitled “The Racist Premium Is Just One Way the Market Punishes Racism” by Andrew Moran. The point that Moran makes …

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Venezuela Turns to Barter

July 26, 2018

In 2006, Venezuela’s president Hugo Chavez declared: There is a market that can be reactivated through barter and not through currency. Let us break that curse [of capitalism]. Well, twelve years later barter is indeed replacing currency transactions throughout the economy but with hardly the results that the late socialist dictator envisioned. Nor is this …

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How To Calculate the Money Supply

June 11, 2018

Reprinted from Mises.org
This interview was originally published in the March 2018 issue of the Lara-Murphy Report.
Lara-Murphy Report: We ultimately want to ask you about the latest readings on the “true money supply” calculation, but before we do that, can you first explain to our readers why there are different concepts about “the money supply” in the first place? We don’t even mean what the Austrians say. Right now, can you just explain why there are different measures, such as M1, M2, etc., and why there is even a debate as to what counts as “money”?
Joseph Salerno: The Fed calculates several monetary aggregates. M1 includes currency held by the (nonbank) public and checkable deposits, both standard checking accounts and “other checkable deposits” such as NOW accounts, which are

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Argentina Has a Chronic Problem with Monetary-Policy Failure

May 9, 2018

Reprinted from Mises.org
Argentina suffered yet another so-called “currency crisis” last week. On Thursday and Friday the Argentine peso (ARS) depreciated 9% against the U.S. dollar (USD), falling from roughly 20.50 ARS per USD to 22.25 per USD. To stem the slide of the peso, Argentina’s central bank increased its target interest rate (the 7-day repo reference rate) from 30.5% to 40% over the course of two consecutive days. This came on the heels of a rate boost of 3-percentage points the previous week during which the bank also sold $5 billion in reserves. The central bank also boldly announced that it would use “all the tools at its disposal” to reduce inflation — which clocked in at 25% year over year in March — to its 2018 target rate of 15%. Politicians got into the act with the

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The True Money Supply

May 9, 2018

This interview was originally published in the March 2018 issue of the Lara-Murphy Report.
Lara-Murphy Report: We ultimately want to ask you about the latest readings on the “true money supply” calculation, but before we do that, can you first explain to our readers why there are different concepts about “the money supply” in the first place? We don’t even mean what the Austrians say. Right now, can you just explain why there are different measures, such as M1, M2, etc., and why there is even a debate as to what counts as “money”?
Joseph Salerno: The Fed calculates several monetary aggregates. M1 includes currency held by the (nonbank) public and checkable deposits, both standard checking accounts and “other checkable deposits” such as

Read More »

The True Money Supply Is Flashing Red

April 12, 2018

Reprinted from Mises.org
Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year. What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008.
RELATED: “Money-Supply Growth Near a Ten-Year Low As Lending Slows” by Ryan McMaken
The Fed recently reaffirmed its commitment to increasing the fed funds rate three more times in

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Student and Colleague to a Genius

April 3, 2018

JEFF DEIST: How does a kid from New Jersey get interested in economics, much less decide to get a PhD?
JOE SALERNO: Well, I didn’t really plan it. I think it all began back in fifth grade when my mother’s cousin visited from Italy, and during the course of conversation, he revealed that he was a member of the Italian Communist Party. My father, a New Deal Democrat who had voted for JFK, was also an ardent anti-communist. He got into a big argument with the cousin and then threatened to throw him out.
This made me wonder what made my father so passionate, so I started reading books in sixth grade about communism. They were all pretty much lurid right-wing screeds against communism with very little analysis. So, by the time I was in

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The True Money Supply

February 28, 2018

Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year. What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008.
The Fed recently reaffirmed its commitment to increasing the fed funds rate three more times in 2018 and has just begun its program of shrinking its

Read More »

The True Money Supply Is Flashing Red

February 26, 2018

Jeffrey Peshut at RealForecasts.com has composed several very illuminating graphs based on the Rothbard-Salerno True Money Supply (TMS). In one graph Peshut shows the collapse of the growth rate of TMS beginning at the end of 2016, which was caused by the Fed beginning to raise the fed funds target rate at the end of the preceding year. What is of great interest is that the recent deceleration of monetary growth (the second red arrow) almost exactly matches in extent and rapidity the monetary deceleration (the first red arrow) that immediately preceded the financial crisis of 2007-2008.RELATED: "Money-Supply Growth Near a Ten-Year Low As Lending Slows" by Ryan McMakenThe Fed recently reaffirmed its commitment to increasing the fed funds rate three more times in 2018

Read More »