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It is generally accepted that banks must be regulated so as to avoid the moral hazard situation that deposit insurance generates. Accepting this argument implies that expanded bank powers must await deposit insurance reform. This article rejects the accepted view and argues instead that the existing regulatory system enhances rather than diminishes the riskiness of banks' portfolios. The article argues that the benefits from permitting banks to diversify probably would outweigh the costs. It concludes, however, that deposit insurance is a major culprit in the current wave of bank failures.

Austrian Economics Re-examined: The Economics of Time and Ignorance is an expanded version of the 1996 edition of The Economics of Time and Ignorance. This work is a classic statement of the role of subjectivism, radical uncertainty and change through real time in Austrian economics specifically, and in modern economics more generally.The new book contains the full text and Introductions of the earlier edition as well as the comprehensive previously-unpublished essay ""What is Austrian Economics?"" and a new Introduction. The essay is a comprehensive overview of the central themes of the book

Many commentators on Federal Reserve policy over the past decade devote little attention to the experience of other central banks and especially the experience of Japan and the Bank of Japan. In fact, there is very little that is new in the U.S. situation that had not already been experienced by Japan and the Bank of Japan over a decade earlier. Many commentators view Federal Reserve policy as unique and special with regard to other central banks; however, the differences between the financial and economic stress experienced by Japan and the United States pale in comparison to the similarities. In many respects, the Federal Reserve is in the shadow of Bank of Japan and a better understanding of the comparative records of the two central banks offers important insight into central bank policy. The paper explores three aspects of the relationship between the Bank of Japan and the Federal Reserve . First, the asset bubbles and bursting of those bubbles in Japan (1985 to 1991) and the United States (2001 to 2006) were both the result of central bank policy errors combined with a flawed financial structure. Second, the political economy of the operating environment of the Bank of Japan and the Federal Reserve ensures continued suboptimal monetary policy regardless of institutional redesigns of the central bank. Third, the Bank of Japan and the Federal Reserve together present a serious contradiction to the conventional wisdom that legal independence is the foundation for optimal central bank policy outcomes. A concluding section brings together the main points of the discussion. These suggest that a better understanding of Federal Reserve policy since the start of the new century might start with a review of Japan and the Bank of Japan.

Trade liberalisation has played a critical role in advancing peace and prosperity. Differences on agriculture have been the major impediment to a future multilateral trade round. The recent agreement on agriculture at the WTO meetings in Geneva may signal a breakthrough in that sector. This article analyses the benefits of recent trade agreements and examines the prospects for future ones. It also presents an alternative framework for advancing trade, the Global Free Trade Association.