The ‘Law of One Price’ is a fundamental economic principle stating that identical goods in efficient markets should sell for the same price. One method for ensuring ‘one price’ is known as arbitrage. Whenever there is a price difference between two identical goods, one can make a risk free profit by buying the underpriced good […]

Borders Bookstore will reportedly file for bankruptcy next week, presenting a fascinating case for those of us who are both book lovers and interested in thinking about companies and the rationality of markets. Amazon.com store two months later.) In 3 years, Borders’s shares quintupled in value, then in the next few months lost about 60 […]

In light of mistakes at the Fed and governments and central banks around the world before and during the financial crisis, it is only reasonable that we should reassess monetary arrangements. Gerald O’Driscoll’s recent piece in the Wall Street Journal is, however, a stunningly foolish contribution to that discussion. Mr. O’Driscoll states, ‘A number of […]

FT.com has a great video interview of Larry Fink CEO of BlackRock. What is most striking is his steadfast defense of moderate positions on the state of the recovery, QE2, and problems in Europe. Some of you may recall that Rob Kapito, President of BlackRock, was the speaker at our Spring event in 2009 and […]

In the mid-1990s as the open interest in some financial derivatives began to explode, Prof. Faust (Director of the Center but then at the Fed), was involved in several meetings where various experts argued that derivatives could not contribute to instability–derivatives only allow risk to be allocated to those who could bear it most efficiently. […]