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Living Dangerously
LIVING DANGEROUSLY Regular readers of Goldmoney’s Insights should be aware by now that the cycle of business activity is fuelled by monetary policy, and that the periodic booms and slumps experienced since monetary policy has been used in an attempt to manage economic outcomes are the result of monetary policy itself. The link between interest rate suppression […]
Living Dangerously
Living Dangerously Regular readers of Goldmoney’s Insights should be aware by now that the cycle of business activity is fuelled by monetary policy, and that the periodic booms and slumps experienced since monetary policy has been used in an attempt to manage economic outcomes are the result of monetary policy itself. The link between interest […]
The Role of Shadow Banking in the Business Cycle
THE ROLE OF SHADOW BANKING IN THE BUSINESS CYCLE 1The process of lending and the uninterrupted flow of credit to the real economy no longer rely only on banks, but on a process that spans a network of banks, broker-dealers, asset managers, and shadow banks funded through wholesale funding and capital markets globally. – Pozsaret […]
Austrian Economics Is Essential to Understand Booms, Busts, and Money Itself
Austrian Economics Is Essential to Understand Booms, Busts, and Money Itself The boom-and-bust business cycle is a natural result of free-market capitalism, but rather of government intervention. Looking to the next few years, will America and the world continue to ride a wave of economic growth, improved living standards, and technological changes that raise the […]
Reflections on Late-Stage Inflation
Reflections on Late-Stage Inflation Without a doubt, we are in a period of late-stage inflation. But how long can it last? A few days ago I noted that “inflation expectations” were the same or nearly the same for every period from seven years through thirty. Actually, the thirty-year expectation was slightly less than the 10-year […]
An Inflation Indicator to Watch, Part 3
An Inflation Indicator to Watch, Part 3 “During the 1980s and 1990s, most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon.” —Ben Bernanke Ben Bernanke began his oft-cited “helicopter speech” in 2002 with a few kind words about his peers, including the excerpt above. Speaking for central bankers, he […]
The Real Engine of the Business Cycle
MARK RALSTON/AFP/Getty Images The Real Engine of the Business Cycle A valuable lesson from the Great Recession is that credit-supply expansions play a key role in subsequent recessions. When lenders make credit more available or more affordable, households respond by taking on debt, which drives up aggregate demand – that is, until the music stops. […]
Are Subprime Debt Slaves, a Leading Indicator, Worrying the Fed?
Are Subprime Debt Slaves, a Leading Indicator, Worrying the Fed? Credit problems always appear first at the margins. The new Fed remains a somewhat unknown quantity: There are still four vacancies on the Fed’s seven-member Board of Governors that forms the core of the policy-making FOMC. The new Chairman, Jerome Powell, has already shown in […]
When Will the Next Credit Crisis Occur?
WHEN WILL THE NEXT CREDIT CRISIS OCCUR? The timing of any credit crisis is set by the rate at which the credit cycle progresses. People don’t think in terms of the credit cycle, wrongly believing it is a business cycle. The distinction is important, because a business cycle by its name suggests it emanates from […]
How Easy Money Is Rotting America from the Inside-Out
How Easy Money Is Rotting America from the Inside-Out How much of our gleaming new infrastructure will fall into disrepair? The Federal Reserve has been the main cause of business cycles in America since 1913. For several decades, it has tried to hide the consequences of its policies by enabling easy credit during each recession. […]
A Stock Market Tumble Is the Correction We Need
A Stock Market Tumble Is the Correction We Need The Fed put us in this predicament. Only the market can get us out of it. Since hitting rock bottom in 2009, stock prices have consistently increased without much volatility — that is, until these first few days of February when the Dow Jones Industrial Average […]
Central Banks Put a Safety Net Under Financial Markets
Central Banks Put a Safety Net Under Financial Markets Most early business cycle indicators suggest that the global economy is pretty much roaring ahead. Production and employment are rising. Firms keep investing and show decent profits. International trade is expanding. Credit is easy to obtain. Stock prices keep moving up to ever higher levels. All […]
Is There a Way Out of This Financial Mess?
Is There a Way Out of This Financial Mess? We need to open the door to the future but that is only possible by understanding the past. Paul Volcker back in 1979 in his Rediscovery of the Business Cycle “Not much more than a decade ago, in what now seems a more innocent age, the ‘New […]
Policy Makers, like Generals, Are Busy Fighting The Last War
Policy Makers, like Generals, Are Busy Fighting The Last War The Maginot Line formed France’s main line of defense on its German facing border from Belgium in the North to Switzerland in the South. It was constructed during the 1930s, with the trench-based warfare of World War One still firmly in the minds of the […]
Why This Oil Crisis Is Different To 2008
Why This Oil Crisis Is Different To 2008 They say history repeats itself, and given the cyclical nature of the oil and gas business, many look to the past when trying to guess what is coming next, but past experience doesn’t always offer an exact model for the present. Much has changed between the 2008 […]
