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The Fed’s Dangerous Game: A Fourth Round of Stimulus in a Single Growth Cycle
The Fed’s Dangerous Game: A Fourth Round of Stimulus in a Single Growth Cycle The longer the signals in capital markets go haywire under the influence of “monetary stimulus,” the bigger is the cumulative economic cost. That is one big reason why this fourth Fed stimulus — in the present already-longest (but lowest-growth) of super-long […]
Why Powell Fears a Gold Standard
Why Powell Fears a Gold Standard Chairman Powell’s testimony last week was closely scrutinized not just for its economic implications but also for its political overtones. Powell cited “trade tensions” as cause for concern about the strength of the global economy. He clearly seemed to be blaming President Trump’s tariffs. But if the tariffs are […]
How to Destroy a Civilization
How to Destroy a Civilization There are lots of ways to kill off a civilization. Wars, politics, economic collapse. But what are the actual mechanics? It might be a useful thing to know whether or not we are killing ourselves off. Ancient Rome is a good place to start. They had an advanced civilization. They had […]
How Central-Bank Interest-Rate Policy Is Destabilizing Banks
How Central-Bank Interest-Rate Policy Is Destabilizing Banks Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns. These returns range from the most commonly understood loans, such […]
ECB Inflationists are Crippling Europe
ECB Inflationists are Crippling Europe Last week, the ECB announced the reintroduction of targeted long-term refinancing operations for the third time. TLTRO-III is scheduled to start from next September. The idea is to make yet more money available for the banks at attractive rates on condition they increase their lending to non-financial entities. The policy […]
Electoral College: Why We Must Decentralize Democracy
Electoral College: Why We Must Decentralize Democracy Although it was long assumed that the electoral college favored Democrats — and this assumption continued right up to election night 2016 — Democrats in the United States have now decided the electoral college is a bad thing. Thus, we continue to see legislative efforts to do away with the […]
Can the EU Survive the Next Financial Crisis?
Can the EU Survive the Next Financial Crisis? Despite the ECB’s subsidy of the Eurozone’s banking system, it remains in a sleepwalking state similar to the non-financial, non-crony-capitalist zombified economy. Gone are the heady days of investment banking. There is now a legacy of derivatives and regulators’ fines. Technology has made the over-extended branch network, […]
How Asset Inflation Will End — This Time
How Asset Inflation Will End — This Time Life after death for asset inflation: this is what happens when “speculative fever” remains high even after monetary inflation has paused. This may well have been the situation in global markets during 2019 so far. But history and principle suggest that life after death in this monetary […]
A Modest Proposal for the Fed
A Modest Proposal for the Fed Quantitative easing, the program of asset buying initiated by the US Federal Reserve Bank in 2008, represents the most profound monetary experiment in the history of the world. Between fall of 2008 and fall of 2014, three successive rounds of QE quadrupled the monetary base of the world’s most-used and dominant currency, from less […]
The State Expands its Responsibilities In Order to Expand Its Power
The State Expands its Responsibilities In Order to Expand Its Power Many moviegoers might recognize the following quotation: “with great power comes great responsibility.” Reality, however, is the exact opposite of what the quote describes. In reality, it is responsibility that precedes power. In a corporation, for instance, when you’re hired you are told your […]
The Pseudo-Psychology Behind Monetary Policy
The Pseudo-Psychology Behind Monetary Policy In his various writings, the champion of the monetarist school, Milton Friedman, argued that there is a variable time lag between changes in money supply and its effect on real output and prices. Friedman holds that in the short run changes in money supply will be followed by changes in […]
How the Euro Enabled Europe’s Debt Bubbles
How the Euro Enabled Europe’s Debt Bubbles It’s the twentieth anniversary of the euro’s existence, and far from being celebrated, it is being blamed for many — if not all — of the Eurozone’s ills. However, the euro cannot be blamed for the monetary and policy failures of the ECB, national central banks and politicians. […]
France’s Protests: Why It’s Different This Time
France’s Protests: Why It’s Different This Time When the first demonstrations on the streets of Paris were reported nine weeks ago, nobody could have foreseen the endurance, the tenacity and the viral effect of the Yellow Vests movement. After all, the French are known to protest and to strike, it’s part and parcel of their […]
Fire the Fed?
Fire the Fed? President Trump’s frustration with the Federal Reserve’s (minuscule) interest rate increases that he blames for the downturn in the stock market has reportedly led him to inquire if he has the authority to remove Fed Chairman Jerome Powell. Chairman Powell has stated that he would not comply with a presidential request for […]
