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Why Monetary Easing Will Fail
WHY MONETARY EASING WILL FAIL The major economies have slowed suddenly in the last two or three months, prompting a change of tack in the monetary policies of central banks. The same old tired, failing inflationist responses are being lined up, despite the evidence that monetary easing has never stopped a credit crisis developing. This […]
Time is Money, Money is Time
TIME IS MONEY, MONEY IS TIME Life’s but a walking shadow, a poor player who struts and frets his hour upon the stage and then is heard no more. -Macbeth Our limited time, our brief candle as Shakespeare’s Macbeth had it earlier in the soliloquy quoted from above, may count for very little in the […]
Markets are all about flows
Markets are all about flows This article looks at prospective supply and demand factors for financial assets in the New Year and beyond. Investors should take into account money flowing into and out of financial assets as well as stock flows, particularly escalating government bond issuance, which looks likely to accelerate significantly in the coming […]
John Law–300 Years On
JOHN LAW – 300 YEARS ON Most people are aware that historically there have been speculative bubbles. Some of them can even name a few – the South Sea bubble, tulips, and more recently dot-coms. Some historians can go even further, quoting the famous account by Charles Mackay of the South Sea bubble, the tulip […]
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 […]
The Relevance of Hayek’s Triangle Today
THE RELEVANCE OF HAYEK’S TRIANGLE TODAY Most of us are aware of the inflationary pressures in the major economies, that so far are proving somewhat latent in the non-financial sector. But some central banks are on the alert as well, notably the Federal Reserve Board, which has taken the lead in trying to normalise interest […]
Trade Wars
TRADE WARS An overt trade war has commenced. President Trump has fired the starting gun, setting in motion an election promise, part of his Make America Great Again undertaking. It is a blow squarely aimed against China, costing China some trade perhaps, but basically a loser’s last roll of the dice. The back story appears […]
Currency Exchange Value Dynamics
CURRENCY EXCHANGE VALUE DYNAMICS In a recent article I postulated that the dollar could lose all its purchasing power with a rapidity that will come as an unpleasant bombshell, even to those who already see inflation as society’s greatest problem in the future. The key to understanding why this may be so lies in human […]
A Roman Lesson on Inflation
A ROMAN LESSON ON INFLATION “While it is the duty of the citizen to support the state, it is not the duty of the state to support the citizen” – President Grover Cleveland The point President Cleveland made back in the 1880s was that individuals and vested interests had no rights to preferential treatment by a […]
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 […]
The Truth About Trade
THE TRUTH ABOUT TRADE The one subject, which became a headline issue last year, and even divides experts is trade. It will become increasingly important in 2018 as the US develops her trade policy, particularly with respect to China, and as the UK negotiates her Brexit terms with the EU. Ignorance dominates this subject. Surely, […]
Inflation v Deflation–State Finances
INFLATION V DEFLATION – STATE FINANCES There is a general belief, and that is all it is, that state finances fare better in an inflationary environment than a deflationary one. This perception arises from the transfer of wealth from lenders to the state through a devaluation of the currency, which occurs with monetary inflation, compared […]
Cryptos May Destabilise Fiat
CRYPTOS MAY DESTABILISE FIAT The assumption in some quarters is that crypto-currencies will replace gold as money, or at least challenge it. This is an error borne out of a misunderstanding of catallactics, or the theory of exchange. It also ignores the fact that beyond a few European countries and North America, gold is firmly […]
Why Europe must end in tears
Why Europe must end in tears The latest consequence of economic mismanagement in Europe was the failed attempt at constitutional reform in Italy this week. The Italian people have had enough of their government’s economic failure, and is refusing to give it more power. The EU and the euro project have been an economic disaster […]
Interest Rates and Gold
INTEREST RATES AND GOLD It is commonly assumed that the gold price and interest rates move in opposite directions. In other words, a tendency towards higher interest rates is accompanied by a lower gold price. Like all assumptions about prices, sometimes it is true and sometimes not. The market today is all about synthetic gold, […]
