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Apocalypse, Or Not?
Apocalypse, Or Not? Members of the American libertarian movement, particularly extremist preppers, are often associated with a belief that a complete breakdown in society is the only outcome from government economic policies and will lead to complete social disintegration. At the centre of their concerns is monetary destruction, with other issues, such as the erosion […]
Macroeconomics Has Lost Its Way
Macroeconomics Has Lost Its Way The father of modern macroeconomics was Keynes. Before Keynes there were macro considerations, which were firmly grounded in human action, the personal preferences and choices exercised by individuals in the context of their own earnings and profits. In order to give a role to the state, Keynes had to get […]
The consequences of leaving the party
The consequences of leaving the party The collective decision of the British electorate is to reject the recommendation of its government, excepting those of its few dissenting ministers, that Britain should remain in Europe. It is a signal failure of government policy. Above all, it is a failure that undermines the state’s control over ordinary […]
The consequences of leaving the party
The consequences of leaving the party The collective decision of the British electorate is to reject the recommendation of its government, excepting those of its few dissenting ministers, that Britain should remain in Europe. It is a signal failure of government policy. Above all, it is a failure that undermines the state’s control over ordinary […]
Guessing the future without Say’s law
Guessing the future without Say’s law Or some reflections to read over the Easter holidays With Japanese and Eurozone interest rates becoming increasingly negative, and the Fed backing off from at least some of the planned increases in the Fed funds rate this year, economists are reassessing the interest rate outlook. Economists lack consensus, with […]
The ECB and John Law
The ECB and John Law Last week, the ECB extended its monetary madness, pushing deposit rates further into negative figures. It is extending quantitative easing from sovereign debt into non-financial investment grade bonds, while increasing the pace of acquisition to €80bn per month. The ECB also promised to pay the banks to take credit from […]
Out of the mouths of babes….
Out of the mouths of babes…. Parents will tell you the most difficult questions to answer sometimes come from their children. Here are some apparently innocent questions to ask of economists, journalists, financial commentators and central bankers, which are designed to expose the contradictions in their economic beliefs. They are at their most effective using […]
Why the Fed Will Never Succeed
Why the Fed Will Never Succeed The Fed will never succeed in its attempt to manage inflation and unemployment by varying interest rates. This is because it and its economists do not accept the relationship between, on one side, the money it creates and the bank credit its commercial banks issue out of thin air, […]
China and the dollar
China and the dollar With the benefit of hindsight, the two-day devaluation of the yuan in mid-August might have been a masterstroke of strategy. China executed a financial move that appeared to undermine its own position but instead created trouble for the US; how much is still to be played out. So was the devaluation […]
From ZIRP to NIRP
From ZIRP to NIRP The sudden end of the Fed’s ambition to raise interest rates above the zero bound, coupled with the FOMC’s minutes, which expressed concerns about emerging market economies, has got financial scribblers writing about negative interest rate policies (NIRP). Coincidentally, Andrew Haldane, the chief economist at the Bank of England, published a […]
Equity markets and credit contraction
Equity markets and credit contraction There is one class of money that is constantly being created and destroyed, and that is bank credit. Bank credit is created when a bank lends money to a customer; it becomes money because the customer draws down this credit to deposit in other bank accounts and to pay creditors. […]
Welcome to the world of ZIRP zombies
Welcome to the world of ZIRP zombies Interest rates in the US, Europe and the UK were reduced to close to zero in the wake of the Lehman crisis nearly seven years ago. Initially zero interest rate policy (ZIRP) was a temporary measure to counter the price deflation that immediately followed the crisis, but since […]
China’s 1929 moment
China’s 1929 moment Anyone with a nose for markets will tell you that the Chinese government’s attempt to rescue the country’s stock markets from collapse is far from succeeding. Bubbles collapse, period; and government interventions don’t stop them. Furthermore, we are beginning to see a crack widen in the foundations of China’s capital markets that […]
