201605.02
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The Weakness Is Really Different Now

If there is any wonder why PMI’s deserve scorn, this morning’s twin bill delivered solid reasoning. Both the ISM Manufacturing Index and the Markit Manufacturing PMI declined, and both remained above 50. However, there was no real consensus about what any of it meant. Depending on the media outlet determining commentary about either, there was…

201605.02
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Coming To Terms With Money; Part 2

To economists nothing about the 2000’s makes sense (a condition that has only grown worse in the 2010’s). At the same time productivity growth suddenly disappears, in its place is this incomprehensible “global savings glut.” While it has been tempting to dismiss these shifts as anomalies, even orthodox economists cannot just ignore them given the…

201605.02
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Coming To Terms With Money; Part 1

The assumed relationship between inflation and employment, unemployment really, has been tortured in the last half century. Given the constant mistakes economists make in this regard, it is fair to conclude that they really don’t have much idea at all about the connection. There is a fatal conceit contained within the orthodox views here that…

201604.29
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They Want It To Be About Inflation

There was more bad news for the FOMC over the past few days beside the once again near-zero GDP estimate. If the labor market were truly growing as is claimed, we should be finding “inflation” in a broad set of different economic views. From the standard inflation calculations to various estimates for wages or income,…

201604.29
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Always About Income

The emphasis on the labor market has become ubiquitous but it is not being used in the manner with which it should be used. It is now permanently attached to words like “despite” or “in contrast” no matter which economic data point is being described. The Wall Street Journal provides a perfect example in writing…

201604.29
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Understanding the Basis Is The Most Pressing Task In The World

On December 27, 1990, changes to Regulation D went into effect with the maintenance period that began that day. Among those alterations was a reduction in the reserve requirement imposed upon what are officially called “eurocurrency liabilities.” Under the Monetary Control Act of 1980, which made reserve requirements universal to any US chartered federally insured…

201604.28
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Ritual Weakness Is More About The Ritual Than The Weakness

The worst part of this stilted or stunted economy is that it isn’t nearly good enough to produce widespread prosperity (with very real questions as to whether it produces any prosperity at all). It has become self-reinforcing, however, to the point of circular logic. We (economists) are now so conditioned by the low, unstable growth…

201604.28
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Where Is (Was) The Overheating?

With no “unusual” snow or “residual seasonality”, the US economy once again grinds to a halt in Q1 only now with no more reasons to dismiss it. In what has become an annual ritual, GDP barely moves in the quarter immediately following the Christmas holiday. This time, however, it wasn’t just consumers holding back in…

201604.27
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Focused On The Wrong End of Oil

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The…

201604.27
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Slowing

The big news of the day had nothing to do with Janet Yellen, which was entirely appropriate given both her stance on the economy and anything she could possibly, realistically do about it (nothing). Apple reported results that were shocking in many ways, though not necessarily unexpectedly so. Last quarter, CEO Tim Cook had warned…