Everything in dollar-denomination yesterday was lifted by the usual M&A debasement and quite sour data from China. The latter was taken as if there would be renewed “stimulus” in the near term. The “dollar” took a break from its recent destructive nature, as commodities rebounded as did currency proxies and even gold. Stocks in the US and elsewhere jumped and [...]
Going back well more than a year now, every time the PBOC takes some kind of action it is classified immediately as “stimulus.” Last July, the Chinese central bank opened its PLF to China Development Bank and it was heralded as a renewed age of traditional monetarism if in unfamiliar formatting. In November, the first rate cuts since 2012 were [...]
The chatter that continues over Japan’s spiral into (further) economic impoverishment is simply astounding since it is taken as “expert” by the media. A credentialed economist will look at some numbers and simply take them as meaningful, especially if they are the “right” sign in the “right” direction. This is either wholly obtuse or intentionally misleading. Stronger exports would support [...]
The reason I spend so much time on Japan is that it is the purest “laboratory” conditions available in which to determine, hopefully for all time, the (un)viability of monetarism. The orthodox monetary practitioners that unleashed the yen torrent were not last year equivocating in their predictions and forecasts. Abenomics and QQE would work without fail, they said; the only [...]
QE’s hope is that in the course of redistribution any spurt of temporary activity caused by such monetary deck shuffling will lead to follow-on activity (the cult of aggregate demand). As we see in the US, the redistribution appears to have had the reverse effect, including effects on global trade. In Japan, the other nation so fully devoted to QE, [...]
There is more than one way to look at the emerging markets and frame the debate about what should or might be done. I think this quote from the Financial Times, however, falls outside the boundaries of reason: “So far we are still not seeing the impact of the currency devaluation we had last year,” said David Beker, economist with [...]
At its most basic element, the economic plan sounds plausible enough to almost be convincing. In the Japanese version, pointed more toward an export economy than internal consumption, monetary policy expects to devalue the yen, which should lead to a favorable re-configuring of goods parity. That, in turn, is supposed to increase internal production levels which then creates increased demand [...]
The old military axiom that battle plans never survive first contact with the enemy appears to have a corollary in the central banking world of interventionist finance. The allure of QE in Japan was an irresistible impulse to believe that a durable solution was to be had by retrying old ideas in a different scale. While that appeals to the [...]
The tendency of mainstream economists toward hostility and outright dismissal of gold is directly related to their view of monetary mechanisms that largely took over in the 1970’s. For the most part, gold acts as a very visible measure investment of disapproval of central bank actions intended to foster or create stability. Inflation is only one symptom of instability, so [...]
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