At the very least, you have to recognize the correlation. If you aren’t willing to consider causation, in part, there’s troubling coincidence in every place around the world between huge government deficits and less growth (therefore the constant inflation "puzzle"). You can argue that the former causes the latter, and that’s absolutely a valid case; when things get rough, neo-Keynesians [...]
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. If everyday folks don’t want [...]
One of the most prominent features of the “rising dollar”, if not the “rising dollar” itself, was an almost out of control shortage in FX basis. Though cross currency basis swaps with Japan received all the attention, with very good reason, the basis was off against the euro, franc, and a host of other majors. These things happen from time [...]
The Bretton Woods system was intentionally set up to funnel monetary convertibility through official channels. The primary characteristic of any true gold standard is that any person who wishes can change paper claims into hard money. It was as much true in any one country as between those bound by the same legal framework (property). What might differ were the [...]
It is a long road to recovery, an actual one, if we are to be left to the pace of economists struggling to make sense of the analog world. They are truly digital creatures, who would look at information and make no judgment until the models tell them what to think. You or I would find troubling data and seek [...]
Maybe after a couple generations the Japanese have finally had enough. Perhaps QQE was large enough so as to leave no doubt that not only did it fail, but that it was the same result registered time and again before. The Bank of Japan has promulgated eleven QE’s dating back to 2001, but this last one might have done so [...]
One follow up point to this morning’s missive about why the economy seems to be converging in recession rather than full and blossoming recovery: There must be something said about the manner of redistribution in this “cycle” as different from all others. In other words, the Fed has been attempting greater and greater redistribution efforts via monetary interference ever since [...]
For something that central bankers and economists were so sure wasn’t ever going to be troubling, oil seems to have become something of a communicable financial disease at the outset of 2016. If 2015 was somewhat sour and disappointing, 2016 was supposed to leave no doubt; it is, just not in the manner predicted. This morning’s headlines tell you all [...]
Part 1 is HERE. In March 1969, while Buba was busy in the quicksand of its swaps and forward dollar interventions, Netherlands Bank (the Dutch central bank) had instructed commercial banks in Holland to pull back funds from the eurodollar market in order to bring up their liquidity positions which had dwindled dangerously during this increasing currency chaos. At the [...]
The finance ministers and representatives of central banks from the world’s ten largest “capitalist” economies gathered in Bonn, West Germany on November 20, 1968. The global financial system was then enthralled by a third major currency crisis of the past year or so and there was great angst and disagreement as to what to do about it. While sterling had [...]
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