Monetary System

Since the Global Crisis, interest rates in many advanced economies have been low and, in many cases, are expected to remain low for some time. Low interest rates help economies recover and can enhance banks’ balance sheets and performance,…

The primacy of monetary policy continues unabated as central banks go further and further down the rat hole of increasingly desperate measures to boost demand. First, it was quantitative easing. Now, the latest scheme is negative interest…

About a month ago, I wrote a post on how market contagion would happen due to deteriorating credit conditions in energy high yield. And while this doesn’t necessarily lead to recession or financial crisis, it has already meant a real…

I am uneasy about where we are in the economic and credit cycle and the accuracy of the Fed’s forward guidance. I think we are above stall speed now. But I also think global policy divergence, slowing earnings growth and poor capex numbers…

The global economy is an economic system in which any country’s domestic economy is inextricably linked to other economies through the balance of payments mechanisms. The ability to place events within their global context is consequently…

So where did they get the money? It's an all too familiar story. Inflows of foreign capital, mainly from Scandinavian banks, attracted by low interest rates and a population hungry for credit - credit advanced, of course, against…

By Michael Pettis Last week Derek Scissors, a think tank analysts at the American Enterprise Institute, published an article in which he referred to an October, 2014, studyby Credit Suisse that attempts to measure total household wealth by…

The point of all this is that models don't have to model everything, and even "wrong" models can be helpful if used in the right way. And narrative has its uses too.

Yesterday was a big conference day in Washington, D.C., with the IMF and World Bank meeting and with the Brookings Institution holding an event featuring the Greek and German finance ministers. While I attended the Brookings event, the…

As Greece staggers under the weight of a depression exceeding that of the 1930s in the US, it appears difficult to see a way forward from what is becoming increasingly a Ponzi financed, extend and pretend, “bailout” scheme. In fact, there…