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Browsing Category
Monetary System
A mental model for understanding policy errors and consistency anchors using the Fed and Greece
One of the great things about markets and economics is that there is a lot of uncertainty built into them because, unlike traditional macroeconomic modelling assumptions, real people are unpredictable and irrational. This makes life…
Why quantitative easing and negative interest rates will fail
This is going to be a short thought piece. But the takeaway should be that the convergence to zero will continue unabated as the threat of inflation is muted given the combination of excess capacity, high private debt and unfavourable…
Why deflationary pressure in China mandates monetary tightening, not loosening
Deflationary pressures in China indicates that we probably need monetary tightening, not loosening. I know this sounds extremely counterintuitive, and so violates what we have learned about the world by assuming that the world looks a lot…
Abenomics 2.0 – Just What Are They Trying To Achieve?
Japan seems to be heading deeper and deeper into a very risky experiment based on a misunderstanding about what the problem facing the country actually is.
Central banks, inflation, inflation expectations, currency wars and the Japanese experiment
This is going to be a relatively short note focused on what is going on in Japan because of the news that Japan has ramped up its program of quantitative easing to new heights. Coming on the heels of the US Federal Reserve’s announcement…
Banks, Japanese trade, the currency wars and deflation
There are no big themes dominating the news today. So it is a perfect time to hit a couple of themes with an economic and market theme approach. Let’s talk banks, Japanese trade, the currency wars and deflation.
The weakness in Germany and Germany’s economic paradigm
The German economic miracle is coming unstuck. And while a German recession this year would merely be a technical recession, it would highlight the underlying flaw in German economic policy, both domestically and for the eurozone as a…
The primacy of monetary policy in Europe
Last November, I posted a two-part piece on the limits of monetary policy based on a speech by Charles Plosser. The message of Plosser’s speech - and many subsequent speeches - has been that central banks are being called on to do too…
Bad debt cannot simply be ‘socialized’
Burgeoning debt in China was not an unlucky accident. It is fundamental to the way the growth model works. We coming closer to the 'Minsky Moment', in which the system requires an acceleration in credit growth simply to maintain existing…
How economics deals with an overindebted private sector
Happy post-World Cup to you all. I missed my Friday catch-all post because I was out sick. So I am going to play catch-up today with a few thoughts on various topics.
The BIS
Let’s start with the BIS. In general, I defend the BIS view…