Monetary System

Sometimes governments choose to mimic the private sector and amplify the trend in the economy. This is called pro-cyclicality - and in worst case scenarios, it can be quite destabilizing.

Hallmarks of recession are all around about the time they happen if one looks close enough — certainly in 2008. I don’t think we are in a recession by any stretch, right now — not even close.

Powell mentioned financial stability as a concern as he was sworn in today. With markets taking a dive, it’s not clear what that will mean in terms of policy.

When defaults begin to rise and the economy begins to slow, we will find out whether deficits really drive rates higher or cause inflation to rise and remain high.

We’re looking at about 1% in real terms. In the 2000s, we saw real earnings growth rise to 2% and in the late 1990s, it was even 3%.

The state of the nation is as good as it is going to get during this business cycle — at least from an economic perspective. On that, we should be a lot more interested in what Janet Yellen has to say in her last FOMC press conference.

If bitcoin and its equivalents can deliver what its champions promise, what’s not to like? Well, the rub is what Economist Abba Lerner said “The modern state can make anything it chooses generally acceptable as money".

Claims that moves by central banks in China, Japan and Europe are dominating the US Treasury market are flawed because the 'model' used to make those claims is flawed.

There hasn’t been inflation in the economy since the early 1980s. It collapsed with the end of the Soviet Union and with the rise of China as a supplier for consumer goods.

As the Federal Reserve meets today to decide how to communicate its messaging on future rate hikes and balance sheet reduction, financial stability will play a key role. The risk of overheating was real. So let’s put some framing around…