Economics

. If China’s current account surplus declines, there are, very broadly, two ways this can affect the US. On the one hand the surplus can simply be transferred to another country. For example if China’s current account surplus declines…

We saw that Joseph Stiglitz proposes a new reserve currency to alleviate pressure on trade imbalances. Michael Pettis is now also proposing a similar move away from the U.S. dollar. In an FT Op-Ed, Michael wrote that every generation we…

This topic needs a lot more attention. And I think today's so-called Bretton Woods II fiat system is unstable. Excess money creation and trade imbalances are secular problems that fiat currency has allowed to become destabilizing. If…

I would argue that inflation expectations are rising as we speak. They are still anchored but they will not be if they continue to rise any more. And if inflation expectations become unanchored, it will mean that policy tightening will have…

I was on the Max Keiser show talking to Max about precious metals, currency debasement and hyperinflation. Max was pushing the view that the U.S. was on its way to hyperinflation due to its reckless monetary policy. I argued against this…

Since the financial crisis hit in 2008, excess reserves have piled up in the U.S. financial system. There were almost no excess reserves in the system during the period of recorded data from 1959 onwards. But after the post-Lehman…

By Claus Vistesen Events in Japan and Libya do not seem to have derailed the ongoing positive sentiment in the market. But they just might have alerted various Masters of the Universe that black holes (or was that swans?) are both…

M1 is the narrowest definition of money. It includes currency and coins, traveller's checks, and checking accounts (so-called demand deposits).  The chart below from the St. Louis Fed shows the relationship between base money that the…

This is from the blog Political Irony (hat tip UMKC). Higher consumer price inflation than we see now will probably result in demand destruction and recession before the Fed reacts. The slack in the economy would mean this becomes a…

Yesterday, Paul Krugman wrote: Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast…