fiscal

One should fear an Italian debt spiral, yes. However, fiscal consolidation is an anti-growth policy that leads to higher deficits in the short-to-medium term. So what Draghi is saying doesn’t make a lot of sense.

How does manufacturing CPI inflation benefit an economy in which incomes are falling? When inflation rises and incomes are stagnant or falling, the economy rolls over.

Despite the economic problems, it is clear that President Hoover felt that the government’s budget still needed to be balanced. He implored Congress to work with him in order to cut spending to meet this objective.

A little more than a year ago, many investors were worried about the US state and local government finances. There were genuine concerns that what was happening in Greece could very well be the future of numerous US local governments. Yet…

All US government obligations are substantially identical promises to repay a specific amount of the currency unit of account backed by nothing but taxing authority. So, Treasury bonds don’t ‘fund’ anything. If the Treasury were allowed to…

In the next series of blog posts, we will look in more detail at fiscal and monetary operations of a nation with a sovereign currency. Before we do that, let us briefly examine the case of the Euro. Let me say that we will not address the…

The jobs numbers in the US were weak. There was no change in non-farm payrolls. Unemployment was unchanged from July at 9.1%. Underemployment was 16.2%. Total revisions to previous months’ data were –58,000, meaning the number today was…

An excerpt from the August 1932 Republican Nomination Acceptance Speech by Herbert Hoover and commentary about his policy choices and ours today

If real returns remain low, it will skew capital investment. When recession hits, debtors backing those losing investments will be caught out and forced to delever aggressively as resource misallocation becomes evident.

The fact that Italy's 5-year CDS prices remain elevated (376 now vs 388 on Aug 4 peak) warns that ECB bond buying, fiscal austerity has not convinced private sector investors that the worst is truly past. This offers a poor backdrop from…