money

The claims about “unsustainable deficits” gained new urgency this week as S&P warned that it was downgrading US federal government debt from stable to negative (see here for recent debate). This appeared to be a blatantly political…

Analyzing official China comments in order to make a currency call is a fool’s errand. However, suffice it to say that all of these comments suggest a reduced patience for the status quo and an increased willingness to recalibrate China FX…

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…

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…

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…

In January, Jeff Clark of Casey Research’s BIG GOLD advisory set out to get opinions from some of the smartest, most accomplished investors in the gold industry – where is the gold price going to go, how volatile will the markets be, what’s…

By Warren Mosler As previously discussed, the US should outlaw the use of libor by its banking system. It makes no sense to allow US dollar rate setting for our banks to be set overseas by the BBA. Setting our banking system’s dollar…

The essential idea is that the “money supply” in an “entrepreneurial economy” is demand-determined – as the demand for credit expands so does the money supply. As credit is repaid the money supply shrinks. These flows are going on all the…

By Michael Pettis Barry Eichengreen had a very interesting piece in last week’s Wall Street Journal. In it he argues that we are approaching the end of the period in which the US dollar is the world’s dominant reserve currency, and…