Tag Archives: 5) Global Macro

The clock really was ticking on this so-called economic boom. A product in many economic accounts of Keynesian-type fantasy, the destructive effects of last year’s hurricanes in sharp contrast to this year’s (which haven’t yet registered a direct hit on a major metropolitan area or areas, as was the case with Harvey and Irma) meant both a temporary rebound birthed by rebuilding as well as an expiration date for those...

Here’s the difference between a recession and a depression: you can’t get blood from a stone, or make an insolvent entity solvent with more debt. There are two basic differences between a recession and a depression: 1. Duration: a recession typically lasts between 6 and 18 months, while a depression drags on for years or even decades, often masked by official propaganda as “slow growth” or “stagnation.” 2. The basic...

By the standards of previous generations, the middle class has been stripmined of income, assets and purchasing power. What does it take to be middle class nowadays? Defining the middle class is a parlor game, with most of the punditry referring to income brackets as the defining factor. People tend to self-report that they belong to the middle class based on income, but income is not the key metric: 12 other factors...

The way forward is to replace the entire system of reserve currencies with a transparent free-for-all of all kinds of currencies. Over the years, I’ve endeavored to illuminate the arcane dynamics of global currencies by discussing Triffin’s Paradox, which explains the conflicting dual roles of national currencies that also act as global reserve currencies, i.e. currencies that other nations use for global payments,...

The defaults and currency crises in the periphery will then move into the core. It’s funny how unintended consequences so rarely turn out to be good. The intended consequences of central banks’ unprecedented tsunami of stimulus (quantitative easing, super-low interest rates and easy credit / abundant liquidity) over the past decade were: 1. Save the banks by giving them credit-money at near-zero interest that they...

On April 2, the benchmark 10-year US Treasury yield traded below 2.75%. It had been as high as 2.94% in later February at the tail end of last year’s inflation hysteria. But after the shock of global liquidations in late January and early February, liquidity concerns would override again at least for a short while. After April 2, the BOND ROUT!!!! was re-energized and away went interest rates. Between that date and May...

We’re living in a fantasy, folks. Bubbles pop, period. The nice thing about the “wealth” generated by bubbles is it’s so easy: no need to earn wealth the hard way, by scrimping and saving capital and investing it wisely. Just sit back and let central bank stimulus push assets higher. The problem with bubble “wealth” is it’s like an addictive narcotic: now our entire pension system, public and private, is dependent on...

In December 2006, just weeks before the outbreak of “unforeseen” crisis, then-Federal Reserve Chairman Ben Bernanke discussed the breathtaking advance of China’s economy. He was in Beijing for a monetary conference, and the unofficial theme of his speech, as I read it, was “you can do better.” While economic gains were substantial, he said, they were uneven. To keep China going down the same path of rapid growth,...

It isn’t easy to add new subway lines or new highways, and so “solutions” don’t really exist. If there’s one thing Americans can still agree on, it’s that America needs to spend more on infrastructure which is visibly falling apart in many places. This capital investment creates jobs and satisfies everyone’s ideological requirements: investment in public infrastructure helps enterprises, local governments and...

Few conventional-media commentators are willing or able to discuss these factors in the labor shortage / declining participation trends. Is there a labor shortage in the U.S.? Employers are shouting “yes.” Economists keep looking for wage increases as evidence of a labor shortage, and since wage increases are still relatively modest, the argument that there are severe labor shortages in parts of the U.S. is...