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Tag Archives: Economics

Toward Stagflation

Norway Real House Price Per M2 We have all heard the incredible stories of housing riches in commodity producing hotspots such as Western Australia and Canada. People have become millionaires simply by leveraging up and holding on to properties. These are the beneficiaries of a global money-printing spree that pre-dates the financial crisis by decades. The road toward such outsized gains in property is not paved...

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Stupid is What Stupid Does – Secular Stagnation Redux

Annual population and labour force growth in Japan Which country, the United States or Japan, have had the fastest GDP growth rate since the financial crisis? Due to Japan’s bad reputation as a stagnant, debt ridden, central bank dependent, demographic basket case the question appears superfluous. The answer seemed so obvious to us that we haven’t really bothered looking into it until one day we started thinking...

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Economics: The Core

The Economist reviews core ideas in economics. The introductory article points out that economists’ fundamental mission is not to forecast recessions but to explain how the world works. It argues that economists have delivered and it discusses six exemplary areas of economic research: Nash equilibrium; Mundell-Fleming trilemma; Minsky financial-instability; Stopper-Samuelson effect of trade on wages; Keynes fiscal-multiplier; and Akerlof’s and others’ work on information asymmetries....

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Brexit or not, the pound will crash

Status quo, as our generation know it, established in 1945 has plodded along ever since. It is true that it have had near death experiences several times, especially in August 1971 when the world almost lost faith in the global reserve currency and in 2008 when the fractional reserve Ponzi nearly consumed itself. While the recent Brexit vote seem to be just another near death experience we believe it says something...

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Money confuses and blurs economic relations

Money, generally accepted medium of exchange, acts as a veil that confuse and blurs economic relations. This is especially true when it comes to intertemporal considerations. Whilst probably the most important institution in a free market, money can be highly destructive when politicized. Why? Because politics is about power and distribution of real wealth. And since money affect almost every single transaction,...

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China the lender of last resort for many oil producers

Summary: Bawerk explains how China will be the lender of last resort of many oil producers. China might let collapse a smaller producer and become much smarter at covering its political bases across producer states to protect longer term sunk costs. It took a while to play through, but our assessment that China would increasingly become the petro-state lender of last resort is starting to come good. The...

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Dumbest monetary experimental end game in history (including Havenstein and Gono’s)

We have seen several explanations for the financial crisis and its lingering effects depressing our global economy in its aftermath. Some are plain stupid, such as greed for some reason suddenly overwhelmed people working within finance, as if people in finance were not greedy before 2007. Others try to explain it through “liberalisation” which is almost just as nonsensical as government regulators never liberalised...

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Saudi-Arabia: Peg or Banking Crisis?

Oil exporters recycled their dollar in US treasuries During the reign of the mighty petro-dollar standard, it was necessary for major oil exporters to recycle their dollar holdings back into the dollar-based financial system to maintain their self-imposed exchange rate pegs. US government bonds are the very centrepiece of this elaborate system and it is thus no surprise to see the dollar price correlate well with overall OPEC TSY holdings. In other words, when oil prices were high, oil...

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Notes from ECB Press Conference

 ECB press conference June 2 2016 Held in Vienna with Governor Nowotny Keep key ECB interest rates unchanged Will be kept at present or lower for an extended period of time, exceeding asset purchase program (80bn per month) which will end March 2017 sector program will start June 8 TLTRO start in June New measures will strengthen growth in euro area through credit expansion Very low inflation must not become entrenched in second round effects through effects on wages and prices. ECB...

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