Tag Archives: Featured

[unable to retrieve full-text content]A drought-stricken forest choked with dry brush and deadfall is an apt analogy. While a stock market crash that stairsteps lower for months or years is generally about as welcome as a trip to the guillotine in Revolutionary France, there is some major upside to a crash.

[unable to retrieve full-text content]One way to look at the price of gold, is that it dropped from its high around $1,900 in early June. Another way is to zoom out, and look at the big picture. Here is a 10-year chart of gold and silver prices. For over four years, after the peak around $1,900 ten years ago (early September 2011), the price of gold moved down. By December 2015, it was just over $1,000. Then it was a sideways market until three years ago (August 2018), when the price was well...

[unable to retrieve full-text content]Overview: After an ugly week, market participants have returned with strong risk appetites.  Equities are rebounding, and the greenback is paring recent gains.  Bond yields are firm, as are commodities.  Asia Pacific equities got the ball rolling with more than 1% gains in several large markets, including Japan, China, Hong Kong, and Taiwan. 

Today [August 15] marks 50 years since President Richard Nixon closed the “gold window,” ending the ability of foreign governments to exchange United States dollars for gold. Nixon’s action severed the last link between the dollar and gold, giving the U.S. a fiat currency. America’s experiment with fiat has led to an explosion of consumer, business, and—especially—government debt. It has also caused increasing economic inequality, a boom-bubble-bust business cycle,...

An op-ed in the Los Angeles Times makes me feel sorry for many college students, at least many of those who take economics courses in their respective schools. In fact, the op-ed even causes me to feel sorry for the people at mainstream newspapers who decide which op-eds to publish in their papers. The op-ed in question is written by a Duke University student named Caroline Petrow-Cohen, who is a summer intern at the Times. Her piece takes California Republican...

© Sudok1 | Dreamstime.com The latest figures on Covid-19 patients in intensive care in Swiss hospitals show a steep rise in numbers. On 18 August 2021, there were a reported 163 Covid-19 patients in intensive care wards across Switzerland. This number is far from the peaks of the first and second waves when ICU Covid-19 patient numbers exceeded 500, however the rise over the last month has been steep. On 18 July, there were fewer than 20 ICU Covid-19 patients. By 18...

Having marked the quinquagenary of the destruction of the gold standard Sunday, August 15, it is natural to be a little nostalgic for the Bretton Woods system. After all, it might not have been the classical gold standard, but at least it wasn’t as bad as the fiat standard that succeeded it. As sites such as wtfhappenedin1971.com document, that year indeed looks to be a turning point in the economic history of the West. However, the suspension of convertibility of...

Mandating private and government employees to be immunized against covid-19 and requiring the use of standardized electronic passes as proof of immunization across the nation is what liberty is made of, the editors of the Washington Post argued last week. State governors such as Florida governor Ron DeSantis (R), who are blocking or attempting to block “government agencies, local businesses or both from mandating vaccination,” are engaged in “efforts that fly in the...

In our post on August 11 titled End of an ERA: The Bretton Woods System and Gold Standard Exchange, we discussed the significance of then-President Nixon’s action of closing the gold window thereby ending the Bretton Woods Monetary system. Under the Bretton Woods monetary system, central banks could exchange their US dollar reserves for gold. This also ended the gold fixed price of US$35 per ounce. This week we explore the two questions that concluded last week’s...

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners. Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially...