Tag Archives: Featured

[Editor’s Note: this article is adapted from a 2003 essay in the Quarterly Journal of Austrian Economics entitled “New Keynesian Monetary Views: A Comment.” As economists abandon theory in favor of makeshift plans to flood the economy with stimulus, Hülsmann here provides some helpful reminders of the fundamental problems behind the current economic consensus on money.] The essential fallacy of John Maynard Keynes and his early disciples was to cultivate the monetary...

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...

The Swiss National Bank meets Thursday. It is widely expected to maintain its current policy stances but is likely to push back against CHF strength. Here, we highlight here the potential choices that lie ahead for the SNB. WHAT ELSE CAN THE SNB DO? The SNB meets quarterly in March, June, September, and December. At the March 19 meeting, the SNB took a series of measures to help mitigate the impact of the pandemic. Whilst SNB officials have always said that rates...

© Eduard Goricev | Dreamstime.com A recently published update to the ongoing study in Geneva to assess the extent of SARS-CoV-2 infection suggests 10.8% of the population may have been infected in the first wave of infections. The study, which tests a sample of the population over time for IgG SARS-CoV-2 antibodies, started in early April 2020. The latest figures come from the fifth week of testing, which was concluded on 9 May 2020. In the first week, 4.8% tested...

Market sentiment reverse sharply to the positive side due to several factors; as a result, the dollar has suffered The Fed beefed up its support for the corporate bond market; all eyes are on Fed Chair Powell as he delivers his semi-annual report to the Senate today The Trump administration is reportedly preparing a large infrastructure bill; May retail sales will be the data highlight Comments from UK and EU officials have sparked optimism about Brexit talks; UK...

Just a quick update to add a little more data and color to my last Friday’s swap line criticism so hopefully you can better see how there is intentional activity behind them. Since a few people have asked, I’ll break them out with a little more detail. While the volume of swaps outstanding at the Fed has, in total, remained relatively constant (suspiciously, if you ask me), the underlying tenor of them has not. Meaning, there is purpose. It’s not like everyone...

[This article is part of the Understanding Money Mechanics series, by Robert P. Murphy. The series will be published as a book in late 2020.] In chapter 8 we presented Ludwig von Mises’s explanation of how bank credit expansion causes the boom-bust cycle, what is now known as Austrian business cycle theory. However, the reigning view today in both academia and the popular media is the Keynesian explanation, derived from John Maynard Keynes’s famous 1936 book The...

Swiss Franc The Euro has fallen by 0.48% to 1.066 EUR/CHF and USD/CHF, June 17(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: Investors have not yet completely shaken off the angst that saw equities slide last week. All equity markets in the Asia Pacific region, but Japan, edged higher today, including China, India, and South Korea, where political/military tensions are elevated. Europe followed suit, and the...

SoftBank has quietly poured more than $500m into Credit Suisse investment funds. Copyright 2018 The Associated Press. All Rights Reserved. SoftBank has quietly poured more than $500m into Credit Suisse investment funds that in turn made big bets on the debt of struggling start-ups backed by the Japanese technology conglomerate’s Vision Fund. SoftBank made the investment into the Swiss bank’s $7.5bn range of supply-chain finance funds, said three people familiar with...

The Federal Reserve has become more aggressive again, after several years of acting docile. As you can see on this chart of the Fed’s balance sheet, it has very rapidly expanded from a baseline from (prior to) 2015 through 2018, of about $4.4 trillion. After which, it had attempted to taper, getting down to $3.8 trillion last summer. Then it was obliged to reverse itself well before responding to the COVID lockdown. Since then, its balance sheet has gone vertical....