The biggest economic debate is between Keynesians (who want more government spending and lower interest rates in order to fuel demand) and supply-side “austerics” (who want lower taxes on the wealthy and on corporations to boost incentives to hire and invest, and who see government deficits crowding out private investment). But both approaches have problems. … Read more
In a very nice piece, Paul Krugman blasts the anti-social orientation of those who tout gold or bitcoins as an alternative to state money (see here). You see, Uncle Sam is hell-bent on generating hyperinflation through President Obama’s run-away deficits and Chairman Bernanke’s money-dumping helicopters. To protect yourself, you need to buy gold and bitcoins—like … Read more
Leo Tolstoy wrote that all happy families are alike, but each unhappy family is unhappy in its own way. Much the same is true of economies. Maybe that was what EU Commission President Jose Barosso had in mind when he said recently that, “it is a completely different situation in Cyprus and in Slovenia.” Different, … Read more
The basic interest rate in Brazil, the Selic rate, has proven itself effective in controlling inflation, and the Central Bank should raise it soon. The first COPOM (the Brazilian monetary policy committee) meeting under a PT’s (Workers’ Party) administration, back in January 2003, raised the Selic rate by 50bps, from 25% to 25.5%. In the … Read more
Monetary policy changed dramatically during Margaret Thatcher’s period as prime minister, from hard-line or ‘punk’ monetarism to membership of the European exchange rate mechanism (ERM). This, from my book Free Lunch, explains how her period in office accounted for four of my seven ages of modern UK monetary policy. By comparison, the past 16 years have … Read more
Summary: The people in Europe’s periphery suffer from a lack of alternatives. This locks them into two ugly choices: suffer years of austerity (with no end in sight), or futile (perhaps nihilistic) protests. In fact, the West as a whole has a lack of alternatives. Here we discuss that problem, and possible solutions. Contents The … Read more
With the recent death of Margaret Thatcher, the Iron Lady, it is time for a quick retrospective.Here’s the conventional narrative. The Keynesians took over policy-making in the UK and the US in the 1960s. They coddled Big Labor, allowing unions to ramp up wages. They coddled the poor with generous welfare. They coddled Big Business … Read more
Last week, I wrote on the ECB’s meeting and the case for easing credit conditions in the periphery (a recommendation that they didn’t heed, though pressure to act is building). I ignored the upcoming Bank of Japan (BoJ) meeting. My wife’s comment the next day summed it up well: “you blogged on the wrong central bank.” For … Read more
So far, the much-dreaded “sequester” – some $85 billion in federal spending cuts between March and September 30 – hasn’t been evident to most Americans. The dire warnings that had issued from the White House beforehand – threatening that Social Security checks would be delayed, airport security checks would be clogged, and other federal facilities … Read more
Here are a few recent tidbits from the press, just in case you were feeling a bit overly optimistic. 1. MERS Helps Wall Street Steal Your Home Over the past couple of years, I’ve tried to explain how the financial sector created MERS to destroy property records so that it would be easier to steal … Read more