Low interest rates in the UK show how powerful expectations of future central bank policy action is on bond markets given rising inflation.
Sometimes governments choose to mimic the private sector and amplify the trend in the economy. This is called pro-cyclicality – and in worst case scenarios, it can be quite destabilizing.
Hallmarks of recession are all around about the time they happen if one looks close enough — certainly in 2008. I don’t think we are in a recession by any stretch, right now — not even close.
When defaults begin to rise and the economy begins to slow, we will find out whether deficits really drive rates higher or cause inflation to rise and remain high.
We’re looking at about 1% in real terms. In the 2000s, we saw real earnings growth rise to 2% and in the late 1990s, it was even 3%.
If bitcoin and its equivalents can deliver what its champions promise, what’s not to like? Well, the rub is what Economist Abba Lerner said “The modern state can make anything it chooses generally acceptable as money”.
Claims that moves by central banks in China, Japan and Europe are dominating the US Treasury market are flawed because the ‘model’ used to make those claims is flawed.
As the Federal Reserve meets today to decide how to communicate its messaging on future rate hikes and balance sheet reduction, financial stability will play a key role. The risk of overheating was real. So let’s put some framing around this issue and ask how the Fed reacts as the data come in down the line.
I am a sceptic of thinking about low unemployment as a bad thing – which is what people who think about policy in terms of the Phillips curve do. Now a study by the Philly Fed is saying that the Phillips Curve is a poor forecasting tool. Will this have any meaningful impact on policy? Some thoughts below
This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that question with this post.
Quick hit here. I have been banging on about lowflation, repeatedly suggesting it is here to stay. The Fed, on the other hand begs to differ and is pre-emptively normalizing rates, as a result. No matter how you look at this, there’s a rub though: We all consume different products, […]
Baumol was a giant in promoting entrepreneurship. And most importantly here, his theory on rising costs in labor intensive industries is something that the Nobel committee considered in 2003 and should have given him an award for.