4-Year Stock Optimist Turns Negative - 4 Signs Market Is On Thin Ice [View article]
Joe, I believe your application of MMT is best used to describe changes in the money supply not production. The economy grows or shrinks in relation to production, the money follows production not vice versa, that is why thevFED finds itself "pushing on a string.". Central banks have increased the supply of money but that doesn't necessarily translate into increased production.
The Bear Who Cried Wolf: Everything Is Fine Until It Isn't [View article]
I believe Colin would point to the following phenomenon. http://seekingalpha.co... Where he argues that the deposit-less shadow bank credit contraction void is being filled by FED-backed deposits into the traditional banking system, which has a higher potential for inflation.
Is Japan Prompting A 1930s-Like Currency War? [View article]
Ben Gee, My concern is that the US economy doesn't become competitive enough to survive in a global free trade environment, that we can't eventually run a trade surplus. In other words, the politicians won't let the cost of wages and capital to fall to equilibrate with that of the rest of the world and will instead "come to the rescue" of big industry by implementing protectionist policies before there can be a rebalancing. With so much trade deficit sovereign debt almost has to rise (unless endogenous productivity starts to raise exponentially, which I don't see happening here with current demographic and political trends).
The Precise Definition Of Inflation [View article]
Peter, Under an Austrian paradigm, and with Metalism (as opposed to chartalism), commodity based money, you are exactly right. This is the way the world should work. Unfortunately, we live in Chartalist times and have since 1971. Money is no longer money in the sense that von Mises said it was, "the ultimate commodity of universal demand" (or something close to that). Money is now a token of credit issued by the govt and required to pay taxes, of value only as far as the people believe in it. Money is now used to spur production as opposed to production putting deflationary forces on the money supply and causing "natural" credit expansion in the private banking system. With the current paradigm (Chartalism) money and wealth are divorced, accrued interest can be paid off (at least in nominal terms). History tells us how this will end, and I agree with you, it won't be pretty.
Treasury Shorts, Negative Repo Rates, And The Poor Money Market Funds [View article]
Diego, Ha ha! Very insightful comment! It just strikes me as so disingenuous, the FOMC members brushing off any concern for possible asset bubble creation (housing, midwest farmland), as if the Primary Dealers wouldn't act in their own self interest! Of course they don't want the FED to take away the punch bowl, they've got a monopoly on all the "high quality collateral." The Money Markets will have to beg or pay up for the Privilege of holding this collateral in exchange for cash! And the TBTF banks, what do they get, invincible balance sheets and another tax-payer guarantee! What a joke! http://bit.ly/120uk1e
Treasury Shorts, Negative Repo Rates, And The Poor Money Market Funds [View article]
Colin, enjoyable read as usual, I always appreciate your thoughtful analysis. The banks must be asking themselves, why pledge low risk collateral for more cash to make high risk loans? The money markets must be cursing the FED for obliterating the demand for cash! What a crazy upside-down time we are in!
20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead [View article]
Watch Japan closely to see how the US will fare in the near future (5-10 years). Japan's demographic picture is horrible. Their aging population is starting to desave. They are now running a trade imbalance. Honest Abe hell-bent on 2% inflation. Industry less competitive globally (Sony vs Samsung among others). If Japan can muddle through, the US sholud be able to as well. If they begin to run into trouble with sovereign debt yields rising, watch out!
No End In Sight For Global Currency Wars [View article]
The BOJ won't let the 10 year JGB yields go above 1.5%, they just can't. As it stands now they can only theoretically service 50% of the INTEREST on their debt with 10 yr yeilds of 0.75%. So they have no choice, as I see it, but to monetize.
Why Hyperinflation Is No Myth: The Shadow Banking Component [View article]
Ok thanks for the reply Salmo, can you please explain how shadow banking activity has no effect on inflation/deflation? I don't understand truly, because they seem to be able to affect m2. Or maybe u think there wouldn't have been deflation post financial crisis? Please explain thanks
Why Hyperinflation Is No Myth: The Shadow Banking Component [View article]
Colin, help me understand this. Stella and Singh seem to think the negative money multiplier in the shadow banks soaked up all the bank's liquidity post 2007, so the banks are currently shoring up their balance sheets with high powered money from the fed. Thus, QE and the like have counter-acted what would have been an otherwise deflationary scenario. So, if banks are as involved in the repo markets, as your other articles suggest, then wouldn't shadow banking credit expansion AND contraction BOTH have a direct effect on inflation? I mean wouldn't banks profiting from their shadow investments be able to loan more thereby increasing m2? Thanks
4-Year Stock Optimist Turns Negative - 4 Signs Market Is On Thin Ice [View article]
Silver Shorts Feeling Squeezed? [View article]
The Bear Who Cried Wolf: Everything Is Fine Until It Isn't [View article]
http://seekingalpha.co...
Where he argues that the deposit-less shadow bank credit contraction void is being filled by FED-backed deposits into the traditional banking system, which has a higher potential for inflation.
A Dow Record In Sight [View article]
Is Japan Prompting A 1930s-Like Currency War? [View article]
My concern is that the US economy doesn't become competitive enough to survive in a global free trade environment, that we can't eventually run a trade surplus. In other words, the politicians won't let the cost of wages and capital to fall to equilibrate with that of the rest of the world and will instead "come to the rescue" of big industry by implementing protectionist policies before there can be a rebalancing. With so much trade deficit sovereign debt almost has to rise (unless endogenous productivity starts to raise exponentially, which I don't see happening here with current demographic and political trends).
The Precise Definition Of Inflation [View article]
Under an Austrian paradigm, and with Metalism (as opposed to chartalism), commodity based money, you are exactly right. This is the way the world should work. Unfortunately, we live in Chartalist times and have since 1971. Money is no longer money in the sense that von Mises said it was, "the ultimate commodity of universal demand" (or something close to that). Money is now a token of credit issued by the govt and required to pay taxes, of value only as far as the people believe in it. Money is now used to spur production as opposed to production putting deflationary forces on the money supply and causing "natural" credit expansion in the private banking system.
With the current paradigm (Chartalism) money and wealth are divorced, accrued interest can be paid off (at least in nominal terms). History tells us how this will end, and I agree with you, it won't be pretty.
Treasury Shorts, Negative Repo Rates, And The Poor Money Market Funds [View article]
Ha ha! Very insightful comment! It just strikes me as so disingenuous, the FOMC members brushing off any concern for possible asset bubble creation (housing, midwest farmland), as if the Primary Dealers wouldn't act in their own self interest! Of course they don't want the FED to take away the punch bowl, they've got a monopoly on all the "high quality collateral." The Money Markets will have to beg or pay up for the Privilege of holding this collateral in exchange for cash! And the TBTF banks, what do they get, invincible balance sheets and another tax-payer guarantee! What a joke!
http://bit.ly/120uk1e
Treasury Shorts, Negative Repo Rates, And The Poor Money Market Funds [View article]
Did Keynes Understand Endogenous Money? [View article]
20 Signs The U.S. Economy Is Heading For Big Trouble In The Months Ahead [View article]
Is Japan Prompting A 1930s-Like Currency War? [View article]
No End In Sight For Global Currency Wars [View article]
Why Hyperinflation Is No Myth: The Shadow Banking Component [View article]
Why Hyperinflation Is No Myth: The Shadow Banking Component [View article]
Why Hyperinflation Is No Myth: The Shadow Banking Component [View article]