Turning Japanese

A noted [monetary extremist] resident at GMU’s Mercatus Center fretted on March 20th that Japan’s efforts during 2001-06 to have the central bank finance deficits ‘didn’t work’ – i.e., they failed to ignite meaningful levels of wealth-sapping inflation.

The reason? As our sage tells us, was that there was ‘no commitment… to a permanent expansion of the monetary base’ as expounded in the ratiocinations of that dark genius of modern central bank theorising, Michael Woodford. We replied:-

Continue reading

Central Banking: It’s alive!!

In his recent posting on Linked In, entitled, ‘The death of macro-prudential’, Stuart Trow of the EBRD delivered a well-aimed broadside at the pitiable conduct of the Bank of England and elaborated on some of the malign consequences of its catalogue of errors. Without wishing to single him out unduly for criticism for a piece with whose broad outlines I concur,  I see it as a prime example of where even those who are not wholly in thrall to the cult of ‘Whatever it Takes’ often miss the critical features of that cult’s essential evil. Continue reading

A recent miscellany

Does it make sense to plot multi-decade asset prices on a linear scale? How reliable are macro ‘profit’ estimates? Why is the curve flattening and what will a reduction in Central Bank reserve balances mean for assets?

S0me recent short snaps from my LinkedIn & Twitter feeds plus you can watch my latest update ‘China: Unbalanced’  here, on YouTube Continue reading

The Mephisto Polka

[This article appeared in edited form in the Epoch Times and also in the Daily Telegraph]

In her recent set-piece testimony before Congress, Janet Yellen made clear that she is determined to repeat the sort of ‘gradualism’ in raising rates that proved so disastrous after the Tech bust. In other words, that she will not so much boil the frog slowly as encourage him to go out and make a further raft of foredoomed, highly-leveraged investment decisions before he realises he’s been cooked.

Continue reading

Fretting on the Fed: Monitor No.5

Falling returns in the US. Tight money in China. An upswing in Japan. Deflation in India. Gold goes cold. Fretting the Fed on falling CPI and a flattening curve? No need to panic, just yet.

Please click for the latest Monitor.

17-06-20 M4 No5

Faking it

SUMMARY: Thanks to the election of President Trump and to his uncompromising attitude to the establishment media, much hot air is being expended on the subject of ‘fake news’. What we should really be getting worked up about is ‘fake economics’, for this is a much more pervasive evil, as well as a much more persistent one. Continue reading

Uncertainty! GASP!

Amid the relative torpor of the US holiday, it might be the moment to wax a little philosophical and ask if you, the listener, have ever noticed that so much of what passes for economic wisdom today involves the persistent overuse of the word ‘uncertainty’? Continue reading

A Dollar is What I Need

As what will be an interval greatly shortened by the Thanksgiving Day holiday dawns, traders and investors seem happy to continue where they left off on Friday, buying stocks, selling currencies, and giving bonds a fairly wide berth.

A little respite would not be entirely unwelcome after a period in which we have experienced record setting moves and switches of positioning in the likes of copper – where the latest numbers from the regulator show the non-commercials now boast a tally of net longs only once briefly topped – and that way back in 2003. Continue reading

Time to Get Real

Having just managed to quell a dangerous rebellion among her fellow Committee members, it did not seem the most opportune time for Janet Yellen to start dreaming of the sort of post-war ‘demand management’ that would happily trade a few extra percentage points of price inflation in order to move a little further up the employment axis in that unshakable vision of the Phillips Curve that seems to dominate the modern central banker’s thought processes.

Continue reading

Abenomics: one arrow short of a quiver

The craziness that is Abenomics seems to have one flimsy foundation: viz., that Japan’s fiscal situation seems so dire as not to be susceptible of a rational approach. Not that this is any real excuse for the political cowardice which attempts to disguise the problem through gross financial and monetary manipulation.

Please click the link for a thorough analysis:- 16-09-29-mmm-sep-jpn