Ah, Brexit! What is there left to say that not already been said, most of it either out of folly or falsehood? As regards the overall political backdrop to this lightning bolt of mass discontent, the only thing that is clear is that there is no clarity—neither within Britain nor without. If, as the Good Book tells us, a house divided against itself cannot stand—hard hats on, people! Continue reading
Category Archives: Fixed Income
Positively Natural – Pt IV
TOMORROW, AND TOMORROW, AND TOMORROW
So, one last time, let us lay out the argument developed above in the hope of eliminating all obscurity, for it is a pivotal one and therefore one which must be well understood if we are to challenge the very substance of the perilous theorizing of our Lords and Masters.
With positive real rates – which, we must again emphasize, simply imply that the instantaneous price ratio between goods today and goods tomorrow is greater than unity – the primal temptation is for the consumer to eat as much as he can, even including his seed corn, and so to yield to the pleasures of the moment in disregard of the needs of the morrow.
Positively Natural – Pt III
NO REMEDY IN THIS CONSUMPTION OF THE PURSE
But the sort of reasoning we developed in the last of this series is alien to much of today’s mainstream, many of whose members succumb to the long-dispelled, circular fallacies of the productivity argument. Yet more of them adhere to what Dennis Robertson wickedly derided as Keynes’ Cheshire Cat theory of ‘liquidity preference’ (‘The rate of interest is what it is because it is expected to be other than it is. But if it is not expected to be other than it is, there is nothing to tell us why it is what it is… [it is] a grin without a cat’).
Positively Natural – Pt II
THE NET THAT SHALL ENMESH THEM ALL
Now, the foregoing may be all well and good, but it is also the case that any such consignment of goods is open to a multitude of what economists call ‘rivalrous’ uses. If this is not true for that rare, individual batch of highly purpose-specific goods which we may have under consideration in some particular instance it will nonetheless still hold for the earlier, typically less use-constrained goods of which that batch is partially comprised, as well as for the later, more shop-ready goods to which it will in turn give rise and whose own market valuation, as we have seen, will help determine the price of their antecedents
Positively Natural – Pt I
THE CASE FOR POSITIVE INTEREST
An Austrian rebuttal of Summers et al, in four parts
THE TIME IS OUT OF JOINT
Over the years, any number of psychological experiments have been conducted in order to validate – or at least to give a veneer of academic corroboration to – a truth already well established by practical experience; namely, that we humans must continually struggle to overcome our basic animal instinct to seek instant gratification of our wants.
Money, Macro & Markets – The Archive
Regular readers will know that the articles published here are but a small subset of the detailed work I undertake to analyse economic and political developments and their effects on markets. In order to give some idea of the scope of this, presented below is an archive of past issues of the Austrian School-informed, in-depth monthly publication, ‘Money, Macro & Markets’ in addition to which I compile twice monthly updates as the ‘Midweek Macro Musings’ which are also made available on a complimentary basis to subscribers to the former letter.
Negative rates, Negative Outcomes
There has been much head-scratching of late as to why, with interest rates lower than they have been since the Universe first exploded out of the Void, businesses are not undertaking any where near as much investment as that hoped for beforehand by the academic cabal whose ‘effective demand’ and ‘transmission channel’ fixations have helped drive rates to today’s mind-boggling levels.
The Only Form of Permanence
Perhaps the first great lesson of economics, as emphasized by Henry Hazlitt, is that there is no free lunch. The second, courtesy of Frederic Bastiat, is that if it sometimes appears that there is one, it means that we simply have not looked deeply enough into the consequences of our attempt to enjoy it. The third, the joint insight of several generations of Austrians, is that the attempt to buy one for ourselves by resort to monetary manipulation is eventually doomed to fail. A cynic might say that the fourth and final lesson is that no-one ever wishes to abide by the strictures inherent in the first three rules. Continue reading
Midweek May Macro
Amid all the debate about the US economy and the somewhat vague prospect of the Fed finally showing some cojones at some point in the future, the principle feature which allows the Doves to block any renormalization of the rate is the supposedly soft state of the labour market, particularly with reference to the sorry-looking participation rate.
Market Mayhem
Between Li Keqiang, Mario Draghi, and the BLS, markets everywhere had a wild ride into the weekend.
Starting east and working west, the upshot of the Chinese ‘Twin Sessions’ was a perseverance with the so-called ‘New Normal’ theme – namely, with the idea that headline, GDP-style growth should be lower in future with the emphasis shifting from brute volume to the encouragement of a shift in the productive structure towards the provision of higher-value added, more technology-rich goods, towards service in place of smokestacks, aall the better to spread the benefits of industrialization to the domestic populace.