Category Archives: Money

Canaries in the Coalmine

by CantillonCH

The old Wall St. adage runs that ‘stocks are not bought, they are sold’, but the idea here is that they are sold to eager acquirers and that the act of selling does not therefore depress the price too much. The same cannot be said of what we have experienced these past six weeks or so.

If the damage in the major indices—measured from the early December highs—has so far been limited to a ‘corrective’ 10%, others—whether geographically more far-flung or more sector-specific—have not been so fortunate. Continue reading …

Has the Fed ‘Bought the Farm’?

by CantillonCH

Those of us who have not been stuck on Mars for the past five years, tending our potato patch, will be dimly aware that the Grand Mages of the economic world – the central bankers – have been manfully searching their spell-books and bubbling their alembics in order to exorcise the dreaded demon of Deflation from the land, terrified that the world will collapse around them if too many shoppers are too routinely confronted with anything that might smack of being a bargain. Continue reading …

Hocus Pocus

by CantillonCH

We are in danger of being blinded by semiotics and so losing sight of substance. We are so convinced that the medium IS the message that we have forgotten to seek for the meaning it is supposed to convey. We have given in to the quack doctors and their unscientific theories of humours in the body economic. We are now so anxious to keep the patient’s temperature minutely regulated that we have neglected to do anything about the malarial parasite which had earlier given him a fever and now has him shivering through a chill.

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Madness in the Method

by CantillonCH

Seemingly oblivious to the idea of ‘purdah’ – a period of dignified silence to be observed in the run up to the taking of policy decisions—the ECB’s Chief Economist, Peter Praet, felt able to give AFP a wide-ranging interview this week and truly remarkable it was, too.

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Inside, Outside, Nowhere is Home

by CantillonCH

To the delight of everyone with a vested interest in the continuance of the global central bank bubble, the latest data round from China revealed that, in the past four months, the cumulative total of new RMB loans in China has set a major new high, amounting to no less than CNY4.6 trillion—a number 50% or so greater than the average of the preceding two years and one equal to around $730 billion, or $6 billion a day, even at today’s newly depreciated rate of exchange. Yet, in that same time, the figure for ‘total social finance’ rose by no more than (sic) the 2012-14 seasonal average of CNY5 trillion.

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Reserve Judgement

by CantillonCH

With regard to the vexed issue of the renminbi, let’s focus on the basics. The official response to July’s stock market collapse saw loans to non-bank financials (the PPT) rise CNY891bln. Many of the recipients, the bailees, took their funds and either moved them abroad or paid back external loans, causing a record CNY242bln efflux.

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Memo to Mario: Money is fungible

by CantillonCH

Since the spring of 2014, the euro has lost around a quarter of its value, Mario Draghi has finally joined the Big Boy’s League by launching his own, decidedly belated version of QE, and—everywhere but in poor, benighted Greece—the growth of the money supply has been bordering on the explosive. Continue reading …

The Only Form of Permanence

by CantillonCH

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 …