As a sort of Keynes-manqué, Stephanie Kelton’s moment in the limelight is being granted her for much the same reason as was that of her more illustrious predecessor: she is telling free-spending politicians what they always want to hear – viz., that their habitual incontinence is statesmanship of the highest order. Continue reading
Category Archives: Money
Chasing the Dragon
As is by now widely reported, China stocks have been on something of a tear in the past few weeks, with the CSI300, for example, up by around 20% in that time. The usual suspects have been at work as the PBOC has encouraged a renewed money flood into being and those desperate for an income – and possibly with little else to do, at present – are enticed back into what is merely the latest in the nation’s rolling series of mania and speculative booms. Continue reading
After the Fall of Caffa
While politicians anxiously check the shifting weather-vanes of public opinion and scientists squabble over facts as well as interpretations, central banks are resolutely doing what they do best – wildly exceeding their briefs and trying to drown all problems in a flood of newly-created money. As ever, the underconsumptionists worry that a lack of demand will usher in deflation, in spite of all such efforts. Some of us, however, worry more about what it will do to supply. Here, we explain why [For those who would like a podcast version please follow this LINK]:-
Free Lunch Finance
The poster girl of the voguish crankdom that is Modern Monetary Theory (“MMT”) – Stephanie Kelton, has been out pimping her new book – “The Deficit Myth” – with a great deal of help from the unofficial PR department which she seems to have, nestled within the House Organ of Davos, the execrable FT.
Here, Professor Kelton – for all the puffery about how fearless and radical is her approach – is pushing at an open door: a gaping aperture in the last bastion of economic rationality that is being held open by no less than Fed Chairman Jerome Powell, a man who recently went on record to boast: “We will never run out of money.”
Not your Grandfather’s Crisis
Many people are trying to draw analogies with the Great Depression, with wartime, or the 70s stagflation era but we feel most of these analogies are missing the mark. Here we explain why:- Continue reading
Money v Supply
With many commodity prices touching multi-year lows and with mounting fears for real estate valuations and car-lease residuals, numerous commentators seem convinced that ours is now a deflationary future. QE failed to raise CPI by anywhere near what the spin promised, they say, partly because it was ‘unsupported’ by fiscal policy. Therefore, if we don’t get Roosevelt, we’ll get Brüning, they conclude, and, meanwhile, we need the Fed to cut rates below zero, said one prominent pundit on April 5th. We replied:-
Whatever it doesn’t take
On March 15th, the Eurozone branch of the Throw-more-money-at-it lobby were making themselves heard, calling for the ECB to run the printing presses for a limited (author pulls down lower eyelid with index finger) period as a supplement to the to the €120 billion in extra security purchases already made to that point. [NB total ‘assistance’ to April 17th had reached to €275bln in RP, €148bln in securities, and €126bln in FX swaps for a total of €550bln in five short weeks].We responded:-
Overstretch
Markets have paradoxically both been on edge – and in the throes of euphoria – since the repo shock in mid-September, being at the same time alarmed and yet strangely reassured by the Fed’s frantic backpedalling and the $400+ billion boost to its balance sheet which this entailed.
However, at a time when an already faltering flow of business revenues across the major nations has now to weather the unquantifiable, but potentially far-reaching, disturbance spread by the China coronavirus outbreak, the margin for error seems slim, indeed. Extreme levels of overstretch are everywhere apparent.
To download as a PDF, please click here: 20-02-21 Overstretch
Bootleggers, Bootstraps & Bitcoin
Once upon a time, way, way back in early October [2017] when bitcoin was being exchanged for proper money at less than a third of the price it is today, I had my first opportunity to peek behind the curtain into the magical work of Cryptocurrency – and what a revelation it was!
Nestled behind a very professional looking website and housed in a cool incu-pod, shared office-space, the faultlessly polite, fresh-faced young men behind the venture took time out of reshaping the future of finance to explain some of the basics of the New Era to us two slow, old dinosaurs who had called upon them in search of enlightenment. [First published Dec 2017] Continue reading
Turnaround Tuesday
After the excitement of the past few sessions, it was not entirely unexpected that what we old market stagers used to call, ‘Turnaround Tuesday’, would deliver its traditional mix of reflection, position rebalancing, and general counter-trend moves of either the stop-profit or the ‘Why do I always buy the top?’, buyers’ regret kind. [First Published June 4th] Continue reading