Many high-income countries experienced little growth but strong price pressures in the 1970s. Since the mainstream economics said the two were mutually exclusive, a new term had to be created, hence stagflation. Fast forward almost half a century later, and mainstream economists are still having a problem deciphering the linkages between prices and economic activity, …
China Returns, ECB Record, Fed Minutes and the Week Ahead Read More »
Central banks are prepared to take fresh measures to strengthen and extend the business cycle primarily because price pressures are below what their predecessors thought would be acceptable levels. Draghi, speaking for the ECB, the Federal Reserve, and the Bank of Japan ratcheted up their concerns, which, even without new initiatives, were sufficient to drive …
The first week of June features the Reserve Bank of Australia meeting, an ECB meeting, and the US employment data. The RBA is expected to deliver its first rate cut in three years. The market appears to have discounted not only a second cut in H2 but has priced nearly half of a third cut …
There seems to be a consensus among investors and asset managers. The expansion of central bank balance sheets through the purchase of sovereign bonds pushed and is keeping bond yields low. Some observers suggest that the central banks’ QE has paved the way for the rise of populism by taking by neutralizing the ability of …
What if Central Banks are not the Main Reason Rates are Low? Read More »
Nothing fails like success, we are often old half seriously. Yet we argue that the most formidable challenge for market economies is not this is or that weakness or defect that can be reformed away. Rather, like some individuals we may know, the biggest weakness of capitalism arises from its greatest strength. Capitalism has unleashed …
It is an amazing set of circumstances. The combination of strong growth impulses fueled by supportive monetary policies, and in several large economies (e.g., US and Japan) fiscal policy is also stimulative and demographics are causing a shift that few have yet to recognize. There is a profound shortage of workers that is beginning to …
The US monthly employment data has been the single most important high frequency economic report. It was a key in the recession of the Great Financial Crisis, and it was an important metric of the recovery. Recent reports have been distorted by the storms in late Q3 and early Q4. September jobs growth fell to …
I had the privilege of joining the set of anchors (Julie Cchatterley, ScarletFu, and Joe Weisenthal on the set of “What’d You Miss” today. The unrehearsed discussion took an unexpected turn when Joe asked about the low volatility. The anchors were patient and gave me time to provide a sketch of the thesis of my …
Cool Video: A Tentative Answer to the Low Vol Question Read More »
(summary of presentation based on my book, Political Economy of Tomorrow, delivered to Bank Credit Analyst conference yesterday)Alice laughed. There is no use trying; she said, “one can’t believe impossible things.” I dare say you haven’t had much practice, said the queen. When I was younger, I always did it for half an hour a …
Another Look at Why the Return to Capital is Low Read More »
All that is solid is melting. After Copernicus, we know that earth is not the center of Creation. Darwin showed us that humans are part of the animal kingdom. Freud told us we are not even masters of our own house. Even the speed of light is not a constant. It has been slowed under certain …
The Need for Higher Wages: Lots of Thunder, No Rain Read More »