After watching the new video with Adair Turner from a talk he gave at the Bristol Festival of Economics in November 2014, it is clear he understands the economic situation better than Paul Krugman. While Krugman tries to understand if inequality even leads to more financial instability (link), Turner knows that it does and the […]
This video was published on Youtube a week ago and has only had 27 views. The video is of a talk Adair Turner gave in November at the Bristol Festival of Economics. It reflects his current insights. He gives explanations for 4 big patterns developing in the global economy. Increased Inequality Rising ratio of wealth […]
The markets wait for the Fed’s statement in 30 minutes. Some thoughts beyond low inflation and an active labor market… Fed must give forward guidance to normalizing the Fed rate. Yet, any sense of disciplining the markets will be met with lower stock values. The markets need discipline which is part of the normal process […]
I reflected in a post last week that we should have had less accommodative monetary policy and more fiscal policy since the crisis… Thoughts on Investment, IS-LM & Effective Demand. Today Paul Krugman also had what appears to be a moment of reflection upon monetary perspectives… The Limits of Purely Monetary Policies. He recognizes the […]
From WSJ, low oil prices can be locked in for a year… (link) Remember, it also depends on what currency you buy the oil with… The US dollar is getting strong, while some emerging market currencies are getting weak. Comparative advantage suddenly increased for US firms?
These are tense moments… At 1 am in the morning, Russia made a dramatic announcement to raise its base interest rate from 10.5% to 17%. Their ruble was falling fast yesterday. There is capital flight out of Russia. So the rate rise was meant to attract money back into their country. They even raised their […]
Investment is an essential component of economic growth. Investment supports a healthy inflation rate by providing new money into the economy. What determines investment? Through the IS-LM model, we can understand interest rates and investment. The IS curve has its own model before it is incorporated into the IS-LM model. In that IS model, investment […]
I am of the opinion that the economy is overshooting its natural sustainable level at the moment. There are problems that can occur from that. Below I give a warning from the field of Population Ecology. Stocks are rising to records partly on the back of a lower labor share in 3rd quarter 2014, which […]
Well, it is about time for a higher authority to push strongly for higher wages. The Wall Street Journal has an article about the Bank of Japan’s Governor, Haruhiko Kuroda. Basically, companies need to use their increased profits and reserves to raise labor’s pay. If companies do not raise labor’s pay significantly, Abenomics will fail.
Economics is full of ideas for fiscal & monetary policies. But these policies are Top-down approaches. They work through investment and the financial system. Yes, China lowers its benchmark rate from 6.0% to 5.6%, but China is supporting a failing policy of over-investment. Debt rises… and non-performing loans are increasing. Yes, Draghi wants to do […]