John Cochrane is developing a model for the Fisher Effect to explain that raising the nominal central bank rate could lead to higher inflation, not lower inflation as many say. Nick Rowe complements the model with a simpler “model”. And Steve Williamson has been an ever-present force for the Fisher Effect. I too have written […]
In the Solow Growth Model, productivity is a powerful factor for raising income per person in a country. So it is important to maintain productivity growth if a country would like to have economic growth. I have written recently that there are ways to discipline the market in order to achieve greater productivity and thus […]
Yesterday Credit Suisse released its Global Wealth Databook 2014 to go along with the Global Wealth Report issued Monday. Global wealth hit another new record of $263 trillion as of mid-2014, up 8.3% from mid-2013 (Report, p. 3). Rich people are doing well, but how about the middle class? One measure of this is median […]
by Joseph Joyce (re-posted from Capital Ebbs and Flows) International Debt and Financial Crises The latest issue of the IMF’s World Economic Outlook has a chapter on global imbalances that discusses the evolution of net foreign assets (also known as the net international investment position) in debtor and creditor nations. The authors warn that increases […]
Dow Jones stock index continues downward. Why? The future will be disappointing. So these future disappointments are already being priced in. Why wait for the bad data? We know its coming. Europe is in trouble. China is slowing. Oil prices are going to low for many producers. Retail sales are weak due to capital income […]
Dem Senate candidate Michelle Nunn is up with a new ad that contains footage of GOPer David Perdue telling a local TV station that he is “proud” of his outsourcing past. This footage could prove especially potent in a state with such high unemployment, but Nunn trails Perdue by nearly four points in the polling average, which is […]
Paul Craig Roberts says, “All the discipline is gone.” (Boom-bust video at 8-minute point) He is referring to the corrupt environment of deregulation that led to larger and larger banks with “untouchable” power. He gives the example of “National Branch Banking” that developed in the late 80’s. Banks were given incentives to siphon savings from […]
He really likes the book, but expresses frustration that Piketty (emphasis mine): …doesn’t adequately differentiate among different kinds of capital… Imagine three types of wealthy people. One guy is putting his capital into building his business. Then there’s a woman who’s giving most of her wealth to charity. A third person is mostly consuming, spending a […]
Embarrassingly, I missed this reply by Tim Worstsall to my post “Understanding Piketty, part 1.” My apologies to Mr. Worstall and my readers; despite his writing it August 14, I just discovered it the other day when I was mindlessly looking at site traffic data from Alexa. In his post Worstall takes issue with Piketty’s […]
The more the Fed postpones raising of the Fed rate, the chances increase that it won’t rise at all before the next recession. Worry will mount about global growth. Worry will mount that the US is vulnerable. Pressure will build to keep the Fed rate low as the profits of more firms become increasingly vulnerable. […]