43.2 Asset Bubbles & Money Financed Fiscal ExpansionHow does one define an asset bubble? Might there be fundamental, non-speculative reasons why prices are persistently high? Also, why did money-financed fiscal expansion fail in Japan? What does that experience tell us about the present? [Emil’s Summary] As many listeners have long suspected, your podcast host did, as a child, run away and [...]
When the going got rough, Bernanke…blamed the weather? It was September 24, 2008, amidst financial chaos the likes of which the entire world hadn’t seen since the early thirties. Hauled up before Congress’ Joint Economic Committee to explain what was going on, or attempt some kind of reasonable sounding explanation, Bernanke pointed to a few positives out there despite so [...]
On August 1, 2018, the Treasury Department announced that it was introducing the 8-week T-bill. With deficits up and going higher due mostly to December 2017’s Tax Cut and Jobs Act (TCJA), the government was becoming creative in how it would deal with its trickier funding needs. Not only the new bill maturity, note auctions were going to be bumped [...]
The Chinese erstwhile dictator Xi Jinping asked the Davos gathering of the superrich, can’t we all just get along? More than a weird juxtaposition, appearing virtually before other virtual attendees, the Communist strongman wanted to make plain his view, therefore China’s, he harbors no desire for a renewal of the Cold War. Though we come from very different places and [...]
43.1 The Fed doesn't do Money so it offers SuasionCentral banks cannot define, identify, measure or map modern money. And they haven't been able to since the 1970s. So instead they offer "moral suasion". That's a fancy word for threats, posturing and coercion. That's all fine and well until the global economy requires money. [Emil's Summary] As many listeners have [...]
The company isn’t bankrupt, it just doesn’t have the right currency in its reach to repay debts coming due. YPF is Argentina’s (former) gold mine, in this case the black gold of energy exploitation. State-owned, the business has obviously close ties to the ruling powers-that-be and a privileged place to go along with them. Its formal name, Yacimientos Petrolíferos Fiscales, [...]
42.2 Real Yields Near Record Lows say Economy's AwfulReal yields recently hit RECORD lows. Yes, inflation is rising but is that due to the real economy expanding? Real yields say, "No!". Real yields say, 'The real economy is AWFUL!' So what is driving inflation expectations higher? Fuel. Oil prices are up - but the economy isn't. [Emil’s Summary] A recent [...]
Why isn’t the inflation monster right upon us? Well, for one, central banks only pretend to do money. But setting that aside, it’s worth asking how even if they did do money, could inflation result given the current conditions? Hard no.It’s a combination of enormous macro slack joining destructive forces with the underside of the permanent income hypothesis. The point [...]
Sticking with Europe, central bankers want and expect higher inflation because that would confirm an economy strong enough – and monetarily sufficed – to sustain success. It’s the sustainability which has been lacking; the global economy since the first global (euro)dollar shortage never able to do more than lurch between downturns and the absence of downturns (reflation).Without enough monetary oxygen [...]
The ECB wants everyone to know that it is in control, and therefore has everything under control. Through an almost certainly carefully placed leak, European central bank officials have let it be known current monetary policy is practicing a kind of yield curve control. Not just the usual QE in terms of bond buying, but tailoring specific parameters within the [...]
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