In individuals, insanity is rare; but in groups, parties, nations, and epochs, it is the rule. Friedrich Nietzsche The new year got off to quite a bang last week. It was almost as if someone flipped a switch and investors/traders suddenly decided that all that stuff they believed last year was just so passe. Growth stocks? Nah, who wants [...]
The dollar was high and going higher. Emerging markets had been seriously complaining. In one, the top central banker for India outright warned, “dollar funding has evaporated.” The TIC data supported his view, with full-blown negative months, net selling from afar that’s historically akin to what was coming out of India and the rest of the world. China was cutting [...]
The Beveridge Curve was a useful guide for checking the intuitive relationship between the economic demand for labor and the actual use of it. Downward sloping, what it implies is that as more companies demand more labor the less unemployment there should be. No duh, right?Because of this fundamental relationship, we might also use the Beveridge Curve in order to [...]
Because there is no actual money in monetary policy, central banks have forced themselves (by having abandoned the monetary system decades ago) into an economic role that looks something like a hypnotist’s. Inflation is a monetary phenomenon, the man said, but in lieu of any practical experience in money what is a central bank to do?Manipulate emotion. Give it a [...]
If there is a better, more fitting way to head into the Christmas holiday in the United States than by digging into the finances and monetary flows of the People’s Bank of China, then I just don’t want to know what it is. Contrary to maybe anyone's rational first impression that this is somehow insane, there’s much we can tell [...]
With the eurodollar futures curve slightly inverted, the implications of it are somewhat specific to the features of that particular market. And there’s more than enough reason to reasonably suspect this development is more specifically deflationary money than more general economic concerns. What I mean is, those latter have come later (“growth scare”) only long after the world’s real money [...]
Have oil producers shot themselves in the foot, while at the same time stabbing the global economy in the back? It’d be quite a feat if it turns out to be the case, one of those historical oddities that when anyone might honestly look back on it from the future still hung in disbelief. Let’s start by reviewing just the [...]
For the FOMC, there was no alternative. The CPI’s keep going higher while the unemployment rate continues lower. Those who are Economists and practice Economics’ brand of econometrics, these would be scary times ahead. Inflationary times unless someone puts a stop to them first. Not because of consumer prices today, but because officials are worried consumers are becoming normalized to [...]
Basic intuition says this is a no-brainer. Producer prices rise, businesses then pass along these higher input costs to their customers in the form of consumer price “inflation” so as to preserve profits. This is the supply chain hypothesis. Statistically, we’d therefore expect the PPI to lead the CPI.And this was expected for much of Economics’ history, taken for granted [...]
With the CPI inching closer to 7% and everyone talking about consumer prices, the FOMC meeting which begins tomorrow can’t be anything else other than inflation. Even if there was something else on the economic horizon, say a material “growth scare”, it’s too late for policymakers since they’d already painted themselves into a narrow corner months ago.If they don’t accelerate [...]
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