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Showing posts from June, 2014

Asset Bubbles

All other things being unchanged, growth in money supply must lead to higher prices of things.  For those higher prices to be sustained they must be supported by commensurately higher wages for the people who buy those things.  If wages don’t keep up with prices, people can’t afford to buy those things, and prices must then fall to meet the level at which demand for the things can be attracted. Economics can be pretty darn simple, no?

Family & Farms

This weekend my wife and I and our two little ones made our annual pilgrimage to upstate New York on what we call our “farm experience.”  We stay in rustic farm settings and mostly hang out with animals and each other.  It’s a time to forget about things in the grown-up world - no Vladimir Putin, no President Obama, no worries about ISIS, Iraq, or Iran, no central bank monetary policy, and no financial markets.  During this time all of that stuff loses its relevance, giving way to hugs and kisses, some whining, games, silly laughter, singing songs together, petting animals and other similar things.

The Real Bush Lesson

Many leaders, if not all, have a vision that they are committed to and that they work towards making a reality.  What I hadn’t fully appreciated earlier in my life is that to be a truly effective leader, to have a hope of bringing about real and lasting change, one must also be committed to communicating and selling that vision.

As I read the news recently of the current taking of Iraq by Islamic militants it strikes me that it needn’t have been this way, and that this current tragedy is largely due to American involvement there in the past 15 years. I must admit to having a soft spot for President George W. Bush.  He has always struck me as being authentic and largely uncalculating, especially by the standards of a politician.  Like many Americans, I also like to root for the underdog and given his high degree of unpopularity, especially in the media, he fit into this category for me.  When the U.S., under his leadership, entered Iraq President Bush’s announced reasons was to liberat…

There Shall Be No Yield

Governments around the world are literally up their eyeballs in debt.  They need to find a way out of this situation, and debasement of currency is the best means of accomplishing this.  Tax increases or spending cuts could conceivably work too, but the levels of change required would be so untenable to citizens that those options are effectively off the table.  No, financial gimmickry is the only real option.

We've Given Up On Growth

Increasingly, society has leaned heavily upon consumer spending to create the impression of economic vibrancy. The belief this rests upon is that if more people bought more stuff then the companies that made the stuff would be moved to hire more people, creating ever more buyers to buy even more stuff.

It has been this logic that has led those in government to focus much of their attention (when they’re not raising money for their next election) to figuring out how to best encourage spending. Not surprisingly, making cheap debt capital abundantly available has been the primary answer that politicians and their economic advisors on both sides of the aisle have arrived at.