money

The problem in a nutshell is that the U.S. is the world's reserve currency. And so, other countries are forced to adhere to Fed dictates in a liquidity crisis because everyone is hoarding dollars, trying to maintain their supply of…

In spite of the divergence in the chart, the "loans create deposits" axiom still stands - deposits are still created through bank credit. Two key developments explain much of this divergence without violating these principles.

One of the most contentious topics in America is the impact of the Federal Reserve’s policy of “Quantitative Easing” – otherwise known as ‘QE’. The Federal Reserve has committed to spending $85 billion every month buying a wide range of…

In the short term, though, a continuation of the currently lax monetary policy is likely to lead to higher assets prices. The investor mindset is very much in risk-on mode at the moment, as documented by the surprisingly calm reaction to…

"With the current policy, will need force to keep it going against the interests of the people. You do not need to be a eurosceptic to conclude that such a monetary union is also deeply immoral." - Wolfgang Manchau, Eurozone Break-Up Edges…

Now the bad times are back, Paul Krugman is trying resuscitate IS-LM, a model published by John Hicks in 1937 that seeks to explain the relationship between interest rates, and real output in goods and services and money markets. I argue…

My friend Scott sent me this video of a magician creating money out of thin air. I thought it was pretty good. Being the investing, econ sort of people, we both also thought it was pretty germane to today's economic environment, don't you…

By Michael Pettis In the past two weeks we have been treated with a mostly positive but nonetheless mixed bag of economic data from China. There has been good news, bad news, good news with worrying underlying trends, and bad news with…

A few weeks ago, I postulated that Christine Lagarde was increasingly moving the IMF away from its position as 'enforcer' of orthodox neoclassical economic policy. I backed this up with three specific ways in which the IMF was becoming a…