Tag: savings

The failure of the Trump presidency

The failure of the Trump presidency

We are only seven months into Donald Trump’s presidency. And I think we can call it a failure. I’ll have a lot more to say on that momentarily. But I want to flag this as not being a dealbreaker for the US or global economy because people put too much emphasis on the political economy in Washington. But Donald Trump is failing.

More on underconsumption and the end of excess demand

More on underconsumption and the end of excess demand

Underconsumption is the term we’re now using to describe the thesis that we are living in a world of excess supply. The novelty here – as I pointed out yesterday – is not that the world is oversupplied – and therefore lacking in developed economy private capital investment, but rather that the oversupply situation is longstanding.

Underconsumption and the end of excess demand

Yesterday’s post on the failure of Japan’s monetary policy experiment drew some favourable commentary from a prominent macroeconomist that I want to run by you. The gist of his insight is that we have long been living in an age of an excess supply which is only now being made plain. Let me run the tenor of his comments by you and make some additional ones of my own.

Monetary policy is at the end of the line

Monetary policy is at the end of the line

The last few days have made clear that monetary policy is having less and less impact as time goes along.In particular, the latest salvos from the Bank of Japan smack of desperation, as if BOJ Governor Kuroda has decided to throw everything but the kitchen sink into his grab bag of unorthodox monetary policy. Because the Bank of Japan is so far along the curve toward both secular stagnation and unorthodox policy to counteract that slowing, we should pay attention to how their experiments go. I do not expect good results.

Internal and external balance

Internal and external balance

The global economy is an economic system in which any country’s domestic economy is inextricably linked to other economies through the balance of payments mechanisms. The ability to place events within their global context is consequently crucially important in understanding any country’s economic performance, but actually doing so tends more to be the exception than the rule.

Europe: A plan to boost economy by cutting taxes

Europe: A plan to boost economy by cutting taxes

By Andrea Terzi originally published at Social Europe and republished with consent of Author The anti-austerity vote in the European elections reflected two different kinds of discontent. One is a feeling of frustration, which is invigorating nationalism: the vote for “less Europe.” The other is a lack of confidence in […]

Why a savings glut does not increase savings

Why a savings glut does not increase savings

By Michael Pettis Debate about the global savings glut hypothesis is mired in confusion, a fundamental one of which is the seemingly obvious but false claim that a global savings glut must lead to higher global savings. Here, for example, is a recent piece by one of my favorite economists, […]

Monetary policy under financial repression

Monetary policy under financial repression

In order to understand much of what is happening in China it is important to understand how financial systems operate under condition of financial repression. Because most of what we know about economics is derived from economists whose operating environment is the classical “anglo-saxon” economies, we underrate important economists that don’t follow this tradition, like the German Freidrich List or the American Albert O. Hirschman. And it leads us into mistaken assumptions, like the belief that higher interest rates lead automatically to higher savings rates.