Wednesday, October 1, 2014
Sunday, September 28, 2014
The idea of a Basic Income Guarantee (hereafter known as BIG) has become increasingly a topic of interest. My views have been greatly influenced by Hyman Minsky and Modern Monetary Theory (MMT), where a guaranteed job was preferred to guaranteed income. (Minsky referred to this as an Employer of Last Resort programme; MMT refers to this as a Job Guarantee.) I explain why I view a BIG as being essentially unfeasible within Canada, using logic similar to their analyses.
Wednesday, September 24, 2014
The Bank of Canada vs the bond market", Nick Rowe queries the low level of 30-year Canadian government bond yields, given where the Bank of Canada thinks neutral is. It is possible to understand this based on relative value considerations. Whether those relative value considerations make any sense is another matter entirely.
Tuesday, September 23, 2014
The post "CMMT - Cate's Modern Monetary Theory" (on Seeking Alpha; free registration required) by Vincent Cate attracted a fair number of comments on the Mike Norman Economics web site. In that post, he presents what he calls CMMT - Corrected Modern Monetary Theory - and he argues that this correction allows MMT to explain hyperinflation. One could probably argue that MMT - as well as mainstream economic theory - do not have standard models that deal with hyperinflation. But that is for the same reason that those bodies of thought do not have standard models to estimate the impact of barbarian incursions along the frontier. It is not to say that foreign incursions do not matter - as the Western Roman Empire can attest - but that such an event is not a serious concern for the industrial economies at present.
Sunday, September 21, 2014
Say's Law as "supply creates its own demand". That is a subject that is somewhat controversial, but I do not want to discuss that here. Rather, I am interested in what might be called the Anti-Say's Law: demand creates its own supply. Although it sounds fairly silly when applied to a market like pork bellies, it actually appears applicable to the government bond market. I have touched upon this topic in earlier articles, but I want to tie it into to my recent primer on stock-flow norms. This concept provides an alternative means of understanding current trends in the developed economies.
Tuesday, September 16, 2014
Sunday, September 14, 2014
Jeff Rubin's book The End Of Growth is a good introduction to the impact of Peak Oil on the economy and markets. It was published in 2012, and the Kindle version has been updated since then (note that I did not read the updated version). Although the book is not perfect, I think it has some advantages over other analyses of Peak Oil. Although Peak Oil has been proclaimed to be dead, I explain the advantages of starting to analyse it now - you want to understand the concept before it rises again from the grave.