Recent Posts

Monday, May 23, 2016

Interest Rate Cycles: An Introduction

Monetary policy has increasingly become the focus of economists and investors. This report describes the factors driving interest rates across the economic cycle. Written by an experienced fixed income analyst, it explains in straightforward terms the theory that lies behind central bank thinking. Although monetary theory appears complex and highly mathematical, the text explains how decisions still end up being based upon qualitative views about the state of the economy.

The text makes heavy use of charts of historical data to illustrate economic concepts and modern monetary history. The report is informal, but contains references and suggestions for further reading.

Sunday, May 22, 2016

Interest Rate Cycles - Coming This Week


UPDATE: (May 23rd) - The text is now available at a few online bookstores, including Amazon, Kobo, and Apple. Will have a full description set up tomorrow.

The text for Interest Rate Cycles: An Introduction is complete, and should appear in online bookstores next week. Once again, it is being published in ebook format only in the short term, but I am looking into the format conversion for a paperback version. I will have a longer description when it is released.

Thursday, May 19, 2016

A Postscript On Barter

One of the topics around the origin of money that I ignored in my previous article was the ongoing arguments about the role of barter in the history of money. Tom Hickey at Mike Norman Economics raised the objection that mainstream economics is based around a mythology of barter. Although I think the historical analysis around barter was dubious, I would argue that it is a distraction when discussing economics. (Once again, the study of history is an entirely legitimate field of enquiry, but I would leave history to the historians.)

Wednesday, May 18, 2016

Should We Care About The History Of Money?

When reading about economic theory, one of the arcane areas of argument that comes up is the origin of money. From the perspective of knowledge for the sake of knowledge is a good thing, one cannot complain about this. However, if you are interested in understanding the current monetary system, this debate is largely a red herring. In this post, I discuss some of the criticisms of  "neo-Chartalism" by Anwar Shaikh in his new book Capitalism (link to my discussion of that book).


Sunday, May 15, 2016

(Not) Understanding Government Finance...

Although the article "Trump's Ideas About the Deficit Sound Inflationary" (by Finance Professor Noah Smith) was supposed to tell readers how crazy Donald Trump's theories about debt were, it actually highlighted that mainstream views about inflation are actually the ones that are fairly ludicrous. I would note that I cover most of the underlying debate behind this article in Understanding Government Finance. 

Wednesday, May 11, 2016

Implications Of Negative Interest Rates

Chart: 5-Year JGB Yield
I crashed a wine and cheese event that was associated with the CFA Institute conference in Montréal, and ended up in a discussion with an asset allocator about the implications of negative interest rates. This is a topic that I have not written too much about, but this is because I see the implications as being very limited. The only interesting implication is that it makes the position of fiscal conservatives who worry about debt-to-GDP ratios even more foolish.

Sunday, May 8, 2016

The United States of Stagnation

Chart: U.S. Employment-to-Population Ratio

The April U.S. Employment Situation Report was disappointing, but one could argue that the weak result is just the various indicators returning to their previous trends. There is little need for urgency with regards to Fed rate hikes, but I doubt that this will be enough to completely rule out a June rate hike. From a longer term perspective, it is difficult to see the U.S. economy breaking out of its low-growth trajectory.