Archives
China and the dollar
October 9th, 2015
With the benefit of hindsight, the two-day devaluation of the yuan in mid-August might have been a masterstroke of strategy. China executed a financial move that appeared to undermine its own position but instead created trouble for the US; ...
NIRP, its likelihood and effect on commodities
October 5th, 2015
In last week’s article I pointed out that negative interest rates should lead to a general shift in consumer preferences from money towards essential goods. Central bankers may wish for this outcome on a controlled basis to allow them ...
From ZIRP to NIRP
September 25th, 2015
The sudden end of the Fed’s ambition to raise interest rates above the zero bound, coupled with the FOMC’s minutes, which expressed concerns about emerging market economies, has got financial scribblers writing about negative interest rate policies (NIRP). Coincidentally, ...
Gold remains money
September 18th, 2015
We think we know that gold is no longer money, because Keynesians and monetarists insist it is so. Furthermore, it has been replaced by government currencies, which we use to buy and sell, do our accounts and pay our ...
Equity markets and credit contraction
September 11th, 2015
There is one class of money that is constantly being created and destroyed, and that is bank credit. Bank credit is created when a bank lends money to a customer; it becomes money because the customer draws down this ...
The danger of eliminating cash
September 4th, 2015
In the early days of central banking, one primary objective of the new system was to take ownership of the public’s gold, so that in a crisis the public would be unable to withdraw it. Gold was to be ...
Economics of a crash
August 31st, 2015
This month has seen something that happens not very often: it appears to be the early stages of a global stock market crash. For the moment investors are in shock, seeking reassurance and keenly intent on preserving their diminishing ...
China chooses her weapons
August 22nd, 2015
China’s recent mini-devaluations had less to do with her mounting economic challenges, and more to do with a statement from the IMF on 4 August, that it was proposing to defer the decision to include the yuan in the ...
Welcome to the world of ZIRP zombies
August 14th, 2015
Interest rates in the US, Europe and the UK were reduced to close to zero in the wake of the Lehman crisis nearly seven years ago. Initially zero interest rate policy (ZIRP) was a temporary measure to counter the ...
China’s 1929 moment
July 30th, 2015
Anyone with a nose for markets will tell you that the Chinese government’s attempt to rescue the country’s stock markets from collapse is far from succeeding. Bubbles collapse, period; and government interventions don’t stop them. Furthermore, we are beginning ...
