Monetarism

This is rather impressive: “Cash still exists in rather surprising quantity – about a trillion dollars, or more than $3,000 per capita, 77% of it in hundred-dollar bills. But you and I, corporate businesses, and financial markets use trivial amounts of cash. The legal, and especially corporate and financial economies, have moved to electronic, interest-bearing […]

John Cochrane’s “Monetary Policy with Interest on Reserves”

John Cochrane has written a very interesting paper on monetary policy under conditions of “abundant liquidity”, including substantial excess bank reserves and interest paid on those reserves (IOR). The central idea behind the paper is the fiscal theory of the price level (FTPL), which is a valuation equivalence relationship between the real values of government […]

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Why so down, Oil?

You’ve seen the charts on oil, and they are grim. Oil fell over 10% after OPEC announced they were not cutting production, and this is after an already dramatic drop since July. Some people are saying it’s all supply related – that we have a glut of oil now (or maybe a glut of high […]

The Full Monty on Naked Short Selling

JP Koning has written an interesting post that depicts banks as engaging in “naked short selling” when they simultaneously create new loan assets and new deposit liabilities. For example, he compares the idea of systemic deposit creation with the case of selling Microsoft stock without owning the stock (shorting the stock) and also without borrowing the […]

Inflation Fears and a Coin Flip

Steve Waldman has a new post up on why rich people, and not so rich people, might prefer hard money over greater wealth. This post was a response to Paul Krugman, and Cullen adds some good thoughts too. Here’s Steve: ““Full employment” means ungrateful job receivers have the capacity to make demands that could blunt […]

Why Did the Natural Rate of Interest Plummet? Take 2

One of the more remarkable claims since the financial crisis of 2008 is that the natural rate of interest is now below zero, and it has been below zero since the financial crisis. If you look at the very best estimates of the natural rate of interest over the last 50 years, one broad fact […]

Cullen’s New Book

He’s been a bit modest about it, but Cullen has written a book which looks dang interesting: Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance I don’t have my copy yet, so I can’t do a full review. Cullen has run an investment advisory for the last several years, and this […]

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China Asks: How much will it cost us to make Solar Cheaper than Coal?

Do you remember when Dr. Evil was going to hold the world ransom for $1,000,000? This is what we are facing today in Solar – the Dr. Evil ultimatum. The cost to get Solar to coal parity is going to be laughably tiny. The cost sounds like a lot of money to old people, or […]

Hey Guys! Let’s Reinvent The Wheel! VA edition

GOP leaders, whistle-blower join in calls to privatize veterans’ care The idea of privatization has gained steam since allegations of a wait-list at a VA facility in Phoenix were exposed last month, but the concept has been posed for years by conservative lawmakers, including Sen. John McCain, R-Ariz., in 2008 and GOP presidential nominee Mitt […]

A tale of 2 r’s

The Piketty data problems are the huge talk right now, but I want to point out something entirely different. Brad Delong points out there are 4 different rates and Piketty does not do a great job differentiating them: The four different r’s are: The real interest rate at which metropolitan governments can borrow: call this […]