Money Supply

The TARGET2 Chart Shows A Breakdown Of The Central Bank Narrative

Despite the alphabet soup of bail-out facilities provided by the ECB, people still do not trust the system. In our view, the TARGET2 chart is the best way to assess trust in central banks and as it clearly shows, the narrative is failing. It seems impossible for Draghi to reestablish monetary confidence.

August 15th - The Date Which Will Live In Monetary Infamy

August 15, 2016 will mark the 45th anniversary of President Nixon’s decision to close the gold window. U.S. citizens and the government are now beholden to the consequences of years of accumulated debt and weak productivity growth that have occurred since that day. Now, seven years after the end of the financial crisis and recession, these consequences are in plain sight. The Fed finds themselves crippled under an imprudent zero interest rate policy and unable to raise interest rates due to fear of stoking another crisis.

Global Stocks Rebound, US Futures Jump On Expectation Of "Coordinated Intervention By Central Banks"

After a historic two-day selloff, which as shown yesterday slammed European banks by the most on record the wildly oversold conditions, coupled with hopes for yet another global, coordinated central bank intervention, coupled with modest hope that David Cameron's trip to Brussels today may resolve some of the Article 50 gridlock, have been sufficient to prompt a modest buying scramble among European stocks in early trading, with the pound and commodities all gaining for the first time since the shock Brexit vote.

Greenspan Warns A Crisis Is Imminent, Urges A Return To The Gold Standard

"We're dealing now in very early days a crisis which has got a way to go.  If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we'd be fine.  Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we've had in the United States, and that was a golden period of the gold standard."

Key Events In The Coming Week: All About Brexit

With global markets gyrating on every piece of news surrounding the Brexit drama, what’s the timetable for UK-related (and all other macro) events this week and beyond?

European Stocks, US Futures Extend Slide On UK Chaos, Pound Carnage

With global asset correlations once again approaching 1, overnight stocks have been trading in broadly "risk off" mode, following every twist of pound sterling and the rapidly deteriorating British financial situation as "chaos infects" virtually all markets, from China, to European banks, to US equity futures.  As a result of ongoing aftershocks from the Brexit vote, coupled with the sudden political chaos in UK politics, where both parties now seem in disarray, with the pound has extended its selloff to a fresh 31-year low dropping below the Friday lows while European equities are dropping to levels last seen in February.

The Problem With Corporate Debt

There are actually two problems with corporate debt. One is that there is too much of it... the other is that a lot of it appears to be going sour.

"We Have Reached The Point That Keynes Warned Of In His General Theory"

"We have arguably reached the point that Keynes warned of in his General Theory where demand for money and credit to satisfy what he labeled “non-speculative” motives has been more than satisfied...  At this point it is likely central bankers are “pushing on a string,” positively affecting prices for the financial markets’ flavor of the month but doing nothing for actual economic activity."

Elizabeth Warren’s War On The Poor

We should not quarrel with Senator Warren’s stated goal of protecting the least powerful in society, but we should take issue with many of Senator Warren’s proposed strategies to achieve her stated goal - because they don’t work.

In Furious Tirade, Citi Lashes Out At "Utterly Misguided" Central Bankers, Invokes Weimar Republic's Von Havenstein

"If ever there was a time to invoke the Havenstein experience, it is now.... We should be invoking Havenstein to identify the present flaw in institutional thinking around current monetary policy, specifically negative rates. In other words, the lesson here is that, unfortunately, people believed in the efficacy of a completely irrational policy because it was put in place by a qualified and experienced policymaker- this instead of questioning the common sense merit of its possible outcome."

Steve H. Hanke's picture

The Saudi Squeeze

The rate of growth in a country’s money supply, broadly measured, will determine the rate of growth in its nominal GDP. For Saudi Arabia, the following table presents a snapshot of the relationship between the growth in the money supply (M3) and nominal GDP.

"The Politics Of Fairness Have Created The Economics Of Hopelessness"

"We’re following the European model which is to maintain the status quo: Don’t let competition damage or disrupt existing businesses. The politics of fairness create anti competitiveness...What we really need is the politics of hope: Let’s figure out how to make it easier to start a business."