Money Supply

"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."

Why The G7 May Be Hastening Helicopter Money

Faced with a sharply appreciating yen, and lacking G7 support, Japan may need to take extreme measures. More than three years into Abenomics, and with policymakers running out of options on how to reverse the economy's trend, the Bank of Japan may be forced to intervene with unorthodox and untested policy, such as “helicopter money.”

Global Stocks, US Futures Slide On Mediocre Manufacturing Data, Yen Surge

Following the latest set of global economic news, most notably a mediocre set of Chinese Official and Caixin PMIs, coupled with a mix of lackluster European manufacturing reports and an abysmal Japanese PMI, European, Asian stocks and U.S. stock index futures have continued yesterday's losses. Oil slips for 4th day, heading for the longest run of declines since April, as OPEC ministers gather in Vienna ahead of a meeting on Thursday to discuss production policy. The biggest winner was the Yen, rising 1%, with the USDJPY tumbling overnight and pushing both the Nikkei 1.6% lower and weighing on US futures.

Futures Flat, Gold Rises On Weaker Dollar As Traders Focus On OPEC, Payrolls

After yesterday's US and UK market holidays which resulted in a session of unchanged global stocks, US futures are largely where they left off Friday, up fractionally, and just under 2,100. Bonds fell as the Federal Reserve moves closer to raising interest rates amid signs inflation is picking up. Oil headed for its longest run of monthly gains in five years, while stocks declined in Europe.

What The Charts Say: Fatally Attracted To New Highs

So we’re short term overbought, with 3 unfilled gaps below and lower highs still in place with stocks being the most expensive in years and yet the NYSE Composite Index is still below key resistance. Ignore it all if you find yourself attracted to new highs. They may indeed come, just remember who gets hurt when the attraction proves fatal...

Why This Friday's Payrolls Report Could See A Big Miss

When the main economic event this week hits this Friday at 8:30 am EDT, when the BLS releases the May payrolls report, Wall Street consensus wil be expecting a 160,000 print, a number which will have a big impact on market expectations for a Fed rate hike at the June or July FOMC meeting. However, consensus may be disappointed for one reason: the Verizon strike could chop off as much as 35,000 workers from the headline payrolls print.

Saudi Officials Crackdown On FX Market As Currency Peg Starts To Strain

As we warned previously, the devaluation, or breaking of the Saudi Riyal peg to the dollar, could be the black swan event for crude oil and the recent weakness in SAR forwards - while not as violent as Nigeria's Naira - certainly signals a renewed market fear that breaking the peg is imminent. It appears Saudi officials are none too pleased with the free markets speculating on this devaluation and as Bloomberg reports, banks in Saudi Arabia are coming under fresh pressure over products that allow speculators to bet against the kingdom’s currency peg, according to people with knowledge of the matter, which were supposedly banned in January.

The Eurozone Is The Greatest Danger

Financial and economic prospects for the Eurozone have many similarities to the 1972-75 period in the UK, which this writer remembers vividly.  This time, the prospects facing the Eurozone potentially could be worse. The obvious difference is the far higher levels of debt, which will never allow the ECB to run interest rates up sufficiently to kill price inflation. More likely, positive rates of only one or two per cent would be enough to destabilise the Eurozone’s financial system. Let us hope that these dangers are exaggerated, and the final outcome will not be systemically destabilising, not just for Europe, but globally as well. A wise man, faced with the unknown, believes nothing, expects the worst, and takes precautions.