The economic system is similar to a machine. The metaphor of a car is useful to understand how all the pieces fit together. Monetary policy is akin to the brake and accelerator pads. When the central bank raises the Federal Funds Rate it does so typically to suppress inflationary pressures by making it less enticing for banks to issue loans (create money).
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Understanding the Modern Monetary System – Part 3
This is part 3 from the paper “Understanding the Modern Monetary System. To read the first sections please see Part 1 here, part 2a here & Part 2b here.
Understanding the Modern Monetary System – Part 2b
This is part 2b of the section “Understanding Modern Money” from the paper “Understanding the Modern Monetary System. To read the first two sections please see Part 1 here & part 2a here.
Understanding the Modern Monetary System – Part 2a
This is part 2a from the paper “Understanding the Modern Monetary System”.
Understanding the Modern Monetary System – Part 1
I’ve done a fairly serious edit of my big paper on Understanding the Modern Monetary System so I figured I’d update the sections here with posts. It’s a bit easier to digest in chunks and some of the concepts are rather hard to digest since they’re way outside of the mainstream. If you prefer to just go ahead and read [...]
Lessons From the Newest Electronic Money – Bitcoin
One of the more interesting developments of the electronic age of money has been the rise of Bitcoin, a decentralized digital currency. If you’re not familiar with it or you’re confused by what bitcoin is, you’re not alone. It’s actually a fairly sophisticated and complex form of money. That’s right, bitcoin is money.
We’re all Active Investors
This is a good piece by Rick Ferri on the myth of passive investing. In essence, he notes that we’re all active investors. It’s just that some of us are less active than others. Rick veers towards the less active side and I mostly agree with him there. He says: “Then I realized, it’s not the actual process of portfolio [...]
Some Thoughts on the Future of Home Prices
I was reading this report from Zillow on the future of home prices and it got me thinking about some of the macro trends in real estate. I’ve turned much more constructive on housing in the last year than I had been for the past 5-6 years. Before about 12 months ago I wouldn’t have told anyone to purchase a [...]
Deficit Hypocrisy
I was watching this video on Yahoo Finance this morning with Jim Rickards of Austrian economics fame. He calls the low interest rate policy of the Fed a “tax on savers”: “[Interest payments] would have gone into the pockets of savers so they could invest and spend – people rely on it for their retirements. This is looting savers.” [...]
The Inherent Fragility of the “Wealth Effect”
You probably thought the boom/bust cycle experiment that started with Alan Greenspan was over when Ben Bernanke came to the Fed. Or maybe you weren’t that naive to begin with. Either way, Bernanke is implementing very similar and in my opinion, dangerous economic policy. When Greenspan was head of the Fed, he made it well known that the stock market [...]
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