I never stop seeing the term “money printing” all over the place. It has to be the most abused term in all of economics and finance. The madness must end! So let’s try to make this so simple that a 6 year old could understand it. 1) Banks create most of the money in our system. Loans create deposits and [...]
How To
Understanding the Modern Monetary System Series
I’ve consolidated the 7 part series on Understanding the Modern Monetary System below. You can always find the condensed version in all 7 parts on this page or if you want to torture yourself with 40 pages of monetary glory you can read the full paper here. I know it’s a lot to digest, but it’s better than sitting through a [...]
Towards a (Mostly) Cashless Monetary System
I often talk about the misconceptions of money being a physical thing. Austrians tend to tell us that money is something like a physical commodity while many Keynesians tell us that the ultimate form of money is paper or cash. There’s a smaller group of (mostly economists) who believe that the ultimate form of money is currency (bank reserves, cash [...]
Understanding Moneyness
Moneyness: Refers to how pure a particular type of asset or financial asset is in meeting the definition of “money” as a means of final payment.
Understand Your REAL, Real Returns
Just passing this paper along from the comments section. It’s a very good read on real, real returns on various asset classes. This is crucial to understanding how different assets generate total returns and how they can be viewed in totality: “Investors often focus on nominal return — or the return they see quoted in the paper or on a [...]
“Loans Create Deposits” – In Context
Loans create deposits. We’ve heard it many times now. But how well is it understood? The phrase is typically invoked accurately, in conjunction with a rejection of the ‘money multiplier’ fable found in economic textbooks.
On Using Technical Analysis
There’s been a broad discussion in recent weeks about the efficacy of technical analysis in investment strategy (see here & here). I’ve touched on this briefly in the past (see here), but my position is rather simple and I think it’s a position most people should adopt, because, obviously, you should adopt my views of the world! Just kidding of [...]
The Difference Between Central Banking and Market Manipulation
The kids are over on the internets using the Tweet machine to ask Ben Bernanke some questions. There are also some adult questions mixed in there. For instance, Jim Grant asks: “Could you help me understand the difference between central banking and market manipulation?” Now, I’m no Ben Bernanke, but I would like to take a stab at this one. First [...]
Evaluating the Value of Active Management
The never ending debate about the merits of active investment management vs passive investment management rages on. In a post this morning Josh Brown asked this important question: “How do we determine the “value” of active management?” I think there are two primary characteristics that define how valuable an active manager is. The first is strategy value. The second [...]
A Paradigm Shift: The Savings Portfolio
I really liked these quotes from Abnormal Returns which cite a blog post from The Zikomo Letter who riffs off my idea of the “savings portfolio”: The second post at The Zikomo Letter makes a great point about the status of most of us investors, nee savers. The fact is that we aren’t traditional investors in the classic sense, we are in fact [...]
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