This one’s really going to throw everyone for a loop. Now, I know all we can talk about these days is how to cut the budget deficit. We need to tighten our belt so the government can live more responsibly and halt the risk of becoming the next Greece, right? Wrong. Let’s explain why. But let’s remember a few things [...]
Myth Busting
Eliminating the Debt Ceiling Wouldn’t Cause Interest Rates to Surge
I just read this at Euro Pacific Capital, Peter Schiff’s company. He says we should eliminate the debt ceiling so our creditors can cut us off: “Such a development may be the shock therapy our creditors need to finally cut us off for good. If that occurs, interest rates in the United States could finally rise to more rational levels. A [...]
Read of the Day: The Biggest Myth About the Fed
David Beckworth has a nice post over at his site in which he argues that the Fed is not monetizing the debt. He makes arguments that are similar to the ones I’ve previously made. But I think the debate over monetization is even simpler than David notes. The purpose of the fear mongering over the term “monetization” is to imply [...]
The Gold Standard is not Synonymous with Freedom
A lot of people didn’t like my recent article about fiat money. That was to be expected. And the usual arguments were trotted out. The old “it takes two people to support a family”. And then the “fiat is synonymous with corrupt governments”. First of all, those statements aren’t totally false. But let me elaborate. If you really wanted to [...]
All Fiat Money Systems Fail, Right? Wrong.
One thing we constantly hear all over the media is how “all fiat money systems in history have failed”. This is just not correct. By my count, there are several hundred fiat regimes in existence today. What has failed and will always fail is fixed exchange rate regimes and commodity based monetary systems. As far as I know, there [...]
Japan, Corporate Profits, Kalecki and Living Standards
I’ve discussed the concept of how budget deficits can lead to higher corporate profits in the past. I am not the only one or the first one to do this of course. Anyone who has studied some advanced economics is familiar with Michael Kalecki’s profits equation. It’s been used widely in recent years given the budget deficit situation in the [...]
Is China Boycotting US Dollars?
I keeping seeing articles and headlines in various places about how China is revolting against US paper in various ways. These headlines either say that China is selling off US T-bond holdings or on the verge of rejecting US dollars. This makes for great headlines and generates lots of page views for those who think China is about to “dump” [...]
In Which Jamie Dimon Misunderstands Banking and Fixed Income Markets
I’ve had a number of readers send me this link from yesterday’s interview with Jamie Dimon at the Council on Foreign Relations so it’s obviously worth a brief comment. Although I’ve been debunking the USA’s “bond vigilante” and “bond bubble” myths for years now, this is a good time to nail home some of the principles of Monetary Realism and [...]
5 Wall Street Myths That Hurt Investors
The following is a list of myths and hurdles to avoid when shopping around for the right financial advisor and investment products.
Who are the Real “Job Creators”?
Eric Cantor, the House Majority Leader, stirred up quite the controversy on Labor Day when he tweeted: “Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.” Of course, Labor Day is a celebration of the worker class, not the capitalist class. But his comments sparked a debate in some circles [...]
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