The “natural rate of interest” is a theoretical concept in economics that describes the interest rate at which the economy operates at full employment with stable inflation. If this price [ … ]
Category: Macro Perspectives
“Price is a Liar”
This is a very good lecture by John Burbank of Passport Capital. I particularly like his explanation of prices: “Price is all the information that exists in the market…it’s just [ … ]
Thinking About Net Financial Assets (Nerdy)
Steve Waldman has a very good post over on his site about the concept of “net financial assets” and the way it is used by some economists (mainly MMT economists). [ … ]
Have Savers Been “Punished” in the Low Interest Rate Environment?
There’s usually two forms of ideological rhetoric that accompany low interest rates. The first is that the Fed has “manipulated” interest rates lower. And the second is that the Fed [ … ]
Could we Still be In the Middle of the Business Cycle?
Last year I talked about the modern era of expanding expansions. That is, the last few business cycles have been extremely long relative to historical cycles. Going back to the [ … ]
Where Does Money Come From?
“The process by which money is created is so simple the mind is repelled.” – JK Galbraith There’s a reason why myth # 1 in my “biggest myths in economics” is [ … ]
Does a “Liquidity Trap” Ever End?
Brad Delong has a very smart post over at Equitable Growth discussing the recent Feldstein commentary on inflation as well as Paul Krugman’s Liquidity Trap model of the current economic [ … ]
Why The Efficient Market Hypothesis is Useless
I noticed Noah Smith and John Authers on Twitter discussing how great the Efficient Market Hypothesis is because it explains why indexing works. I responded saying that the EMH really has [ … ]
What is Asset Liability Matching?
I’ve previously described how good financial planning and asset allocation is a “temporal conundrum”. More specifically, our liabilities tend to have fixed temporal constraints. You pay a monthly credit card [ … ]