Insight and inspiration in turbulent times.
Academic researchers Carmen Reinhart and Kenneth Rogoff have become famous for their book This Time is Different: Eight Centuries of Financial Folly and their earlier paper This Time is Different: A Panoramic View of Eight Centuries of Financial Crises. Their point, of course, is that the same thing happens over and over again. We can learn from past crises to solve our current problems.
In a recent speech to the International Monetary Fund economist Larry Summers argued that since near zero interest rates have not stimulated GDP growth sufficiently to reach full employment, we probably need a negative interest rate.
December 23rd marks the 100th anniversary of the Federal Reserve. Dissatisfaction with its track record has prompted calls to audit the Fed and end the Fed.
I’ve spent the weekend pondering how to bring this series to a conclusion and I decided that these last two pieces — the optimistic and the pessimistic view of the future — will, for the sake of focus, have to deal with only a couple of variables.
What is your house worth? What is a company’s stock worth? What is your dollar worth? Nobody really knows because there isn’t actually a market for any of those things.
Yesterday we looked at how debt is used to generate high returns, particularly for a small subset of the population and especially during times when central policy makers commit to extended periods of low, stable interest rates.
If Britain is broke at the moment, then – looking at this longer series – it was also broke for a whole century between 1750 and 1850, and for 20 years after the Second World War. In reality, in neither case did the UK default, and reveal itself as bust – both periods were times of investment and national renewal. Today, our national debt is significantly lower than Japan’s (about 200% of GDP), and comparable to Germany’s (83%) and the US (80%). By international or historical standards, the national debt is not high.
