Summary: Historians will laugh at our response to QE, for the reasons discussed here. We're enjoying our days in Wonderland. We may find the hangover less entertaining. This is a follow-up to Important things to know about QE2 (forewarned is forearmed). Links to more information appear at the end. Our response to the Federal Reserve's latest monetary … Continue reading Bernanke leads us down the hole to wonderland! (more about QE2)
Summary: There have been megabytes of analysis of the Fed's second quantitative easing program (QE2), most of which overlooks some important points. See the links at the end for more information. Some important things to know about QE2: QE2 is a desperate act by the Fed Expect QE2 to be late, slow, and small Don't expect … Continue reading Important things to know about QE2 (forewarned is forearmed)
Summary: An oddity of the great recession is our obsession with the threat of inflation while debt deflation ravages the economy. Asset prices fall, causing loan defaults and bankruptcies -- while many guru's warn of hyperinflation. This is one aspect of the great forgetting, how we've forgotten so much knowledge of economics painfully gained during … Continue reading All about deflation, the quiet killer of modern economies
The news and Internet are filled with confident predictions of inflation, classic example of fighting the last war. In the midst of debt deflation, with high levels of unemployment and 70 year low levels of capacity utilization, worries about near-term inflation are totally unfounded. Looking in to the future and the picture changes. Inflation will be likelyif we have a … Continue reading Inflation or Deflation? Nobody knows what path will we take.
Economic theory as a guiding light for government action in this crisis. But which theory? The dominant Keynesian economic theory, or that of the Austrian School? (see the links at the end for background information about each). Here is an excerpt from the Drobny Global Monitor of 5 March 2009, by Andres Drobny (see his bio … Continue reading Economic theory as a guiding light for government action in this crisis