Are Banks Finally Ready To Start Lending?

In normal times, today’s combination of record low interest rates and massive infusions of capital into the banking system would ignite the mother of all expansions. That it hasn’t has confused the economists whose textbooks clearly state that it should. And it has convinced the Fed to just keep upping the ante with QE after QE.

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The nonsense behind state intervention

Both Keynesians and monetarists believe that increased government spending is sometimes necessary. The intervention is in the form of unfunded government spending, artificially low interest rates, or a drive to make the currency “competitive”. These methods have been tried unsuccessfully time and again, and they must be denounced if we are to understand our true economic condition.

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The Big Picture: From banking crisis to sovereign debt crisis to currency crisis (diagram)

Last week’s article ‘The Big Picture: From banking crisis to sovereign debt crisis to currency crisis’, provides a brief outline of each of the macro forces and trends that are currently impacting the global economy and financial markets. Today’s article attempts to show these forces in visual form so that investors can begin to understand the interplay between them.

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The Big Picture: From banking crisis to sovereign debt crisis to currency crisis

This article attempts to outline all the macro forces and trends that are currently impacting the global economy and financial markets. It is only by understanding all of these forces (and the interplay between them) that investors can begin to see the inevitable path from banking crisis to sovereign debt crisis to currency crisis.

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Examining the global crack-up boom: Part I

Since the 2008 financial crisis central banks around the world have created in excess of $12 trillion. Not only has their policy of ultra-lose money created another unsustainable boom in asset prices, it is looking increasingly likely that it will end in what Austrian economist Ludwig von Mises called a “crack-up boom”, i.e. a complete breakdown of the monetary system.

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The case against deflation

Regular readers will know I am in the inflation, possibly hyperinflation camp; but there are those that think the future is more likely to be deflationary. In the main this is the view of neoclassical economists, Keynesians and monetarists, who generally foresee a 1930s-style slump unless the economy is stimulated out of it.

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Keynesian economics debunked in one graph

John Maynard Keynes believed that when the private sector economy was struggling, it could be spurred into growth by public sector deficit spending. In other words, by incurring a temporary deficit, private sector growth could be revitalized to the point where the additional tax revenue generated would eliminate the newly created public debt.

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Recommended Reading: Stimulus and risk – why the Keynesian borrowers are wrong

Economic policy in Britain is in desperate need of a radical overhaul, however Labour’s Keynesian alternative of print, borrow and spend is not the answer. In this excellent article Dr Tim Morgan, Global Head of Research at Tullett Prebon, helps explain why the Keynesian prescription is actually an extremely dangerous and foolhardy option.

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Keynesianism, inflation & euthanasia of the rentier: A survival guide

The Keynesian economic policies being pursued by finance ministers, central bankers and politicians around the world are designed to create inflation and destroy the wealth of investors. This article outlines the dangers and explores ways in which investors can protect themselves.

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The flawed logic of Keynesian economics: Part II

The economic policies being pursued in the majority of G8 countries are flawed. That’s because they are based on the flawed thinking of John Maynard Keynes. This article aims to give some insight into the flawed logic that lies that the heart of what is known as Keynesian economics.

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The flawed logic of Keynesian economics: Part I

The economic policies being pursued in the majority of G8 countries are flawed. That’s because they are based on the flawed thinking of John Maynard Keynes. This article aims to give some insight into the flawed logic that lies that the heart of what is known as Keynesian economics.

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Krugman’s parachute is full of holes

In a Krugman-planned economy the plan is simple: “Stimulate” the economy back to health by printing as much money as needed. Once back on a robust trajectory – and before price inflation rears its ugly head – unload the Fed’s treasuries to sop up all of those extra dollars.

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Osborne & King deliver another dose of Keynesian medicine as a deflationary depression looms

Faced with a rapidly deteriorating domestic economy and a worsening global outlook, George Osborne and Mervyn King used last night’s annual Mansion House dinner to announce a coordinated stimulus programme of around £140 billion. Mansion House circa 1920 Mansion House (left) sits opposite the Bank of England in London’s financial district and is the venue [...]

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