Tuesday, 22 January 2013

Inflation: Chicken or Egg?

The argument that "there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency" (J M Keynes, 1921) may well be true. But it still makes one wonder what comes first: the dysfunction of society or the destruction of money. These days one could argue that in a lot of countries it is a mal-functioning political system that leads to desperate measures like Quantitative Easing as cooked up by the Frankenstein economists running the Fed, Bank of England, ECB and Bank of Japan. See also Dylan Grice

Sunday, 20 January 2013

Nominal GDP Targeting - Witches Brew

The absurdity of this 'policy' that is the latest mantra propagated by the political and economic policy establishment should be clear at first sight: if an economy is dead in the water all that will happen if any nominal level of GDP is targeted is that the level of inflation is pumped up. No one seems to be interested in explaining why this should have any meaningful - or permanent - influence on real economic activity