Helicopter Money (Part 3)

By | 2017-07-17T12:21:59+00:00 April 29th, 2016|Global Market Update|

Money is never free. Photo: Jon Cutrer. Source: Morguefile Even if all you do is print more bills, you still need to pay the printers. That’s what Venezuela is finding out. Late last year, the government needed to satisfy a growing currency shortfall. In December Venezuelans throng to the banks to cash in their bonuses, and like everything (but oil) in their economy, bank notes have to be imported. Instead of inviting printers to bid for the job, the central bank told several of [...]

The Mosquito Coast

By | 2017-07-17T12:21:59+00:00 April 28th, 2016|Global Market Update|

What if we found a way to eliminate malaria? Photo: James Gathany. Source: Center for Disease Control I hate mosquitoes. When I was growing up in Minnesota, we joked that it was the “Minnesota State Bird.” Mosquitoes suck your blood and make you itch. And they carry a lot of diseases, including Malaria. Malaria kills half a million people every year, mostly children in tropical Africa. References to the disease have been found throughout history and around the world, from ancient China, to Greece [...]

Helicopter Money (Part 2)

By | 2017-07-17T12:22:00+00:00 April 27th, 2016|Uncategorized|

What’s wrong with helicopter money? Photo: Eric Salard. Source: Wikimedia “Helicopter money” is money created by the central bank so that the government can spend it. It typically happened during wartime: the government unmoors the currency from a gold or silver standard, and the central bank credits the government’s financing agency the funds. Governments do this when their very existence is threatened, when war or insurrection require them to raise a large army and buy a lot of material. The result is always inflation: [...]

Helicopter Money (Part 1)

By | 2017-07-17T12:22:00+00:00 April 26th, 2016|Global Market Update|

What is helicopter money? Photo: BegoBego. Source: Morguefile “Helicopter money” is a concept first floated fifty years ago by Milton Friedman, where he proposed – theoretically – that the government fly over a community and drop thousands of dollars, financed by the central bank. What would that do to the economy, he wondered. This notion was revived by Ben Bernanke in 2002 when he gave a speech on preventing Japan-like deflation here in the United States. The speech earned him the nickname “Helicopter Ben.” [...]

Bootleggers and Bankers

By | 2017-07-17T12:22:04+00:00 April 25th, 2016|Global Market Update|

Are banks out of control? Photo: Nightscream. Source: Wikimedia Many people are still hurting as a result the Financial Crisis. And there’s a lot to be upset about. By some measures upwards of $5 trillion in wealth was destroyed. The crisis triggered the Great Recession of 2008-9, and led to government bailouts and fiscal stimulus packages around the world. At the heart of the crisis was our overly complex banking system. Fundamentally, banking is pretty simple: move money from people who have it to [...]

Clash of Civilizations

By | 2017-07-17T12:22:04+00:00 April 22nd, 2016|Global Market Update|

Clash of Civilizations Are we doomed to an endless cycle of conflict and violence? Clash of Civilizations Map. Artist: Kyle Cronan. Source: Wikipedia Sometimes it feels like it. In 1992 Samuel Huntington outlined his thesis: there were nine major world civilizations in the world, and these would remain a major source of conflict. The early ‘90s was a heady time: the Berlin Wall had fallen; East and West Germany were reunifying; Operation Desert Storm had repelled Saddam Hussein’s invasion of Kuwait. Some political theorists [...]

The Tiger and the Dragon

By | 2017-07-17T12:22:04+00:00 April 21st, 2016|Global Market Update|

The Tiger and the Dragon Is India on-track to overtake China? Photo: Jeff Kubina. Source: Animal Photos China’s growth has slowed. We know this from innumerable reports. The reduction in aggregate demand resulting from China’s economic shift from manufacturing to services is at the heart of the bust in commodity prices. But what about India? They have over a billion people, most of whom are trying to emerge from poverty. And they have a competitive democratic system—rather than a Party-led autocracy—along with a free [...]

Transparently Foggy?

By | 2017-07-17T12:22:05+00:00 April 20th, 2016|Global Market Update|

Are corporations becoming too transparent? Photo: Chance Agrella. Source: Free Range Stock Photos Goldman Sachs’s annual report was over 400 pages. GE’s 10-k contained over 100,000 words. Annual reports today are dense, filled with jargon, and longer than a Russian novel. Are these corporate leviathans trying to obscure what they’re doing—trying to hide the truth in plain sight? Part of the reason annual reports have gotten so big has to do with the complexity of the businesses themselves. Goldman Sachs and GE are much [...]

The Investor’s Enemy

By | 2017-07-17T12:22:05+00:00 April 19th, 2016|Global Market Update|

Why is investing such hard work? Photo: Alvimann. Source: Morguefile Investing should be simple: spend less than you earn, and sock away the extra. But we have a host of habits that get in the way. First there’s the lure of excess spending. Our lifestyles are determined more by our peer-group rather than our financial goals. That’s why young athletes with seven-figure incomes end up bankrupt just a few years later. Then there’s predatory financial products: complex annuities, high-fee mutual funds, and so on. [...]

Chinese Dreams

By | 2017-07-17T12:22:05+00:00 April 18th, 2016|Global Market Update|

What’s going on in China? Photo: SP. Source: Pixabay Given the size of their economy, it’s an incredibly important question. The global economy totals about $78 trillion. The US is about 22% of that, Europe is 20%, and China is 13%. Together, our three economies make up 55% of the world’s commerce. So it’s crucial to understand what’s happening. We knew that China couldn’t export its way to prosperity forever. Eventually, it became limited by the size of its trading partners. So China has [...]