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Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘Macro Perspectives’

Passive Investing isn’t Hurting the Economy

macro

The new sales pitch for the high fee active manager goes something like this: “passive investing has gotten so large that this creates greater opportunities for us to take advantage of these inefficiencies and outperform the market.” In fairness, this comment is partly true because more passive investors should create the need for more active… Read More

Why Has Heterodox Economics Become Orthodox on Wall Street?

macro

I recently noted that heterodox economics is not so heterodox anymore.¹ There’s been a growing trend, especially on Wall Street, in the use of heterodox economic models and particularly Post-Keynesian Economic models.  What’s the cause of this surge in popularity?  I think it’s derived from two primary sources: Orthodox economic models largely ignore the financial… Read More

“Heterodox” Economics is not so Heterodox Anymore

macro

Noah Smith says that “heterodox” economics is occult (mystical) because someone in his Twitter feed was bothering him.¹  Noah also says there just isn’t any accessible research on heterodox economics.²  Both of these statements are incorrect. I’ve noticed a strong trend in the last 10 years where heterodox economics is becoming increasingly mainstream where the… Read More

Bernie Sanders and the Santa Claus Growth Plan

macro

Drama. Major drama in political economics. In case you haven’t been paying attention: Gerald Friedman released some estimates about the Bernie Sanders growth plan with an expected 5.3% GDP. You can read the document here. 4 former Council of Economic Advisers wrote a letter to Sanders saying the plan was wildly unrealistic and undermined progressive… Read More

We’re in Uncharted Waters

macro

Last year I expressed the concern that the global economy of the future might be excessively influenced by a black box economy – China.  But as 2016 has picked up the turmoil that 2015 started, it’s become clear that this is not the global economy of the future.  It is the global economy we are dealing… Read More

Fiscal Policy Has Failed the US Economy

macro

The story of the post-crisis economic period is simple: The housing boom left the household sector mired in a deep debt hole. This was further exacerbated by the leverage Wall Street added on top of the household sector’s debt. This left the banks and household sector needing a great deal of support. Since 2008 we’ve… Read More

Was Raising Rates a Yuge Mistake?*

macro

The recent market jitters have a lot of people saying that the Fed might have made a yuge mistake by raising rates.  I’ve been a vocal proponent against raising rates, but I am not convinced that this was a policy error (just yet).  The risk/reward doesn’t look great in a world where the US economy… Read More

Could the Fed Have Prevented the Financial Crisis?

macro

Janet Yellen’s Congressional testimony today brought up an interesting line of questioning from Ted Cruz who said that the Fed was “passively tightening” policy in 2008 which contributed to the financial crisis.  This is a popular line of reasoning among many economists.  David Beckworth, whose work I admire greatly, posted some nice comments explaining this… Read More

The Temporal Problem in Market Forecasting

strategy

You can’t talk about money and investing without talking about time.  After all, the two are inherently interconnected.  There’s the time value of money, the erosion of value due to inflation, the linkage between money and interest rates, etc.  The problem is, time is a great unknown for all of us.  It is a concept… Read More