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Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘Macro Perspectives’

The Euro’s Broken Promises

I really liked this comment by Bloomberg Europe Economist Maxime Sbaihi on the purpose of the Euro: => The point of the euro was to give Greece the interest rates of Germany, and Germany the exchange rate of Greece. pic.twitter.com/bGtW1QNGC7 — Maxime Sbaihi (@MxSba) December 1, 2015 That’s precisely right.  Of course, Germany has basically gotten… Read More

The Impractical Economics of Bernie Sanders

Extremist views don’t mesh well with economics.  While they often sound good in theory they don’t work well in practice.  This was the crux of much of my criticism of the Republican debates last week (see my comments on the gold standard and Rand Paul’s views).  Unfortunately, some of the same (well, very different actually) extremist… Read More

How Will the Fed Raise Rates?

A Federal Reserve rate hike is very likely to occur before the end of the year or in Q1.  But many are still unclear about how the Federal Reserve will raise rates.  After all, we’re in a new monetary environment in the post-crisis period thanks to the size of the Fed’s balance sheet.  I’ll try… Read More

Private Sector Saving is Not Saving Net of Investment

I’m highly sympathetic to Post-Keynesian economic perspectives. Post Keynesians generally prefer to work from an operational perspective so there is a strong influence on how the economy works at an operational level which includes a fairly thorough understanding of stock flow consistent accounting.  As I like to say, accounting is the language of economics so it’s… Read More

Creating Demand out of “Thin Air”

Michael Pettis has a post about endogenous money in which he challenges the idea that banks and governments can create demand from “thin air”.  This is a concept that has grown in great popularity over the years thanks in large part to internet discourse, but it’s also become quite confused at times due to differing… Read More

“Price is a Liar”

This is a very good lecture by John Burbank of Passport Capital. I particularly like his explanation of prices: “Price is all the information that exists in the market…it’s just what people think….price means nothing other than the equilibrium of liquidity…It doesn’t mean it’s good or bad, it’s just where people agree.” That’s really clean… Read More