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Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘Macro Perspectives’

Thinking About Net Financial Assets (Nerdy)

Steve Waldman has a very good post over on his site about the concept of “net financial assets” and the way it is used by some economists (mainly MMT economists). Several of us covered this in excruciating detail several years ago when we had our big disagreements with the MMT people, but it’s always worth… Read More

Could we Still be In the Middle of the Business Cycle?

Last year I talked about the modern era of expanding expansions. That is, the last few business cycles have been extremely long relative to historical cycles.  Going back to the 1800’s the average cycle has lasted 39 months.  But here we are in month 72 of the current cycle. It is tempting to say that… Read More

Where Does Money Come From?

“The process by which money is created is so simple the mind is repelled.” – JK Galbraith There’s a reason why myth # 1 in my “biggest myths in economics” is “the government prints money”. It is, by far, the most pernicious and misleading of the economic myths that exists. I was reminded of this today… Read More

Does a “Liquidity Trap” Ever End?

Brad Delong has a very smart post over at Equitable Growth discussing the recent Feldstein commentary on inflation as well as Paul Krugman’s Liquidity Trap model of the current economic environment. Brad, unlike Paul, is not so quick to assert that the Hicksian model that Dr. Krugman has been using, is a big success.  He… Read More

Why The Efficient Market Hypothesis is Useless

I noticed Noah Smith and John Authers on Twitter discussing how great the Efficient Market Hypothesis is because it explains why indexing works. I responded saying that the EMH really has nothing to do with why indexing works. They didn’t seem to see my point of view so let’s try this again and see if we… Read More

Fun With Charts, Part Deux

Paul Krugman has an explanation on his site for why he truncated the chart that he says proves that housing starts and interest rates are correlated. My original post went a little viral (as far as nerdy econ posts go) and got picked up by a number of other outlets. Some of the readers implied… Read More

Fun With Charts – Paul Krugman Edition

Someone sent me an email this evening with some details on the Paul Krugman response to James Montier which I discussed here. I had previously stated that the Krugman response was lacking meat. But it’s actually worse than that. It’s actually highly misleading and appears intentionally so. In the post Dr. Krugman tries to show… Read More

James Montier Rightly Dismisses the Natural Rate of Interest

Warning – This post is extremely nerdy and could result in extreme sleepiness.  Do not try to read this post while operating heavy machinery. The consumption of alcohol before, after or during a reading of this is not ill-advised.  James Montier has an excellent new quarterly letter dismissing the idea of the Natural Rate of Interest. None of it… Read More