Pragmatic Capitalism

Practical Views on Money & Finance

‘How To’

This Commonly Referenced USD Purchasing Power Chart is Useless

You’ve almost certainly seen the chart below over the years – it shows the purchasing power of the US Dollar over time.  It looks terrifying.  And it’s constantly cited by hyperinflationists and other people trying to convince you that the world is quickly coming to an end thanks to the “fiat monetary system” and all the… Read More

What Backs the Value of Money?

I was reading this very good piece by Matthew Klein at FT Alphaville when I came across this line: “The only kinds of money that reliably hold their value are the ones explicitly backed by a strong government*.” This is an interesting point and one I don’t completely agree with.  I go into this in… Read More

More Thoughts on the CAPE and Valulations

I’ve made my opinion on valuations and the use of CAPE pretty clear – these sorts of metrics don’t tell us much about the macro environment because the whole idea of ” value” is dynamic and evolving.  If I am right then trying to calculate a market “value” through these types of metrics is likely to… Read More

Thoughts on Commodities as an Asset Class

I really liked this piece by Ben Carlson on commodities and how they might fit into your portfolio (I like Ben’s piece primarily because he agrees with my views so you’ve been warned in advance! ).   He goes over the historical performance of commodities and concludes that commodities are best used as trading vehicles… Read More

Reserves Don’t Really “Go Into” Loans

Very good piece here by Robert Murphy of the Austrian school regarding stock prices and how it’s erroneous for people to state that money “goes into” other financial assets. He’s dead right of course.

Thoughts on “Artificial Interest Rates”

There’s been a lot of talking in the econ blogosphere about “artificially low interest rates”.   This is a concept that’s often expressed by people who are promoting the “Fed as manipulator” view of monetary policy.  And they’re basically right even if they overstep in the way they communicate the point. I think Noah Smith’s article… Read More