Pragmatic Capitalism

Practical Views on Money & Finance

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Three Misconceptions About Risk Management

Risk management is something every investor realized they needed following the 2007-2009 finanicial crisis. The same thing will happen when the next bear market hits. But too many investors learn the wrong lessons or take misguided advice about how to approach risk. Here are three common misconceptions about risk management.

Mainstream Economics is Flawed & That’s Fine

David Andolfatto and Mark Thoma have written extensive posts defending mainstream economics against its critics (see here and here). These are two very very smart economists who make many salient points and if this is a debate that interests you then you should read their posts. I’ll outline my general thoughts here given that I have… Read More

Consumer Price vs Asset Price Deflations: Which Ones are Costly?

Here’s an excerpt from a very good piece over at VOX. The authors make an important distinction between asset price deflations and consumer price deflations. Specifically, they find an important statistical relationship between housing prices and debt deflations. This blends nicely with the views I’ve espoused over the last 5 years and the importance of understanding… Read More

Monetary Policy has Everything to do With Banking

Here’s Scott Sumner saying that banking doesn’t matter to monetary policy: “What in the world does banking have to do with monetary policy?  Yes, it may or may not boost bank lending, but it doesn’t matter, as monetary policy is about the hot potato effect.  And yes, the Fed should not be trying to boost… Read More

9 Lessons From The Great Depression

Dean Mathey was a successful investor who served as chairman of the investment committee at Princeton from the 1920s through the 1940s. Late in his career he privately published a book called Fifty Years of Wall Street that included a section with nine lessons learned during the Great Depression.