Pragmatic Capitalism

Practical Views on Money & Finance

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Milton Friedman Might Have Won the Battle, but he’s Losing the War

Nick Rowe writes a post glorifying Milton Friedman declaring that “we are all Friedman’s grandchildren” and that New Keynesian economics owes more to Friedman than to Keynes. He also takes some shots at John Kenneth Galbraith saying that he “lost” to Friedman. Nick is right. ¬†Friedman has influenced economics tremendously over the last 40 years… Read More

The 4 Traits of Good Forecasters

Economics and finance involves a certain degree of forecasting by necessity. All of our portfolios with any directional bias involve implicit forecasts at a minimum. And any economic model we put together relies, to a certain degree, on our ability to understand the future outputs and their ramifications. That said, we tend to be notoriously… Read More

The SNB is 48% Privately Owned…No Wonder They De-pegged

Here’s something I didn’t know about the Swiss National Bank: “Many economists believe that balance sheet losses are irrelevant for a central bank, so they should play no role in policy. But the SNB is 45 per cent owned by private shareholders, many of whom are individuals, who receive dividends from the SNB. The rest… Read More

Leverage Can Kill

Back in 2011 I highlighted the three biggest risks to most portfolios: Leverage Concentration Illiquidity With the SNB shocker this is a perfect time to revisit that thinking because we’re seeing a lot of carnage out there as a result of these three factors. Leverage multiplies the moves in assets. Borrow 100% and you’ve increased… Read More