Raising rates is a stimulus
There are two broad categories of monetary policy instrument: 1) measures which are aimed at influencing market interest rates, and 2) transfers from the central bank to the private sector.
‘Conventional’ m...
Money and language
The great Scottish philosopher David Hume may have been the first to understand that the economics of money is closest to that of language.
Money is one of the most essential social conventions, the other t...
Language and money
Language is perhaps the most useful social convention, followed by law. Words are exchanged by humans to coordinate action, express thoughts and feelings, and to entertain. It is difficult to imagine much human...
More on Bitcoin (Part I)
Bitcoin proves that the 'interest' paid by central banks on bank reserves (IOR) is not an "interest rate" but a helicopter drop to banks. Imagine that Bitcoin came with an additional feature, that all holders o...
Intelligent money & valuing Bitcoin
The most significant innovation in Bitcoin is not blockchain, nor the fact that it is a non-state-backed electronic currency. It is truly ground-breaking because it is the first 'intelligent' money. An 'intelli...
Democracy and minority rule
Democracy is an attempt to provide legitimacy for law-making and government. Legitimacy resides in obtaining the consent of those affected by decisions. Democracy is also a practical process - of public debate,...
Secular stability
The defining characteristic of US economic data since the financial crisis is not stagnation, but stability. We all look back on the Great Moderation with incredulity at the hubris of economists. But has realit...
When big data is worse than a sample of none
Michael Mauboussin uses a very simple exercise to illustrate how difficult it is to statistically distinguish skill from luck. Investors are often deemed geniuses or fools based on small samples. Think of those...
The economics of partying too hard
What is the difference between work and leisure? A distinction based on paid and unpaid activities is incomplete. A better distinction is between activities we want do and those we don’t enjoy. But this is also...
Why do asset prices move?
Discussions of volatility tend to reveal eccentric views of asset price determination. 'Uncertainty' is deemed to increase and decrease with remarkable frequency. This is particularly odd given that what we don...