For the last couple of decades, U.S. budgets have been prepared on a 10-year basis, with the Congressional Budget Office scoring the 10-year deficit, while the sustainability of social security and other entitlement programs is calculated on the basis of their deficit projected 75 years ahead. Politicians have learned to game this system, inventing new […]

Monetary economists around 2009-10 were sure of one thing: the Fed’s unprecedented creation of “narrow money” in the form of bank reserves would show up fairly quickly in a burst of inflation. Clearly, they were wrong; the Fed has created $2.7 trillion of bank reserves, increasing the monetary base by $3 trillion or 319% since […]

The American Enterprise Institute has now joined much of the Fed, Christine Lagarde of the IMF and the commentariat in warning of the imminence of deflation, and the dire consequences that would ensue from even a mild decline in prices. I frankly don’t believe a word of it. We are in uncharted waters of monetary […]

The Financial Times revealed this week that trades in index credit default swap options had managed to avoid being listed on exchanges, with all the transparency requirements that brings, instead being allowed to continue trading on an over-the-counter basis. The amount outstanding is relatively small in relation to the $25 trillion of CDS outstanding, but […]