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Velocity of Money and the Crack-Up Boom

by John Rubino on May 18, 2013 · 16 comments

Based on both recent history and mainstream economic theory the past few years should not have been possible. When you cut interest rates to near-zero, run deficits of 10% of GDP and buy up every government bond in sight with newly created currency, you get a boom, end of story. That’s just the way capitalism [...]

Preparing For Deflation

by John Rubino on May 15, 2013 · 15 comments

Signs of a slowdown are spreading. Here in the US, despite all the happy talk about rising stock prices and falling deficits and the imminent unwinding of the Fed’s debt-monetization program, today’s numbers were ominous: Producer prices post big drop, factory activity weak (Reuters) – U.S. producer prices recorded their largest drop in three years [...]

Welcome to the Currency War, Part 7: The Zero Sum Game

by John Rubino on April 11, 2013 · 8 comments

Based on the past few weeks’ stock market action, Japan’s decision to flood the world with yen looks like a raging success. It’s not of course. Here’s a cogent take on the subject from ex-hedge fund manager Bruce Krasting: Japan’s Gains Are Losses For Everyone Else My daughter called last night, she’s made her reservations [...]

The Other Currency War

by John Rubino on March 29, 2013 · 23 comments

Most of the recent “currency war” talk refers to countries trying to lower the value of their currencies to gain a trade advantage and/or make their debts more manageable. But this war has another theater, where a weaker currency is not the main goal. Start with the premise that when a country conducts most of [...]

Has The Debt Jubilee Already Started?

by John Rubino on January 23, 2013 · 25 comments

There are three fairly radical ideas floating around the monetary policy world right now. The first is economist Ellen Brown’s belief that governments should stop borrowing money and simply create the currency they need, thus bypassing central banks and government bond markets. The second is Australian economist Steve Keen’s debt jubilee, in which governments give [...]

Why We’re Ungovernable, Part 5: Japan “Would Be Manageable, If Only…”

by John Rubino on December 17, 2012 · 6 comments

Japan’s government has fallen — again: Two-Party Japan Democracy Undone in 39 Months as DPJ Crumbles It took 54 years for Japan’s politics to produce a viable opposition party, and 39 months for it to self-destruct after winning power, splintering prospects for an enduring policy-driven two-party system. The Democratic Party of Japan lost as many [...]

Oh What a Tangled Web We Weave

by John Rubino on December 12, 2012 · 13 comments

By the age of 12 or so, most people have learned through bitter experience that dishonesty is hard to pull off, because one lie tends to require more lies, until the complexity of the situation exceeds the liar’s ability keep everything straight. This is just as true for governments as for individuals, especially when it [...]

Is a Debt Jubilee the Next Big Meme?

by John Rubino on October 21, 2012 · 24 comments

The idea of a “debt jubilee” — that is, a wide-spread forgiveness of debt as a way to reset the US financial system — has been bouncing around for a while. But it hasn’t gained mainstream traction because it seems, at first glance, to be too simplistic to be worth serious thought. It must have [...]

Fed Policy Is Working — Moral Hazard Is Back

by John Rubino on October 3, 2012 · 8 comments

A near-death experience isn’t something one gets over right away. So it’s no surprise that the US leveraged speculating community was a tad more cautious than usual for a while. Real estate investors, for instance, still bought houses, but only on very favorable terms where rental income would clearly exceed expenses. And investment banks still [...]

A Year of Deflation Coming Up?

by John Rubino on September 6, 2012 · 45 comments

Being deeply in debt is like being grossly overweight. You’re carrying around this extra baggage that slows you down, and without continuous, conscious effort you tend to stop moving. That’s the situation in which the world finds itself. The debts accumulated in the past couple of decades are weighing down the major economies, threatening to [...]