Hello. I’m Burnham Banks and I studied economics in the late 80s and early 90s. I’m still studying economics today and am still no wiser. This blog is a journal, a record of my thoughts and experiences. If we are destined to repeat our mistakes, we should at least repeat them faithfully. If not, then perhaps the past is a mischievous guide and we should try something new.
A little change is coming…
Tuesday, 01 October 2019 | 3:54 pm
Fiscal policy will join monetary policy in the fight against stagnation. 10 years of loose monetary policy has inflated assets while failing to raise growth or inflation. Orthodoxy is slowly pivoting towards fiscal policy. The textbook dangers of unlimited monetary and fiscal support are, excessive and rising national debt and the eventual loss of confidence
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Yield Curve Inversion. The Fed. The QE Trap.
Friday, 20 September 2019 | 3:59 pm
For a while now, the Fed funds effective rate has pushed up against the upper bound of the Fed funds target rate. If not for the Fed, short term rates would have risen above the target range. We see this pressure in repo rates, not just this week but for some months now, where repo
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The Limits of Monetary Policy? The Price of Fiscal Policy.
Monday, 16 September 2019 | 7:54 am
Since the ECB announced a rate cut of 0.1% taking the desposit facility rate to -0.50% and a resumption of bond purchases at a rate of 20 billion EUR per month, the 10 year bund yield has predictably moved from -0.71% to -0.45%, a 0.26% rise, substantial when yields are that low. The ECB’s move
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ECB to disappoint. Lagarde expects fiscal policy to do the lifting.
Wednesday, 11 September 2019 | 8:30 am
I’ve been of the view, like so many other investors, that the would be dovish and a) launch LTRO early, b) cut rates, and c) do some form of QE (the market thinks outright QE, I thought unconstrained LTRO.) This view has led me to be long EUR duration from Bunds to Italian and Portuguese
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Inequality
Monday, 26 August 2019 | 4:29 pm
Inequality has reached acutely high levels. There are certain drawbacks. An important impact of inequality is that the capital and resource allocation decisions are concentrated in the hands of the few. The efficiency of this capitalist, free market, economy, tends to the efficiency of the centrally planned (for example, Soviet) economy. A related theme is
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