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Tag Archives: Denmark

Inflation is about monetary policy

I continue to see all sorts of non-monetary theories of inflation. For instance, “demographics” is often cited for the low inflation rate in Japan. There’s a much simpler explanation for inflation—monetary policy. The following graph shows the exchange rate for three European countries, Denmark, Switzerland and Sweden: During this period, the Danish krone (red line) was pegged to the euro.  This meant that the Danish central bank was not able to adopt an independent...

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We Know How This Ends, Part 1

The finance ministers and representatives of central banks from the world’s ten largest “capitalist” economies gathered in Bonn, West Germany on November 20, 1968. The global financial system was then enthralled by a third major currency crisis of the past year or so and there was great angst and disagreement as to what to do about it. While sterling had become something of a recurring devaluation tendency and francs perpetually, it seemed, in disarray, this time it was the Deutsche mark...

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Danish Blues: Low Inflation, Low Interest Rates and a Housing Bubble (Just Like the USA)

In the recent CNN debate, Democrat Presidential candidate Bernie Sanders said that he wished the USA was more like Scandinavian countries like Denmark. I have news for Bernie — the USA is already like Denmark in terms of low inflation, near zero Central Bank rates and a housing bubble. Like the USA, Denmark has a housing bubble … again just like Denmark. Both the USA and Denmark has Central Banks rates that are ZIRPIE (near zero), helping to create asset bubbles. And inflation YoY looks...

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Denmark: Libertarian Welfare State?

Right-leaning arguments about the free-market marvel that is Denmark cut both ways. Denmark shows us that a much larger public sector and a much more robust social-insurance system need not come at the expense of a dynamic market economy. In other words, Denmark shows us that capitalism and a large welfare state are perfectly compatible and possibly complementary. The lesson Bernie Sanders needs to learn is that you cannot finance a Danish-style welfare state without free markets and large...

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