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Tag Archives: inflation

Arnold Kling on Modigliani-Miller and money

Arnold Kling recently posted on the implications of the Modigliani-Miller (M-M) theory of corporate finance for monetary economics. He seems to suggest that open market operations will not significantly affect the price level, even when interest rates are positive. (Although it’s possible I’ve misread his post): The metaphor that I would propose is that a single firm’s changes to its financial structure is like me sticking my hand in the ocean, scooping up water, and...

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Pittsburgh Tribune-Review: “Inflation 101”

In my column for the February 16th, 2011, edition of the Pittsburgh Tribune-Review I wrote about inflation. You can read my column beneath the fold. Inflation 101 In 1977, the year I took my first economics course, I could buy two McDonald’s Quarter Pounder hamburgers — with cheese — and a small order of fries for exactly $2. But if the dollar had been worth then what it’s worth today, that very same meal would have set me back $7.28. The unhappy fact is that, over the past 34 years,...

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How Long Before This Time Bomb Blows Up?

When governments started locking down economies in response to the coronavirus pandemic, the Federal Reserve sprung into action. The central bank immediately cut interest rates to zero and launched what we’ve called “QE infinity.” Since then, the Fed has ballooned its balance sheet by nearly $3 trillion and increased the money supply at a record pace. Along the way, Powell and Company signaled they were surrendering to inflation, moving the inflation targeting goalposts to allow for the...

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Money Out of Thin Air: Exchanging Nothing for Something

In response to any economic downturn, the Federal Reserve cranks up the money printing press. The reaction to the economic chaos caused by the government response to the coronavirus pandemic was no different. The Fed launched what many have called “QE infinity,” and has increased the money supply at a record pace. A lot of politicians and pundits see no problem with this approach. After all, “inflation” remains muted despite the money printing.It’s true that by some measures, we haven’t...

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Traders Finally Pick A Lane, But They Pick The Wrong One!

A Pfennig For Your Thoughts October 14, 2020 * Currencies, metals, Oil, stocks all get sold yesterday * If inflation rises, how does a Central Bank Combat that?  Good Day… And a Wonderful Wednesday to you! We’re in our second day of warmer than usual weather today, and then the bottom falls out tomorrow… So, I’ll need to get outside today to soak up some warm sun before the cold front comes through… I’ve always said that the Fall weather was the best weather we get here in the St. Louis...

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What Would a Biden Win Mean for the Economy?

Peter Schiff appeared on Kitco News with David Lin to talk about the investment implications of the upcoming US elections.Peter said he doesn’t feel good about the election and that he thinks Biden will likely win. He said the Democrats may even gain control of the Senate. So, what would a Biden win mean for the economy?As reckless as the Republicans have been with borrowing and spending, I expect the Democrats to be even worse. And unfortunately, unlike when Obama was president and you...

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Tired Of Up One Day, Down The Next?

A Pfennig For Your Thoughts Rocktober 13, 2020 * Yesterday was a down day for the currencies & metals * China puts the kyboshes on further renminbi appreciation, for now…  Good day, and a Tom Terrific and Manfred the Wonder Dog day to you! Looky there, I remembered! Amazing things happen every day, and me remembering something from last week, is one of them! I can recall things that went on 10 years ago, but I can’t even begin to tell you what I wrote about last week! UGH! Well,...

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How soon we forget

This Bloomberg headline caught my eye: Have people already forgotten the 1970s?  From 1973 to 1981, inflation fluctuated between 6% and 13%.  Even if you (wrongly) believe that inflation was caused by supply-side factors, the ultra-dovish Fed was not even trying to reduce inflation during that period.  Both inflation and NGDP growth were quite high, and the Fed set the real fed funds rate at a negative level throughout most of 1974-81. On numerous occasions, they...

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Peter Schiff: Stimulus Doesn’t Help the Underlying Economy

Peter Schiff appeared on along with Michele Schneider of MarketGauge to talk about market reaction to the stimulus stalemate, the impact of the upcoming election, and the prospects of the dollar.The interview was recorded before President Trump tweeted the rug out from under the hope of a stimulus deal and cut off negotiations with the Democrats. At the time, Peter said it was certainly possible we could get another round of “so-called” stimulus, but none of it actually helps the...

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Tim Duy on fiscal stimulus

David Beckworth directed me to an interesting post by Tim Duy: Most likely, net job growth will continue even if at a slower pace. That job growth will be sufficient to drive income growth, and income growth will support consumption. But what about the missing fiscal stimulus, you say? I know this will be widely hated, but the decline in spending in nominal and real terms at this point pretty much matches the decline in income excluding current transfer payments . ....

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