Category Macro
Currency, interest, and redeemability
What makes a central bank special? The Bank of Canada can borrow and lend. So can the Bank of Montreal. So can I. Nothing special there. The Bank of Canada can set any rate of interest it likes when it lends. So can the Bank of Montreal. So can I. Nothing special there. "If you […]
Good and bad currency wars
Canadian Finance Minister Jim Flaherty is concerned that Switzerland's actions to depreciate the Swiss Franc against the Euro could lead to a currency war. But currency wars don't have to be bad; they could be good. It depends on how they are fought. If fought the right way, an invisible hand may lead to a […]
A shotgun wedding for the United States of the Euro?
"Ummm, you know that Free Trade Agreement we signed with the US and Mexico, a while back? And you know we said NAFTA was just a free trade agreement — nothing more? Ummm, well, it turns out we were wrong. Because of NAFTA, if Canada, Mexico, and the US don't now join together into one […]
Ranking Employment Performance
It has been the conventional wisdom in Canada that we have weathered the Great Recession and the financial crisis much better than the rest of the world. Ever wonder why when government comparisons are made about how Canada fared during the Great Recession, the comparison made is inevitably with the G-7 countries?
2 into 17 won’t go
Hans-Olaf Henkel (H/T Larry Willmore) suggests splitting the Eurozone seventeen into two. He wants Germany, Austria, Finland, and the Netherlands to leave the Euro and create their own new common currency. The remaining countries would keep the Euro. I don't think this would work. (But I agree a lot with the other things he says). […]
Gold Prices Bubbling Away
Well, I normally do not follow the price of gold or other precious metals but an email from a former student of mind has piqued my curiousity. My former student is studying medicine rather than economics but has a consuming interest in economics and markets and forwarded me a newsletter on the price of gold […]
Recessions are always and everywhere a monetary phenomena
"Inflation is always and everywhere a monetary phenomenon" was Milton Friedman's slogan. It was revolutionary (or counter-revolutionary) when he said it in 1970, but it's now very widely accepted. After all, we make central banks responsible for keeping inflation on target. We do not make fiscal authorities responsible for targeting inflation (unless they happen to […]
Apples, wheat, and haircuts: output and demand
What happens to output when the quantity of output demanded suddenly and unexpectedly falls below and stays below the existing level of output? (And prices either do not or cannot adjust to bring the two into balance). I'm going to sketch three different economies, which give three different answers to that question. In an "apple […]
I=S
There's a lot of people wandering around the internet who are very confused about Investment = Saving. Maybe they have been mistaught, or maybe they have mislearned? I don't know. But I'm doing this as a public service, even though it's a thoroughly boring job for me. Someone's got to do it. And since I've […]
Worthwhile Canadian Initiative 
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