Category Monetary policy
What is a “reserve currency” anyway?
I just realised I don't really know; that's why I'm asking. With the Eurozone troubles, the US dollar has been rising against the Euro. That's not so surprising. But the US dollar is rising not just against the Euro; it seems to be rising against other currencies as well, like the Canadian dollar. And gold […]
The orthodox loss of faith
I think we are witnessing the biggest silent shift in macroeconomic thought since the Second World War. For 70 years we have taught, and believed, that we would never again need to suffer a persistent shortage of demand. We promised ourselves the 1930's were behind us. We knew how to increase demand, and would do […]
Fiscal Federalism revisited
A French, German, and Canadian student were asked to write an essay on elephants……And the Canadian student titled his essay "Elephants: a Federal or Provincial responsibility?" The Eurozone is what Canada would be if we abolished the Federal government, leaving only the Bank of Canada. The 16 Eurozone countries are the 10 Canadian provinces. Americans […]
L’Europe et l’alchimie monétaire
Cet article nous est envoyé par Guillaume Nolin, qui participe régulièrement ici sur WCI. Les événements survenus en Grèce au cours des derniers jours nous forcent à nous questionner sur la précarité de notre situation économique. L’image d’une Grèce prodigue, sorte de cigale en préretraite manifestant violemment pour conserver des acquis sociaux illusoires, est certes […]
The Eurozone lender of last resort?
OK. Let's simplify this whole Eurozone mess. Central banks do two things:
The optimal destruction of wolves
This post is not about wolves. Sorry. You are an armed shepherd guarding 16 sheep against circling wolves. There are more wolves than you have bullets. It takes ki wolves to kill one sheep, where ki is the strength of sheep i. The number of wolves is greater than SUM{ki}, so they could kill all […]
Negative and Positive sovereign debt feedback loops
There are two sorts of countries: countries that can print money to pay their sovereign debts; and countries that can't. Canada is a printer; Greece is a non-printer. Both sorts of countries can get into trouble if they issue too much sovereign debt; but they get into very different types of trouble. Printers get into […]
The Euro money supply
I agree with Ambrose Evans-Pritchard and Jacques Cailloux. It's what I was trying to say yesterday. And on Thursday. It's probably gotten too big for Germany, France, the IMF, whoever, to fix. Only the European Central Bank has enough money to fix the Eurozone problem; because it can print it. What's ironic is that what […]
The Holy Roman Eurozone
I started writing this post yesterday. It's already out of date. This is what I wrote yesterday; I will continue the post below. Greece has now gone, at least in expected value terms. With bond yields increased to over 13% today, there is no way I can see Greece running a primary surplus big enough […]
The CPI release: blip, counter-blip, or the beginning of the parity pass-through?
Today's CPI release shows a reduction in pretty much every measure of inflation, so talk of just how high and how fast the Bank of Canada will increase interest rates will be a bit subdued for a few days – although last I checked, the CAD was still trading above parity.
Worthwhile Canadian Initiative 
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