Category Nick Rowe
Who is increasing their spending – debtors or creditors?
That's the question we ought to be asking right now, but I haven't seen anyone ask it, let alone answer it. I don't know the answer, but I do know it's the right question to ask.
Pre- Darwinian Macroeconomics
There are signs of economic recovery. Suppose a year from now it is clear that the economy has indeed recovered. What caused it? Was it: monetary policy; fiscal policy; or did the economy recover by itself? I don't know the answer to that question; nor does anyone else. If you have one world recovery, and […]
The grain of truth in the Junker Fallacy
I saw an example of the Junker Fallacy recently (it doesn't matter where). You have probably seen it too somewhere. "Investment is low because people (or firms) spend all their savings on speculation rather than investment — bidding up the price of houses, shares, land, or in corporate takeovers; there is no money left over […]
Banks, Money, and Debt
"You and I can only lend money if we've got some to lend; but banks can create money and debt simultaneously at the stroke of a pen". Might commercial banks be the cause of the increase in debt over the last few years? Maybe partly, but basically no. You can't just look at one side […]
Bagehot on “Who owns the Fed?”
Who owns the Fed? Is the Fed really privately owned? I don't know, and I don't really care (except perhaps out of idle curiosity). Learning who has really owned the Fed all these years would make little or no difference to how I view the Fed.
Money and debt
Could monetary policy have caused the recent rise in levels of debt? The obvious answer is that loose monetary policy lowers interest rates, which causes people to want to borrow and spend more, and so go deeper into debt. That answer is both obvious and wrong, as I explained in a previous post. Low interest […]
Sterilised, unsterilised, beggar-thy-neighbour, forex market interventions.
The Loonie has been appreciating recently. This has a number of people, including me, a bit worried. What can/should the Bank of Canada do about it?
Why did debt increase?
Updated below. I have heard the argument so many times: "Low interest rates caused people to want to borrow and spend, and that's what caused debt to increase". It's such a simple and obvious explanation; only someone with a PhD in economics could fail to understand it. Unfortunately it's also an explanation that makes no […]
The “Cripes!” growth model
I first heard about this growth model back in the 1980's, applied to management consulting firms. Only the expletive wasn't "Cripes!". It's a 2-stage growth model: Stage 1: "Cripes! We've got all these consultants on the payroll! How are we ever going to pay for them all? Better get some more contracts." Stage 2: "Cripes! […]
The optimal number of things to think about
I think our minds (brains, whatever) are like a multi-product firm. We have to decide how many things to think about — how many different products to produce. We don't think about just one thing all the time; but we don't think about an infinite number of things either. There must be fixed costs of […]
Worthwhile Canadian Initiative 
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