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Global Economic Intersection

Chasing Utopia: Solow Versus Harrod-Domar

by Philip Pilkington I’m currently reading Robert Solow’s paper A Contribution to the Theory of Economic Growth in which he lays out his famous Solow growth model. I don’t want to get into the actual model laid out here but instead ask what exactly this paper is trying to address. As readers of this blog will probably know I find so-called ‘long-run’ models to be about as useful for understanding the economy as toy train sets are for understanding the operations of an actual train. But in...

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The Next Minsky Moment

by John Mauldin, Thoughts from the Frontline “China’s economy has entered a state of new normal.”– Premier Li Keqiang, 2015 “Success breeds a disregard of the possibility of failure.”– Hyman Minsky Follow up: Please share this article - Go to very top of page, right hand side for social media buttons. Hollywood thrives on tropes. Most things that are possible to portray on film have been portrayed at some point in the last century. Today’s producers mostly just rearrange those tropes –...

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What, Me Worry?

by John Mauldin, Thoughts from the Frontline “Forget the past. The future will give you plenty to worry about.”– George Allen, Sr. “I try not to worry about the future, so I take each day just one anxiety attack at a time.”– Tom Wilson Follow up: Please share this article - Go to very top of page, right hand side for social media buttons. The middle ground can be uncomfortable. As someone now widely known as the “muddle-through guy,” I have learned this the hard way. My bullish...

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Bad Governance and Corruption in Countries: What Causes It?

by Elliott Morss, Morss Global Finance Introduction In earlier writings, I have pointed to the primary shortcoming of democracy as a form of government. Special interest groups get what they want via lobbying and campaign contributions while the general question of what is good for the country is put on the back burner. Follow up: Please share this article - Go to very top of page, right hand side for social media buttons. An excellent example of this is what Eisenhower warned about –...

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Rising Job Tenure and Its Tradeoffs

by Timothy Taylor, Conversable Economist Given the tumultuous changes in the US economy in recent years, I would have guessed that average "job tenure"--that is, the average time that someone with a job has held that job--was declining. My guess would have been wrong. Henry R. Hyatt and James R. Spletzer present the evidence that job tenure has been mostly on the increase since about 2000 in "Shifting Job Tenure Distribution" (U.S. Census Bureau, Center for Economic Studies, May 2016, CES...

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The Interaction of Economists and Money Cranks in the Depression Years

by Philip Pilkington Article of the Week from Fixing the Economists Recently I ran a post that briefly delved into the connection between Keynes and the money cranks of the 1920s and 1930s. There I showed that Keynes’ ideas cannot be said to have been influenced in any substantial way by the money cranks. Rather they were an outgrowth of a modifying of his earlier views, put forward in his Treatise on Money and taken from the Swedish economist Knut Wicksell. Follow up: Please share this...

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Can You Afford to Reach 100?

by John Mauldin, Thoughts from the Frontline “I often joke that 100 years from now I hope people are saying, ‘Dang, she looks good for her age!’”– Dolly Parton “Just because you live 20 years or 100 years doesn’t make it less meaningful. They’re both short amounts of time. So all we can do is just live in that time, whatever time we’re given.”– Ansel Elgort “If I had more time, I would have written a shorter letter.”– Blaise Pascal, 1657 (and a few score other later attributions)...

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The Yield Curve and Recessions: Against U.S. – Centricism

by Philip Pilkington Article of the Week from Fixing the Economists One of the nicest stylised facts in applied economics is that if the Fed inverts the yield curve it will cause a recession. Inverting the yield curve basically means that the Fed hikes the short-term interest rate goes higher than the long-term interest rate. In theory this should lead to long-term lending drying up, investment falling significantly (usually in housing and inventories) and, ultimately, a recession....

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Money and Banking, Part 18 (B): Overview of the Financial System: A World of Promises

by Eric Tymoigne Due to the size of this post, it has been split into 2. You can find part A here. Click for larger image of U.S. Treasury note. Follow up: Please share this article - Go to very top of page, right hand side for social media buttons. Monetary instruments Monetary instruments are the last type of marketable promissory notes. Post 15 and Post 16 are devoted to their analysis. One of the main characteristics of monetary instruments is that their term to maturity is...

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Thoughts from the Frontline: The Great Reset, Part Two

by John Mauldin, Thoughts from the Frontline “Premature optimization is the root of all evil…”– Donald Knuth, from his 1974 Turing Award lecture Follow up: Please share this article - Go to very top of page, right hand side for social media buttons. This is the second of twoarticles that I think will be among the most important I’ve ever written. These letters set out my philosophy about how we have to invest in the coming days and years. They are the result of my years spent working...

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