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Global Economic Intersection

Two Different Approaches to Economics and One Approach to Pseudo-Economics

by Philip Pilkington In the comments to my piece on Janet Yellen the hypocrisy of my position was pointed out, as it so often is, by a certain reader of this blog. What was my hypocrisy on this particular occasion? It was the fact that I complained about Yellen’s obsession with ‘closing’ models but, in other circumstances, champion Godleyian Stock-Flow Consistent (SFC) modelling which, of course, contains models that have ‘closures’ of various forms. Follow up: Please share this article...

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Some Economics of Immigration

by Timothy Taylor, Conversable Economist The Fall 2017 issue of the Cato Journal includes 11 accessible papers on "The Economics of Immigration." Here, I'll mention some insights that especially caught my eye from two of the papers. Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. One of the most powerful concerns about immigration of low-skill workers is that even if it provides benefits for high-skilled workers (because services...

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Global Value Chains and the US Missing Exports

by Voxeu.org -- this post authored by Yuqing Xing The last few decades have seen the US running its largest ever trade deficit. This column uses the case of Apple to demonstrate that the failure of trade statistics to capture flows of intellectual property embedded in exports explains a significant share of this deficit. Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. Reforming trade statistics by including the value added of...

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Slackers: How the Multiplier Works in the Real World

by Philip Pilkington In a previous post I wrote about the key reason that the natural rate of interest does not exist. There I discussed the Kahn Multiplier. We saw that when investment increased consumption increased along with it due to the fresh income received from the investment spending. Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. The increase in consumption was then multiplied out into the wider economy in accordance...

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Uncle Sam’s Unfunded Promises

by John Mauldin, Thoughts from the Frontline Here’s a surprisingly profound question: What is a promise? Dictionaries offer various definitions. I like this one: “An express assurance on which expectation is to be based.” Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. That definition captures the two-sided nature of a promise. One party offers an assurance, which the other converts into an expectation. You deposit money in...

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The Natural Rate of Interest Does Not Exist

by Philip Pilkington I just want to make a quick note on the multiplier and the theory of liquidity preference that is not generally recognised. When the full implications of this argument are recognised and integrated with marginalist theories of savings and investment (including the Austrian theory) these theories basically fall apart unless some very restrictive assumptions are put in place. Follow up: Please share this article - Go to very top of page, right hand side, for social...

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Global Retirement Reality

by John Mauldin, Thoughts from the Frontline Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop. Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. Lately I have focused on the trend in US public pension funds, many of which are woefully...

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Why Thomas Piketty is Wrong About Inflation and Interest Rates

by Philip Pilkington I have pointed out on here recently that Thomas Piketty’s views on public sector debt are wholly un-Keynesian. Well, we should also point out that his view of inflation and interest rates are also fairly un-Keynesian.  Piketty basically thinks that the reason that governments have been able to run persistent government deficits is due to consistent inflation which erodes the real interest rates governments must pay on their debt. Follow up: Please share this article...

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Consumer Spending is Driving Healthy Economic Growth

by Rick Davis, Consumer Metrics Institute September 28, 2017 - BEA Revises 2nd Quarter 2017 GDP Growth Slightly Upward to 3.06%: In their third and final estimate of the US GDP for the second quarter of 2017, the Bureau of Economic Analysis (BEA) reported that the US economy was growing at a +3.06% annual rate, up +0.02% from their previous estimate and up +1.82% from the prior quarter. Follow up: Please share this article - Go to very top of page, right hand side, for social media...

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Brexit: Will It Ever Happen?

by Elliott Morss, Morss Global Finance Introduction A United Kingdom (UK) departure from the European Union (EU) would generate important changes in global finance and trade. International financial markets do not as yet reflect these changes, suggesting they don’t think Brexit will happen. Will it ever really happen? Follow up: Please share this article - Go to very top of page, right hand side, for social media buttons. The key question is whether the protagonists – the UK and the EU –...

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