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Mike Norman

Mike Norman

Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

Articles by Mike Norman

Bill Mitchell — RBA tom foolery continues while spending continues unabated

12 hours ago

It’s Wednesday where I examine in short a few items that came to my attention in the last week and then retreat into the music segment. Yesterday, the Reserve Bank of Australia raised interest rates for the sixth time since May 2022. This time the increase was 0.25 per cent and the current cash rate target is 2.6 per cent. The below-expected increment has been hailed as the first central bank to ‘turn’. It tells me the RBA is now scared it has gone too far in its ridiculous show of power. It is also obvious that spending is not really responding yet to the RBA move which means that they have no real idea of what the impact of their shift in rates has been. That is the problem with relying on monetary policy as a counter-stabilising tool – it works (if at all) with long lags and by the

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Biden/Summers risk free rate policy

17 hours ago

Biden/Summers rate increase jihad is causing them to become increasingly isolated from:The academe:Greg Mankiw endorses Paul Krugman’s view that the Fed might be tightening policy too aggressively https://t.co/Cl4VFonPLd pic.twitter.com/tcEXqVdLf4— Nick Timiraos (@NickTimiraos) October 1, 2022 International community:This is real. Not the Onion.The U.N. is asking the Fed and other central banks to stop tightening.Noone had an issue on the way up. (Even though the outcome was obvious)https://t.co/fAtHMMS1gm— Stephen Geiger (@Stephen_Geiger) October 3, 2022 Wall Street:Correction: The Fed is going to cause ‘unbelievable calamities’ if they keep hiking, according to Barry Sternlicht https://t.co/rQL77wKxwS— CNBC (@CNBC) October 4, 2022 And perhaps voters we’ll see on November 8th…

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UNCTAD Warns of Too Much Tightening — Stephanie Kelton

1 day ago

You may have heard that the United Nations (U.N.) is urging the Federal Reserve and other central banks to stop raising interest rates. That’s how The Wall Street Journal reported the release of a new report yesterday.Not exactly.It’s not the position of the United Nations (general assembly) but the view of an agency within the United Nations known as the United Nations Conference on Trade and Development (UNCTAD). Here’s the report UNCTAD released yesterday….The LensUNCTAD Warns of Too Much TighteningStephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats’ chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

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Chris Dillow —The Full Employment Question

1 day ago

"Never mind the public finances. Look after the economy and the deficit will look after itself." For years, critics of George Osborne such as me echoed Keynes’ old line. At last, the Tories are, by their own lights, heeding this call. And financial markets hate it. Does this mean the Keynesian advice was wrong all along?No. There’s a big difference between the 2010s and now…Stumbling and MumblingTHE FULL EMPLOYMENT QUESTIONChris Dillow, Investors Chronicle

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Lars P. Syll — The economist’s oath

2 days ago

Systemically important quote. Economists have way more political clout than they deserve based on past performance. Of course, that could change, but only if the profession changes. This quotation targets the core of the problem, over-reliance on modeling without adequate explanation of the limitations involved. Failure to do so appears to be an indicator of pseudo-scientific arrogance manifesting as a peculiar form of academic hubris.Lars P. Syll’s BlogThe economist’s oathLars P. Syll | Professor, Malmo University

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Crisis, Pre-Crisis, Or No Crisis? — Brian Romanchuk

2 days ago

I divide the regimes for the global capital markets into three states: crisis, pre-crisis, and no crisis. The one term that is non-standard is pre-crisis; it is a state where something has gone horribly wrong in funding markets, but it is not yet well known and there is a hypothetical possibility of a full financial crisis being avert…My “no crisis’“ state does not imply that we cannot find panicking people in the financial press. Unimportant markets like Magic the Gathering™️ cards, crypto, or equities might be blowing up, but as long as the funding markets are not touched, the effects on the real economy will be limited. Those markets are largely zero sum transfers of wealth between participants, and not used to raise funding for investment (fixed and inventory). Since we can always

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Bill Mitchell — Learning while on the job …

2 days ago

For the past several months I have been learning Japanese. I am now working at Kyoto University under a JSPS International Fellowship and living near the main campus. Each morning I go running along the Kamo River, which runs north-south through the east side of the city. It is a marvellous resource for runners, walkers, etc. While I have been learning Japanese formally, there is nothing like the real experience and just meeting people down the little lane where my house is or interacting with people in the supermarket has taught me the colloquialisms much more quickly than formal study could ever do. Outside the window of my office I hear people talking and the sounds of the language are music to my ears – allowing me to ‘repeat’ what they are saying (in the privacy of my office) to get

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The Inevitable Financial Crisis — Yves Smith

2 days ago

For months, I have been confident that Europe would suffer a financial crisis and a depression, as in a real economy catastrophe accompanied by a market crash. It might not be that severe and lasting as 1929, but the breadth would mean there would not be 1987 quick bounceback nor a 2008 derivatives crisis concentrated at the heart of the banking system. Even though that looked like financial near-death experience, the same factors that made it more acute in many respects also made it easier for the officialdom to identify and shore up the key institutions that took hits below the water line.The short version of what follows is things are looking even worse now, and on multiple fronts. And unlike 2007-2008, where the officialdom actually was monitoring the US (and other markets) housing

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Bill Mitchell — Degrowth, Deep adaptation and MMT–Part 3

2 days ago

This is the third part in a on-going series that I am writing about Deep Adaptation, Degrowth and related concepts, all of which are designed to provide some sort of pathway beyond the current mess that the world is in with respect to climate, inequality, poverty, excessive consumption, and excessive population growth. Today, I consider how Modern Monetary Theory (MMT) fits into the transition agenda and discuss the labour market dislocation that will accompany the transition to degrowth….Bill Mitchell – billy blogDegrowth, Deep adaptation and MMT – Part 3Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australiael

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Busting The Deficit Myth Featuring Dr. Stephanie Kelton — Thom Hartmann (video 12:16)

4 days ago

[embedded content]Video  (12:16), no transcript. Good short intro. Pass it on.The Thom Hartmann ProgramBusting The Deficit Myth Featuring Dr. Stephanie KeltonThom Hartmann interviews Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats’ chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

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Primer: Basics Of A Swap Meltdown — Brian Romanchuk

6 days ago

I am now seeing more attempts to dig into what exactly happened in the United Kingdom interest rate market. In this article, I am not attempting to do that. Instead, I am just giving a primer on how interest rate swaps are used to hedge liabilities, and what can go wrong when interest rates rise. The mechanisms I describe were likely part of the issue, but I am not saying that this is “the” explanation. Since most people are unsure what liability-driven investment and swaps are, so I am hoping to cover big picture issues for those readers.…Bond Economics Primer: Basics Of A Swap MeltdownBrian Romanchuk

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Let’s Talk Turkey Stephanie Kelton

6 days ago

Today’s post will be short. I spent the day mostly doing
interviews and ran short on time. I was planning to write about Turkey
at some point, but Brian Romanchuk beat me to it. So I’m just going to set things up and encourage you to read what Brian has written….The LensLet’s Talk Turkey [which now prefers to be called by it official name, Tūrkiye]Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats’ chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

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Bill Mitchell — The last week in Britain demonstrates key MMT propositions

6 days ago

There was commentary earlier this week (September 26, 2022) from an investment banker entitled ‘MMT takes a pounding’. I won’t link to it because I don’t want to send traffic to their site. But it is the narrative that the financial market commentators who desire to politicise public debate and use it to attack their pet hates. Modern Monetary Theory (MMT) apparently is a pet hate of this character and like many with similar biases he has been champing at the bit for some semblance of ‘evidence’ that MMT analysis is flawed. This week’s events in Britain have given them more succour. Except when you understand what has actually happened the events demonstrate key MMT propositions….Bill Mitchell – billy blogThe last week in Britain demonstrates key MMT propositionsBill Mitchell |

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The “gilt crisis” — Brian Romanchuk

6 days ago

I have not seen too many longer articles about the “gilt crisis” in the United Kingdom, but have seen a variety of reactions on Twitter. My reaction is that the discussions reminded me why I mainly followed people who used the title “rates forecaster” and not “economist” when I was in finance. (The “rates forecasters” might have had economics degrees, but they knew that if they wanted people like me to take them seriously, they needed to not sound like the people with “economist” in their title.) It is rather impressive how the most interesting part of this crisis has been buried….Bond Economics The "gilt crisis"Brian Romanchuk

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Benefit of higher risk free rate

7 days ago

The higher rates provide higher risk free income to critical USD accounts.  This is and will turn out to be a better policy than the MMT policy of permanent ZIRP with current institutional arrangements of ERISA.A drawback of the policy adjustment though has been the severe reduction in NPV of all financial assets of moving it from 0.05% in March to the projected 4.5% in December…  9 months…A 10-yr asset would project a 35% reduction in NPV due to an immediate adjustment from 0 to 4.5%… so with a 9 month adjustment period we perhaps see a bit less than this…They should have done this a lot slower over multiple years for a more stable outcome for financial assets… but we ofc have Art degree morons in there trying to run it and reduce their figurative “inflation!” so there’s going to be

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A Wonky (But Worthwhile) Read — Stephanie Kelton

7 days ago

Link to Randy Wray’s "Monetary Policy: An Institutionalist Approach" as an antidote to the poison of monetarism and its policy application.The LensA Wonky (But Worthwhile) ReadStephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats’ chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

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Bill Mitchell — Musicians should be paid at least a socially inclusive minimum living wage

8 days ago

It’s Wednesday and I am now ensconced in Kyoto, Japan for the months ahead. I will report on various aspects of that experience as time passes. Today, I reflect on a debate that is going on in Australia about the situation facing live musicians. Should promoters be able to employ them for poverty wages including ‘nothing’ while still profiting or should they be forced to pay the musicians a living wage. You can guess where I sit in the debate.…We can change that to, "Everyone should be paid a living wage."  Then we could have a debate over the various ways to accomplish this.Bill goes on to say this.My position is clear – any worker should be paid a living wage at a minimum.Bill Mitchell – billy blogMusicians should be paid at least a socially inclusive minimum living wageBill Mitchell |

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Gilt Market Mayhem! — Brian Romanchuk

8 days ago

Bond markets are finally getting interesting, with the Bank of England launching emergency purchases to restore order in the gilt market. Since I am not in constant contact with people trading gilts, I will just offer a tentative description of what seems to be going on, and what it “really means.”…Bond Economics Gilt Market Mayhem!Brian Romanchuk

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European Energy Security Faces New Risks With Nord Stream Explosions — Cyril Widdershoven

8 days ago

The leakages and explosions at the Nord Stream and Nord Stream 2 pipelines take the European energy crisis to another level.Analysts are worried that the leakages and explosions on both lines are not an incident but linked to the launch of the Baltic Pipe.A disruption of Norwegian energy supplies to the European Union or the UK could lead to faster depletion of natural gas storage facilities in Europe this winter.Taking economic warfare to a new level.OilpriceEuropean Energy Security Faces New Risks With Nord Stream ExplosionsCyril Widdershoven

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Should We Be Raising Taxes to Fight Inflation? — Stephanie Kelton

8 days ago

Some specifics about the MMT position on addressing inflationary pressure based on analysis of relevant causal factors — albeit without details owing to the scope of a post. For example, there are demand side reasons for rising inflationary pressure and also supply side. Stephanie Kelton claims that the predominant causal factors now are supply side and so addressing the issue from side of demand is the wrong approach, whereas expanding supply where there are shortfalls and bottlenecks is the way to go.Raising taxes to fight inflation is a single-variable approach based on addressing the demand side and as such it is simplistic. "Raising taxes" is not the preferred MMT solution to inflation although in some cases it is indicated. When it is, then the specifics of tax policy to reduce

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Paper On Türkiye — Brian Romanchuk

9 days ago

I was passed a link to the paper “Exchange Rate and Inflation under Weak Monetary Policy: Turkey Verifes Theory” by Gürkaynak, Refet S. and Kısacıkoğlu, Burçin and Lee, Sang Seok. (They used Turkey, and not the apparently preferred Türkiye.) It was claimed by a well known blowhard economist to tell us something about MMT — but to be clear, that was an assertion by someone who makes a living by being wrong about macroeconomics, and not the authors of the paper. Although it has some relevance to some debates about MMT, it is a stretch to say that is telling us much that is useful.…Bond Economics Paper On TürkiyeBrian Romanchuk

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Bill Mitchell – Off to Japan I go

9 days ago

Today, I am skipping my Japanese language class and heading to the airport. I am taking up a position at Kyoto University under a JSPS Invitational Fellowship. I am working with the team in the Resilience Unit there on a project studying the design of fiscal policy for building national resilience using Modern Monetary Theory (MMT) principles. Resilience is an important part of the degrowth and deep adaptation agenda and I will spend some months there working on with other researchers. The – Japan Society for the Promotion of Science (JSPS) is ‘Japan’s sole independent funding agency dedicated to the advancement of science’ and is overseen by the Ministry of Education, Culture, Sports, Science and Technology. I am very privileged to receive one of the invitations. So from tomorrow I will

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Government shutdown looms

9 days ago

No bueno….Just three legislative days remain before funding runs out. https://t.co/xUQPZtzF10— ABC News (@ABC) September 26, 2022

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The Bank of England Had to Say Something — Stephanie Kelton

9 days ago

Everyone insisted that the Bank of England (BoE) needed to say something following the financial turmoil that began on Friday and continued over the weekend. The BoE has now spoken. Sounds pretty dovish to me….Actually, the Bank concludes with, "accordingly. The MPC will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term, in line with in its remit." (emphasis added). This is not all that "dovish." The BoE is saying it will act aggressively through monetary policy, which markets generally want to hear. This is an example of single-variable-in a-linear-equation thinking, which is the basis of contemporary monetarism. This hypothesis (in a discredited theory) is that the interest rate set by the central bank as the

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