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Peter Radford

Peter Radford

Peter Radford is publisher of The Radford Free Press, worked as an analyst for banks over fifteen years and has degrees from the London School of Economics and Harvard Business School.

Articles by Peter Radford

Silicon Valley Blues

11 days ago

From Peter Radford
The circumstances of Silicon Valley Bank are well rehearsed by now.   The bank sat at the epicenter of the tech-bro start-up ecosystem and played a pivotal role in the collection and disbursement of all the cash that flows through that system.  It was an extremely odd bank.  Unlike the everyday banks most of us deal with it had very few deposits that originated from regular customers.  Most of its deposit base consisted of the chunky piles of cash belonging to start-ups and their various hangers-on.  That meant the average size of each deposit account was well in excess of the limit the FDIC insures.
This odd customer base added to the strain on the bank during recent years when the combination of low interest rates and excess cash slopping about the economy led to a

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Wolf knows better. I know he knows

27 days ago

From Peter Radford
What am I supposed to make of this?
Martin Wolf, someone whose work I always pay attention to, flubs it and leaves us with a partial picture.  That’s unlike him.  Perhaps it was the editing?
In any case the notion that the UK needs to generate more savings, which is what Wolf is arguing in his recent Financial Times article, needs a slight augmentation in his basic analysis.
The problem begins when he says that “Investment is financed by savings”.  This is a very un-Wolf like statement.  He is as aware as we are that savings do not cause investment.  This is simply one of those accounting identities that sometimes confuses people into imagining causation where there is none.  This unfortunate sentence then opens the door for the avoidance of the sort of deeper

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State of play at year end

December 30, 2022

From Peter Radford
Is it just me?
Or is the realm of punditry in a state of confusion?
There seems to be an emerging consensus that something big is happening.  It’s just that we don’t quite know what.  The problem is that the template we are all applying is frayed if not shattered.  Consequently we are searching for the safety of explanations but finding that our questions do not elicit comfortable answers.  This is not a place we like to inhabit.  What are we to do?
Let’s speculate.
Stagflation?  Growth seems to have slowed dramatically over the last decade if not longer.  There’s talk of malaise.  There’s talk of a post-growth economy.  Some folks even applaud the idea that the days of vertiginous growth are behind us.  Now, we are told, we can focus on the environment and pivot to

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Reflections on the US election results

December 12, 2022

From Peter Radford
Let the dust settle.
Absorb the information embedded in the results.
Take a deep breath and avoid partisan primping.
First: this election was insanely expensive.  Candidates seeking election to Federal office spent an estimated $8.9 billion.  Their state level counterparts spent a further $7.8 billion.  
Second:  all that expenditure had little effect.  Sure, the House changed hands, but by the slimmest of margins, and for all the pre-election talk of various color waves the reality is that only 40 House seats were truly competitive — if by competitive we mean that the victory margin was  5% or less.  That means 90% of the election was decided before the starting gun.
Third: elections have thus become a major industry that produces little change.  America is,

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We need our Hutton

October 7, 2022

From Peter Radford
– the question is how does economics get its much needed revamp?
This caught my eye:

“Debreu noted in his Nobel Prize lecture that the success of the mathematization of economic theory depended “on the fact that the commodity space has the structure of a real vector space”. We have shown that this is incorrect. The “price vector” is not a vector, and GET [General Equilibrium Theory] is therefore false. But we may go further and assert that not only was the proof incorrect, what was set out to be proved was not true in the first place. The real economy cannot be brought into equilibrium by adjusting prices. And indeed, the real economy is never in equilibrium.”
That’s the concluding paragraph in Philip George’s paper in the recently published Real World

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Share buybacks — again?

September 7, 2022

From Peter Radford
What isn’t said is often more telling than what is.  The silence denotes either a disrespect for thorough analysis or an ignorance of issues beyond the ken of the speaker.  Then, of course, a third option arises: that those issues are an embarrassment to the point being made and are thus best left unmentioned.
For some reason stock buybacks appear to fall into such a zone of silence.  There is some controversy currently about the topic because of the recent proposal to impose a very modest tax on stock buybacks here in the U.S.
The usual arguments have been put forward to defend buybacks.
Michael Mauboussin, who is head of something called consilient research in an arm of Morgan Stanley, recently wrote this in an op-ed for the Financial Times:
“An essential role of

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Tax stock buybacks?

August 25, 2022

From Peter Radford
Taking a short break from my crusade to get information taken more seriously in economics …
Yesterday’s Financial Times includes, on page 9 of the print edition, one of its regular “Market Insights” columns.  This is the space the FT allocates to sundry financial market types to opine on subjects of general interest to other financial market types.  It’s always a good read if you want to gain insight into how our magnificent financiers talk to themselves whilst allocating capital appropriately around the economy.  Well that’s what they see themselves doing, so let’s not nitpick.
The column yesterday was written by a luminary of the investment community, someone who sat on the board of a popular retirement fund, and who has written extensively on subjects related to

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Say it ain’t so

August 19, 2022

From Peter Radford
re-visiting economics’ basic concepts
I am nothing if not annoying.  Allow me to elaborate.
Let’s be basic.
I mean really really basic.
Our model world initially consists of two people, Adam and Eve.  I know, it’s been done before.  But we are economists.  What are we interested in?  What problems that Adam and Eve face do we want to study?
Well, they need energy.  Human bodies, like all ordered structures, need flows of energy to maintain that structure.  The Second Law of Thermodynamics is the damndest thing.  It gets in the way.  But that’s life.  So what do Adam and Eve do?  They go look for energy, which in our speak we call food.  They avert death by searching for, finding, and consuming food.  Problem solved.
What do we make of this?
Demand — the need for a

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Machine age musings on algorithmic growth theory

August 7, 2022

From Peter Radford
Don’t mind me.  I am just thinking out aloud…
That we live in a Machine Age is indisputable.  Our lifestyles depend entirely upon the mediation of machines.  Without them modernity collapses back to whatever existed in the prior ages and we surrender most of what we currently cherish.
And it is important to use the phrase “machine age” because other phrases such as Industrial Age and so on limit us.  Some say we are now entering a Digital Age, but this too is a mistake.  All that is changing is the nature of our machines.  The Machine Age lives on.
So what is a machine?
It is a piece of information that allows us to channel energy and concentrate it such that we amplify the output we expect from that application of energy.  In this case the information is embodied in

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Thinking like an Economist?

May 19, 2022

From Peter Radford
Thinking like an economist.
What a horrible thought.  Can you imagine anything more restrictive and less imaginative?  It requires you to disengage from reality and enter a world constrained by absurd assumptions, odd definitions, and a lack of foundation.  The entire edifice of economics sits, in all its glory, suspended in mid-air and relying on what the philosopher Daniel Dennett describes as “sky hooks” to hold it up.  Beneath it is only vapor and foggy notions of the phenomena it purports to describe and explain.  Just ask an economist to describe a market in detail and you will understand how vague the enterprise is.  
Perhaps I am wrong.  It takes a lot of imagination to conceive of what passes as economics as being a study of actual economies.  You need a

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Free to trade efficiency?

March 23, 2022

From Peter Radford
The war in Europe is messing with some major preconceptions and exposing some as illusions that, perhaps, we would be better off without.
Take, for instance, The Economist magazine’s leader article entitled “Trading with the enemy.”  Here’s the key question the article poses:
“Is it prudent for open societies to conduct normal economic relations with autocratic ones, such as Russia and China, that abuse human rights, endanger security and grow more threatening the richer they get?”
You and I might answer in the negative with a certain ease, but for the Economist and its ilk the question is more nuanced.  After all aren’t freedom and free trade one and the same?  If you stop trading freely aren’t you surrendering your freedom?
The Economist goes on to

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A note on Furet

March 7, 2022

From Peter Radford
Intellectual vanities abound in a technocratic society.  It seems inevitable that as we push the boundaries of knowledge further and further into the space of potential beyond our current state that the division of labor presses down on us.  We become, each of us, more distant from any sense of self-sufficiency.  Such a state is an absurdity in our technologically infused and dependent world.  We have become enmeshed in the very supplementary support system we developed to drive ourselves out of the Malthusian trap we lived in for millennia.  As the complexity of our society rose, as the interdependence implied by the ever increasing network of specialities grew, and as we left behind the visceral ways of life we were prepared for by our evolutionary trajectory,

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All wet like a river

March 3, 2022

From Peter Radford
I am still stuck wondering about Diane Coyle’s defense of economics.
Heraclitus exists only in fragments.  That’s unfortunate because aphorisms are not the best way to tackle the hubris of the technocrat.  He was on to something though.  We all know his well-worn saying about stepping into rivers.  He tells us that they’re never the same twice.  And yet they stay the same.  Beware, then, the analyst that thinks she sees a regularity in our economy.  It may look the same as before, but it isn’t.  Not in detail.
Yes, I am still stuck wondering about Diane Coyle’s defense of economics.  It has, she says, changed a great deal since it was exposed as somewhat vapid back during the Great Financial Crisis.  I am trying to be gentle.  In truth it was exposed as being a lot

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Democracy? Surely not!

January 4, 2022

From Peter Radford
Let’s stir things up for the New Year by continuing with one of my recent themes.

A quote from an opinion piece in the NYT this morning [January 3rd]:
“James Madison boasted that the Constitution achieved “the total exclusion of the people, in their collective capacity.” Its elaborate political mechanics reflect the elite dislike and mistrust of majority rule that Madison voiced when he wrote, “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.” Madison’s condescension has never gone away. Walter Lippmann, perhaps the most prominent intellectual of the short American Century, reckoned that citizens were ignorant, confused and emotional. Democracy brought “an intensification of feeling and a degradation of significance”

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Confusion reigns

December 29, 2021

From Peter Radford
What on earth were they doing?
Rocked but undaunted by the great financial crisis the orthodoxy of our central banks survived to fight another day.  The system had been saved.  That no one saw the onrushing crisis is still being debated.  Of course some people saw it coming.  Anyone with a scintilla of understanding of Minsky for instance.  But those folk are hard to find in the top seats of central banks.
The objective of the so-called independent central bank is to preserve the system.  To make it safe for markets to continue undisturbed by the intrusions of political whims.  To save, that is, capitalism from the depraved intrusions of democracy.  The idea is to separate as firmly as possible the political and the economic realms.  After all as economists seem to

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Domain shift

December 7, 2021

From Peter Radford
Brian Arthur tells us that technology most often advances in the form of domain shifts.  In his narrative technologies cluster in related groups he calls domains.  So individual technologies might advance through a tweak here or there, but the economy advances through a shift from one cluster of technologies to another.
I like this idea.  Especially when we then broaden the topic to use technology as a background against which we view a particular slice of history.  Thus we can think, legitimately about the “steam era” and such.  Adding insight to this, Arthur situates all technologies as extensions of natural phenomena.  So he characterizes a technology as a phenomenon being “captured and put to use”.
All good.  This gives us a practical definition of technology and

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More is different: a redux

December 1, 2021

From Peter Radford
“Formation is the vanishing of being into nothing, and the vanishing of nothing into being”
Hegel loved his dialectics.  But it isn’t just contrasts that illuminate reality.  It is connections also. Connections matter.  Single things are interesting.  Perhaps even intriguing.  But it is the way in which things connect that leads us to the better understanding of our surroundings and of ourselves.
Our modern world rests largely on a web of technology that mediates our existence and removes us from our primitive origins.  We pride ourselves on this web.  Our ability to render nature compliant and exploit both our context and our intellect to produce comfortable lifestyles is the essence of modernity.  Any brief study of the past two hundred years will astonish us at

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Is there a “policy”?

November 25, 2021

From Peter Radford
I read this morning that the Federal Reserve had bought, at the peak of the recent crisis, about 40% of all US government bonds being issued.
This may, to some of you, be something of no concern.
Think again
The illusion that there are separate spaces for monetary and fiscal policy is belied by this fact.  Which one was it?  Was it the Fed flooding the economy with money?  Or was it the government issuing debt to finance economic support? I suppose it was both.  But it wasn’t fiscal policy.  The effect of all that money was simply to support asset prices.  Whether that was the intention is irrelevant.  The flood found its way into the financial system and relatively little found its way into the economy in the form of an expansion of productive activity.  We could go

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The sabotage of efficiency

November 23, 2021

From Peter Radford
Not the sort of sabotage we associate with plucky heroes undertaking dramatic action like blowing up railway lines and so on.
No, the sort of sabotage that is a great deal more subtle.  The kind that is summed up by the metaphorical boiled frog.  The slow devious and underhanded chipping away at something termite-like until the edifice is more fiction than fact.
That sort of sabotage.
The sort of sabotage that Thorstein Veblen wrote about a hundred years ago in his curious collection of papers later accumulated into the volume entitled “The Engineers and The Price System”.  I must admit that every time I read those papers I come away with a furrowed brow.  What on earth was Veblen getting at?  The argument ends with a reference to a soviet of engineers

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And now for something completely different …

October 4, 2021

From Peter Radford
My summer of research is almost over.  The season here in Vermont is changing and the view from our window will soon be dominated by the brilliant autumnal colors our region is famous for.  All is both regular and well.
Sort of.
Perhaps there’s something in the water down there in New York.  There are rumblings of life in economics.  The long sclerosis inhibiting the emergence of theories that explain rather than re-invent reality might just be close to loosening its grip.
I hope so.
In case you are unaware, there has been a paper published that has emerged as something of a viral hit.  We all need to add to its fame.  It begins thus:

“Mainstream economics is replete with ideas that “everyone knows” to be true, but that are actu- ally arrant nonsense. For

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Weekend read – Who’s in charge: us or our technology?

August 28, 2021

From Peter Radford
So who is in charge?  Who controls the flow of technology?  Is it us?  Or does the technology now control us?
We live in a technology infused world.  Our current civilization sits on a foundation accumulated through the past few centuries and built of machine power.  We cannot separate ourselves from this cumulative support system without regressing to a pre-industrial way of life.  Which is something few of us either want or are equipped to deal with.  We have forgotten how to live that life, and despite the sentimentalism of our artists and poets, it is not returning without a crash forced upon us.  We will not return willingly.
The rise of this technologically mediated existence crept up on us.  At first the technology was resisted: it displaced human beings from

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Diversity in economics

August 19, 2021

From Peter Radford
In this case geographical diversity.
Dani Rodrik has brought to our attention a rather serious problem within the economics profession: it is still dominated by people living and working in the West.  As a consequence it has a decided bias towards issues that are of significant interest to the West.
This is, of course, not news to any of you not living in the West.  Nor is it news to anyone outside the profession paying attention to the product of the journals and various other outlets.  The ideas that get the most attention and the work that gets most lauded is still channeled through a very narrow lens.  The result is a considerable — massive? — underrepresentation of viewpoints and experiences that inhibit the ability of the discipline to engage broadly with the

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Techno babble

July 2, 2021

From Peter Radford
What is about technology?  It’s either a panacea for all our ills, or it’s the cause of all the aforesaid ills.  Why can’t we make up our minds?
This morning’s Financial Times is, sort of, a good demonstration of the confusion we are in.
On the one hand there’s any article about cryptocurrencies.  On the other there’s a rather less techno-centric article about bank culture.  In both cases technology looms large.  In neither is technology really mentioned in detail.  It just forms a context and provides the framing for the problem being discussed.  After all cryptocurrencies are the archetypical modern techno fad and banks were early adopters of hi-tech bookkeeping and analytical tools.  It’s all about ledgers.  Which means, in my mind at least, that it’s all about

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Structural defects

June 30, 2021

From Peter Radford
The Bank for International Settlements issued its annual report yesterday.  Perhaps the central banks are feeling a little insecure, or perhaps they are a little more sensitive to economic reality, but the BIS felt compelled to use one third of its report to tackle inequality.  Here’s the summary as given in the report:
“Key takeaways
The long-term rise in economic inequality since the 1980s is largely due to structural factors, well outside the reach of monetary policy, and is best addressed by fiscal and structural policies.
Monetary policy can most effectively contribute to a more equitable society by fulfilling its mandate, which addresses two key factors causing inequality at shorter horizons. This requires keeping inflation low and limiting the incidence and

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Back to the bank?

June 20, 2021

From Peter Radford
Following on from the revelation that our impoverished banks are thinking off penalizing their staff for the rather obvious and rational decision to re-locate, along with their big city wages, to a low cost place to live, we discover that most are now trying to force those recalcitrant workers back to the big city offices.
My head is still spinning from the absurdity of the threat to cut the wages of enterprising workers.  Just how stupid, mean-spirited, and unnecessary is this?  Those workers are being exactly the kind of person the banks want to employ.  Self-interested, rational, aggressive in pursuing their goals, and intense.  The problem, I suppose, is that all those qualities make them difficult to control.  Whatever next?
Banks love, of course, to crow about

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Power shifts, or not?

June 9, 2021

From Peter Radford
“Even someone as smart as Larry Summers.”  
Power can flummox even the best economist.  A typical explanation of events in an economy makes scant reference to the way in which power distorts the wondrous smooth motions that so obsess the discipline.  It’s almost as if human relationships don’t exist in those wonderful models they are all so proud of.  For the rest of us, power is central.  It takes little time to realize that establishing an imbalance can have all sorts of advantages.  They most notable being that it defeats or undermines the consequences of the classic impersonal marketplace.  Fair is out.  Asymmetry is in.
Not that the existence of asymmetry ought surprise anyone.  The real world is an awfully lumpy place.  Resources, information, people, and

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Where are we going?

May 26, 2021

From Peter Radford
Paul Krugman has been rightly skeptical about cryptocurrencies lately.  The extraordinary volatility in the price of Bitcoin, for example, has brought a bout of crypto mania to the fore in both the media and the marketplace.  And, as seems usual, various regulators around the world are arriving at the party about a decade after the launch of what their advocates call an alternative to the evils of fiat currencies.
I suppose it would be churlish of me to remind us all that the launch of each and every form of crypto assets is itself an act of fiat.  Instead of a government waving its wand, a small group of self-selected techie libertarians waves its collective wand, that is if a group of libertarians can be called a collective.  The former is, apparently evil, the

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The technological bright blue yonder?

April 22, 2021

From Peter Radford
One of the greatest shifts subsequent to the rise of machinery and industrialization is the social acceptance of apparently  never-ending technological change.  A change, moreover, that we are told will inevitably lead us all towards an improved, more prosperous, healthier, and happier existence.  That this future cannot be precisely determined or known to us is set aside, we simply accept the drumbeat of change and presume the rest.
Or at least that’s one view.  How else to explain the great contrast between the social reaction to new technologies back at the onset of industrialization and our contemporary reaction?  The one was tempestuous and riddled through with hostility, questions, and counter-attack by the workers affected by the introduction of the first

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Chapter thirty-one

April 20, 2021

From Peter Radford
There’s a story about Richard Feynman who is reputed to have said that anyone who claims to understand quantum physics almost certainly does not.  This coming from someone who almost certainly did.  I have much the same reaction to anyone who claims to have understood Ricardo on their first read through his work.  Then again, perhaps it’s just my own struggle: every time I grapple with Ricardo it takes me a while to understand where he’s going.  It’s a case of knowing the plot, but failing to follow the details.
In any case, here we are towards the end of the pandemic-induced economic downturn and minds are turning back to the many longer term issues we were all discussing before the shutdown curtailed conversation and re-focused our minds on shorter term issues.

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Weekend Read – Odd contradictions

April 16, 2021

From Peter Radford
Jamie Dimon, CEO of JP Morgan Chase writes his annual letter to shareholders, Wall Street quivers in anticipation at his wisdom.  This year’s is a doozy.  Dimon, it seems, wants to explain to us all that corporations play many roles in society and are not simply focused on “short term rapacious profit taking” (his words, not mine).
Let me begin with an aside: why it is that an annual communication from a CEO to the shareholders of a corporation that he/she leads is thought newsworthy in some general sense?  Why is it not treated as a minor activity all CEOs are expected to indulge in?  Why is society at large meant to listen in and, perhaps, learn a thing or two?  Personally, I blame the cult of CEO personality, which is an absurdity that, by itself, demonstrates the

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