Tag Archives: economics and finance

Mainstream finance theory suggests that money is the life blood of the real economy, helping to provide liquidity, means of payment, store of value, market price discovery and risk management, and reinforcing credit and governance discipline. These basic functions appear as self-evident truths — logical, consistent and convincing. But the 2007 global financial crisis revealed that these four functions can only operate depending on at least five more key interrelated preconditions of...

At different times, the manias spread through the world’s financial and economic commentariat. We have had regular predictions that Japan was about to collapse, with a mix of hyperinflation, government insolvency, Bank of Japan negative capital and more. During the GFC, the mainstream economists were out in force predicting accelerating inflation (because of QE and rising fiscal deficits), rising bond yields and government insolvency issues (because of rising deficits and debt ratios) and...

It is indeed strange since "money" as a unit of account is basic for quantitative measurement in economics and finance. Moreover, economic activity involving production, distribution and consumption of real good is dependent of finance in the creation of "money" in a monetary production economy. "Money" and finance are hidden assumptions in economics that constitute foundations of the framework for economic activity and therefore economics. They are for the most part unexamined, and...

Quote worth pondering.Lars P. Syll’s BlogEconophysics Lars P. Syll | Professor, Malmo University

So I've never really understood Modern Monetary Theory (MMT). In some sense, I can understand it as a counter to the damaging "household budget" and "hard money" views of government finances. To me, it still cedes the equally damaging "money is all-important" message of monetarism and so-called Austrian school that manifests even today when a "very serious person" tells you it's really the Fed, not Congress or the President that controls the path of the economy and inflation when neither...

In the end, while standard macroeconomic reforms may work in theory -- albeit under an unrealistic set of assumptions -- they’ve never worked in practice. Rather than eliminating the controls that protect China from a financial crisis, leaders should confront their debt problem head-on and begin deleveraging. For that to happen, it would help if the decision-making process were more, not less centralised. Only forceful action from the top can overcome the tremendously powerful vested...