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Tag Archives: Interest rates

Britain was not “nearly bust” in March

"Britain nearly went bust in March, says Bank of England", reads a headline in the Guardian. In similar vein, the Telegraph's Business section reports "UK finances were close to collapse, says Governor":Eh, what? The Governor of the Bank of England says the UK nearly turned into Venezuela? Well, that's what the Telegraph seems to think: The Bank of England was forced to save the Government from potential financial collapse as markets seized up at the height of the coronavirus crisis,...

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Too Good To Be True

"USD-backed stablecoin is 10x better than your savings account," runs the headline on an unsolicited press release in my inbox yesterday. And it goes on to explain: The average interest rate for savings accounts in the US currently stands at 0.09%, with some German banks even charging negative interest rates. Universal Protocol, a coalition of leading blockchain organizations, including Uphold, Cred, Blockchain at Berkeley, and Bittrex Global, has recently introduced interest rates of 10%...

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Trudeau’s proposed speculation tax

Posted by Nick Falvo under BC, bubble, cities, economic thought, foreign investment/ownership, globalization, housing, inequality, interest rates, investment, Liberal Party policy, monetary policy, municipalities, Ontario, party politics, prices, private equity, regulation, Role of government, taxation, Toronto, wealth. September 25th, 2019Comments: none I’ve written a blog post about the Trudeau Liberals’ recently-proposed speculation tax on residential real estate owned...

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TASS — Russia’s Central Bank cuts key rate to 7% for first time since 2014

Interest rates represent cost of borrowing and income from saving. Both are reduced by cutting rates. Since is this is a decrease in price, it is disinflationary, which is opposite to what central bankers assume. Savers receive less income, which would likely have been spent on goods purchases. Lower of the cost of firm investment potentially results in lower goods prices. On the other hand, in deciding on a monetary policy using interest rate setting, central banks assume that lower...

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Yield curve weirdness

Yield curves have gone mad. Negative yields are everywhere, from AAA-rated government bonds to corporate junk. Most developed countries have inverted yield curves, and a fair few developing countries do too:(chart from worldgovernmentbonds.com)Negative yields and widespread yield curve inversion, particularly though not exclusively on safe assets. To (mis)quote a famous pink blog, this is nuts, but everyone is pretending there will be no crash.Here, for your enjoyment, is an à la carte...

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Keynes and the death of capitalism

In a recent article for the New Statesman, the economics commentator Grace Blakeley makes an extraordinary claim. Writing about the origins of the IMF, she says: Seventy-five years have passed since these international financial institutions were created in Bretton Woods, New Hampshire, in 1944. Back then, delegates sought to tame the power of international finance, the growth of which helped to cause the 1929 Wall Street Crash and the ensuing Great Depression. JM Keynes – who led the...

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Weird Is Normal

This post was originally published on Pieria in December 2013. Since then, the idea that the long-term real equilibrium interest rate must be equal to or lower than the long-term sustainable growth rate has become much more mainstream. I am just amazed that anyone ever thought it could be otherwise. A long-term real interest rate persistently above the sustainable growth rate cannot possibly be an "equilibrium" rate. As I show in this piece, it can only be maintained through rising...

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10 years after – and nothing has changed.

The following is an interview with Yena Yoon – a financial journalist with Chosen Ilbo “the largest newspaper in South Korea” conducted on 12 February, 2018, but still relevant. What is the most remarkable change in financial market after 2008 global crisis do you see? Why do you think so? The most striking outcome from the global financial crisis of 2007-9 was that there was no structural change to the international financial architecture/system – the system that was at the heart of the...

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