economics

The only difference might be that the yields on U.S. government bonds will be higher by a tiny amount while credit spreads on risky assets would be lower by the same amount. This will be because there is an increase in the willingness of the market to hold risk assets relative to riskless assets, and the corresponding price of both types of assets

Capital cycle analysis is really about how competitive advantage changes over time, viewed from an investor’s perspective.

This may have also been due to consistently weak credit demand from the industry. After years of sluggish performance, private sector investment still has not picked up in a substantial manner. It is true that within industry, bank credit to medium industry grew at almost 20% and that to small industry at around 13%, but this was primarily driven

From the early 1980s through the 2000s, interest rates were high and steadily heading down, which meant bond prices were steadily going up while also paying their holders a hefty income along the way. And quite usefully, their price action tended to be inversely correlated with equities; bond prices normally went up in recessions while stocks went

Investments & inventory: When a firm buys INR 300 machine, it’s basically an inflow (or income) for another firm which sells it. But for the buying firm, it’s not a cost. It’s an investment. It becomes a cost very slowly as machine depreciates. So for the two firms together, decision of a firm to buy a machine from another firm becomes profit.

The reverse repo facility has been flat lately, and there’s still $433 billion in it. The big draining of the reverse repo facility from over $2 trillion in May 2023 to the current low levels was the main reason why the Fed was able to keep performing quantitative tightening without causing further liquidity problems in the banking system.

The first two are systematically undervalued currencies and lagging wage growth relative to productivity growth. The third important factor, I argued, is financial repression.

Second, one very important reason why prices have not gone up as fast as the monetary stock is that both overall production and production per capita have risen steadily almost year by year. With the constant increase in capital investment—in the number, quality,

Overall, the modern American economy is very different from the one of 1930. In fact, when it comes to trade, the two are almost opposites. The United States now has by far the largest trade deficit in history. That means Americans invest and (mainly) consume far more than they produce. U.S. consumption in the 1920s, in other words, was too low