economics

The creation of financial assets may redistribute the economy’s wealth, but it does not represent new wealth; a financial asset for one party is a financial liability for another. But what about wealth gains that occur when one’s house, stock portfolio, or derivatives appreciate? The national income accounts ignore such gains, but they could easily

In contrast, during the three decades prior to 2020 (pre-pandemic), Japan never ran a budget deficit larger than 8.3% of GDP. Their deficits were big and persistent, but gradual:

But there are two very different ways by which tariffs can lower consumption as a share of GDP. One way is by increasing GDP as a whole. This happens when a tariff’s implicit subsidy to production results in more jobs and higher wages, which in turn leads to an overall increase in total consumption. The higher savings—or the gap between the

This action had a subtle but negative effect on the stock market, particularly on old economy stocks that are traditionally more affected by interest rate direction. New economy technology stocks proved relatively immune to rising rates in 1999—but not in 2000.

With regards to the workings of the capital cycle, investors focus on current (and projected) future profitability but ignore changes in the industry’s asset base from which returns are generated.

Laundromats were also invented in the 1930s after sales of individual washing machines fell; they marketed themselves as washing machine rentals.

In volume terms, world merchandise trade rose by 2.7% in 2022. The volume figure was well below the 12.4% growth in value terms, reflecting the effect of high global commodity prices.

Like most industrial and trade policies, tariffs operate by transferring income from one part of the economy to another, in this case from net importers to net exporters. They do this by raising the price of imported goods, which benefits the domestic producers of those goods. Because household consumers are net importers, tariffs are effectively a

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.