economics

Here we shall have to say simply that all government expenditures must eventually be paid out of the proceeds of taxation; that inflation itself is merely a form, and a particularly vicious form, of taxation.

Job openings (blue) remain elevated as the labor force participation rate (white) remains flat. When there is more demand (Jolts data in blue) vs the supply of labor (white), wages (YoY wages in green and Atlanta wage index in orange) express the supply and demand differential:

separation between the real and financial economies results in protracted capital misallocation, as flows of funds and created credit are focused into purchasing existing assets in the pursuit of stable savings returns from known predictable cashflows and anticipated capital gains in asset values.

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

It is important to note at the outset that external surpluses or deficits need not be a problem and can be desirable to a degree. For instance, it is desirable for young or rapidly growing economies to finance part of their economic development with foreign capital. Conversely, older or less dynamic economies may need to save more and can obtain

Global Liquidity is up an impressive near-40% since 2019 and by more than a whopping 125% since the 2008 GFC. To add context, the IMF estimates that World GDP across the major economies is barely 50% higher in nominal terms and a lesser 30% up in real terms.

So it’s little surprise that this excess liquidity has flooded into financial assets. Since

The Depression practically flipped a switch: a fringe idea was suddenly embraced. The Social Security Act was passed in 1935, 372–33 in the House of Representatives and 77–6 in the Senate.

Let us, therefore, try to see exactly what happens when technical improvements and labor-saving machinery are introduced.