economics

Conversely, if foreign purchases of government bonds lowered a country’s interest rate, the higher a country’s current account surplus, the higher its interest rates should be. Why? Because of the need for the capital and current accounts to balance: the net amount of foreign purchases of U.S. government bonds and other U.S. dollar assets is

The U.S. government, in other words, does not benefit from lower interest rates by foreign reserve accumulation, although the nature of the reserve accumulation may affect the shape of the domestic yield curve.

As we showed in chapter 7 German recycling of the German current account surplus through the banking system is not radically different from Chinese recycling of the Chinese current account surplus through the central bank. Policies that restrain consumption growth must push up the savings rate, and if as a result savings exceed investment, the

Notice yet again how similar this policy is to currency undervaluation or lagging wage growth in its impact on trade. Just as in the previous two cases, under conditions of financial repression there is effectively a hidden tax on households that serves to reduce disposable household income and, with it, household consumption.

Back in 2020, the misery index briefly spiked due to lockdown-induced unemployment, and consumer sentiment fell, but that reversed quickly as lockdowns ended and as fiscal stimulus went out to people and businesses. In 2022, as inflation washed over the economy, the misery index rose to very high levels, and consumer sentiment fell to deeply

The grandiosity of the scheme is reminiscent of another failed European megaproject, Desertec. The intuition behind Desertec was to generate PV energy in the Sahara Desert and transport it to Europe. Desertec was set up by a network of politicians, scientists, and economists which itself was founded by the Club of Rome, of all organizations. It was

have left out all the other things people think about when they decide what to own, e.g., taxes, risk, and any benefits an asset provides, like the value of living in your house or looking at a painting. People will take all of these things into account when making decisions. For this post, I want to concentrate two things: 1) there will be a