economics

To sum up, if the savings rate in one part of the economy rises, without an equivalent rise in investment the only way for the economy to balance is for savings elsewhere to decline, and this can happen either in the form of a (usually credit-backed) consumption binge, or in the form of rising unemployment. The first is unsustainable.

In FY 2010-11 the share of consumer credit in total bank credit was only 19%. By FY2023-24 this increased to around 33%. Nearly half of this credit is unsecured or quasi-secured (secured against weak collateral), which makes it riskier. In the post-pandemic period, much of the growth in bank credit has in fact been driven by growth in consumer

In my opinion, this highlights the importance of the hiring channel. When employers want to shrink their workforce (or at least slow its growth), they use hiring as their primary lever; and when it’s time to expand/accelerate, they pull the same lever. Ergo, young people are highly levered to sectoral, occupational or economy-wide cycles, something

Scale of support: China’s government directs about 4 percent of its GDP each year toward industrial policies such as subsidies, tax breaks, low-interest loans, and cheap land.

Anything that reduces consumption, in other words, without changing total production or total investment, must cause an increase in exports relative to imports.

I don’t know how many times I have to keep saying this before the rest of the profession figures it out. Never reason from a price change. It makes no sense to argue whether a higher price will increase or decrease quantity. Here is a S&D diagram. I dare you to show me how price changes affect quantity.

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Given that I am a macro investor I look at cues to explain aggregate profits of all firms of the market. Individual firm’s profit is a produce of how well it runs its operations and how it is able to out-compete others in creating good products at low cost with good sales and distribution strategies. Assessing all these parameters is the job of my

The first and largest dollar spike occurred in the mid-1980’s. From the 1970’s and into the early 1980’s, the U.S. dollar encountered serious devaluation and inflation, so Fed Chairman Paul Volcker hiked interest rates up to the double digits to stabilize the dollar and force inflation back down. This, however, made the real interest rate on the

A wholesale bank’s liabilities are repo borrowings, not deposits. This places US Treasury notes and bonds at the very centre of the modern monetary system. Lately, bank regulators have been attempting to further reduce and even remove Treasuries from capital ratio requirements. This should allow banks to significantly expand wholesale bank lending