economics
Imported tag from Readwise
economics
From these two equations it is obvious that in any closed economy savings is always equal to investment. This simple truth, which is true by definition, has very powerful implications.
Michael Pettis • The Great Rebalancing
... See moreUsing a comprehensive dataset, covering a wide range of macroeconomic and financial variables, we demonstrate that it is the interaction of asset price bubbles and credit growth that poses the gravest risk to financial stability. These results, based on long-rung historical data, offer the first sound statistical support based on large samples for
Noah Smith • Will Data Centers Crash the Economy?
TFP is long-term and thematic in nature. It is positively affected by new technology and negatively affected by overhangs which slow organic value creation such as burdens on business, commodity price inflation, or an overhang of debt.
Peter Farac • Spiralling Government Debt Isn’t a Choice
States need money to cover their deficits, and the way they raise this money has changed significantly. In 2005-06, only 17% of their deficit financing came from the market (like bonds). Now, it’s a massive 79%. This shift means states are relying less on traditional sources like the National Small Savings Fund and more on selling bonds—financial
... See moreZerodha • Inside the Finances of Indian States: A Reality Check
In fact I will argue that excessive use of the U.S. dollar internationally actually forces up either American debt or American unemployment. It is more of a burden for the United States than a privilege.
Michael Pettis • The Great Rebalancing
At the very center of Minsky’s conception of what makes a financial structure robust or fragile is the relationship between the time pattern of cash commitments and the time pattern of expected cash flows. A firm with cash flows greater than cash commitments for every future period is said to be engaged in “hedge” finance, because the unit can meet
... See moreBoston University • Minsky’s Financial Instability Hypothesis and Modern Economics
At the heart of Minsky's ideas about strong and weak financial systems is how money coming in and money going out is timed. A company that makes more money than it needs to pay its bills in the future is considered to be managing its money safely, or “hedge” finance, because it can pay its bills without needing outside help.
“Speculative” financial systems expect to bring in more money than just what they owe in interest on loans, but they also know they will need to borrow more money to pay back the original loan when it’s due. This makes them risky because if borrowing becomes too expensive or they can't borrow at all, they could get into trouble.
“Ponzi” financial systems are even riskier because they expect to bring in less money than what they owe in interest. This means they rely on selling their investments for a profit and hope that the overall financial situation is good to cover their debts.
In order that new industries may grow fast enough it is usually necessary that some old industries should be allowed to shrink or die. In doing this they help to release the necessary capital and labor for the new industires.
