Sublime

it is the government’s financial condition that matters most. When the government runs out of buying power, there is a collapse.

Irving Fisher, the great classical economist, tells us that the definition of debt deflation is when everyone in a market tries to reduce debt, which results in distress selling. This leads to a contraction of the money supply as bank loans are paid off. This in turn leads to a fall in the level of asset prices and a still greater fall in the net w

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Some see a dollar-dominated world as a mixed blessing. The rest of the world is affected by U.S. monetary policy but has little influence over it. The Federal Reserve, or the Fed, is responsible for setting U.S. monetary policy in response to conditions in the United States, not in response to the needs of the global economy. But the adjustment of

For finance to consistently grow as a proportion of GDP, either it is simply upping its take — which might be reasonable within bounds, but raises questions of adequate competition in the sector and of possible regulatory capture — or it is making more and more MBS-like time bombs. It is spinning off flows of toxic financial exposure, of whose valu

By noon on March 3, every bank in Kansas and Minnesota had closed, and closings had begun in North Carolina and Virginia. And in New York, opposite Grand Central Station, depositors had formed long lines to withdraw their money from the Bowery, the world’s largest savings bank; in Chicago, bankers totaling their shrinking reserves realized that the