June 2010


Obviously not the trade I had planned. Looking very sickly. Time to close the trade for a loss. Too many think’s, might’s and hope’s in there now.

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Government wages and salaries have expanded through the crisis, as government increasingly becomes a larger actor in the economy. Unfortunately government produces nothing. In fact, government policy over the last 100 years has directly driven the contraction within the goods producing industries, which has contributed to the structural unemployment and reliance upon imports, which drives persistent trade deficits.

A Richmond Va. Federal Reserve Economist, Kartik Athreya wrote a paper recently that trashes economic bloggers. Mr. Artheya has a PhD from the University of Iowa.

Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.

The response of the untrained to the crisis has been even more startling. I listen to Elizabeth Warren on the radio fearlessly speculating about the nature of credit market dysfunction, and so on.

The real issue is that there is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.

The sophomoric musings of auto-didact or non-didact bloggers or writers is instructive. For those who want to really know what the best that economics has to offer is, you must look here.

The general public are simply being had by the bulk of the economic blogging crowd.

The views expressed are my own, and do not necessarily represent those of the Federal Reserve Bank of Richmond, or Federal Reserve System.

Go on my son!

I purchase a house in America. I am granted a mortgage from a bank, that creates the funds from fractional reserve lending, viz credit creation.

This credit creation, is not real, it is backed by nothing, not even existing fiat currency. Therefore, legally, the bank have provided no consideration in contractual terms.

Without consideration, I owe them nothing, thus, I need pay nothing on that mortgage.

Food for thought.

Wise words. Unheeded. History rhymes.

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