Interesting Comments
Here’s a comment from a recent post on CalculatedRisk that I found pretty interesting…
http://calculatedrisk.blogspot.com/2008/03/delong-sounds-alarm.html
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What a Week!
Term Securities Lending Facility (TSLF)
On March 11th, 2008 (Tuesday), the Federal Reserve, in response to the most recent incarnation of the credit crisis announced the creation of the TSLF. From the press release:
The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS.
Rough Times Ahead, Part II: An ‘Austrian’ View of the Great Depression
Economic Cycles & The Money Supply
According to proponents of the Austrian School of Economics, boom and bust cycles are caused by inflationary monetary policy; that central banks “create the business cycle by inflating the supply of money in a fiat monetary system.” They argue that policy expanding the supply of money ultimately lowers the cost of borrowing and results in speculative investments and a misallocation of resources. “A correction—commonly called a ‘recession‘ or ‘bust’ — occurs when resources are reallocated to their best uses.” Furthermore, government policies to minimize the impact of a correction only delay and exacerbate the inevitable bust. Austrian economists Hayek and Murray Rothbard, for example, blame the Federal Reserves’ inflationary policies during the Roaring Twenties for the Great Depression. If you follow this school of thought, the current housing and financial crisis should come as no surprise - we are, as they would say, paying the price for Greenspan’s reckless reduction of interest rates. The M3 money supply, which the government now refuses to publish, literally doubled from approximately $5 trillion to $10 trillion between 1998 and 2006, and if the slope of the line remains unchanged, should be well over $11 trillion today. The only ways to correct the imbalances are to either (1) allow deflation to occur, or (2) continue providing cheap credit to stay one step ahead of deflationary pressures and as a consequence, continue expanding fiat money supplies.
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Rough Times Ahead, Part I: Revisiting the Great Depression
The recent economic events have piqued my interest in The Great Depression and Crash of 1929. Out of concern over the resiliency of the US economy, I began reading historical accounts of the depression era, and while browsing through books on the subject, came across Robert S. McElvanine’s aptly named “The Great Depression: America, 1929-1941.” The book has an eye-opening and intriguing section on the origins of the Great Depression.
Origins of the Great Depression
While most informational websites or articles attribute the Depression to income inequalities and the maldistribution of wealth, it should be noted that this particular problem was merely symptomatic of other structural economic flaws and was the one that ultimately broke the camel’s back.
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If Bernanke Was Blunt -
Here is an excerpt from a post on SeekingAlpha on what Bernanke would say if he did not have to sugar coat things.
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Signs of a Global Slowdown
Although mainstream media is reluctant to provide widespread coverage about it, cracks in the global economy have started to emerge.
Singapore
While we may be concerned with stagflation scenarios here in the United States, Singapore is scrambling to repair its economy. Consumer prices rose 4.4% in the last twelve months while their economy contracted by 5.0% on an annualized basis during Q4 2007. Should this quarter’s GDP figures show another contraction, Singapore would be, by definition (two consecutive quarters of contracting growth), in a recession [1]. Singapore is experiencing stagflation, and given the recent run up in oil, precious, metals and commodities, will continue to do so in the months ahead.
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About
My name is Arpan and this is my blog! I'll be writing about things I find interesting, and hopefully some stuff that you might too. Some posts are intentionally controversial and are intended to provoke discussion. Don't be shy!
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