Financial Markets
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Assessing Market Expectations of Inflation
“Those denying any risk that inflation will remain above target or confidently predicting that 4 percent inflation will be the new normal, are not within the range of reasonable. They are rightly ridiculed.” ~ William J. Luther
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Trouble Transacting with Bitcoin
“Problems with bitcoin’s design––including its suboptimal supply constraint and limited transactions capacity––cast doubt on the claim that bitcoin is superior to the monies widely used at present.” ~ William J. Luther
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What’s Wrong With Bitcoin’s Supply Mechanism?
“Bitcoin’s supply mechanism fails to provide a long-run nominal anchor or promote monetary stability. A better money would employ a supply mechanism that offsets changes in the demand to hold it.” ~ William J. Luther
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Bitcoin and the Network Effects Problem
“There are steps entrepreneurs can take to help reduce the network effects problem. It is, nonetheless, an obstacle bitcoin must overcome to achieve widespread adoption.” ~ William J. Luther
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What Do Wildcat Banks Tell Us About Stablecoins?
“The experience in Michigan when it was a frontier state in the same year that the telegraph was invented is not particularly pertinent for discerning the likely success of private currency with the communications technology available today. ‘Wildcat’ is a phrase that has no relevance for stablecoins.” ~ Gerald P Dwyer
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Not Smart Financial Regulation
“U.S. financial regulators approved the NSFR despite the fact that their own evidence showed the costs of the rule exceed its benefits. That’s Not Smart Financial Regulation.” ~ Thomas L. Hogan
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The Decentralization Fetish
“We must not merely assume that decentralization is always good and more-decentralized solutions are always better. Instead, we should recognize that it depends on the unique benefits of decentralization and the costs of realizing those benefits relative to more-centralized alternatives.” ~ William J. Luther
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Did the Fed Just Raise Interest Rates?
“In the Fed’s current floor system, the rate of IOR is the key tool of monetary policy. If the Fed raised the rate of IOR, then it raised interest rates.” ~ Thomas L. Hogan
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Is the Fed Paying Banks Not to Lend?
“The evidence shows that banks treated excess reserves as a profitable alternative to loans. High rates of IOER caused them to increase reserve holdings and decrease their loan allocations. The Fed was indeed paying banks not to lend.” ~ Thomas L. Hogan
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Do These Money Supply Charts Portend Hyperinflation?
“Financial markets indicators suggest that high inflation is not likely. Even with a very large balance sheet, the Fed has proven that it can control inflation by paying high rates of interest on bank reserves. Whether Fed officials choose to do so is the open question.” ~ Thomas L. Hogan
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Sovereign Debt After Covid-19: The Wrong View
“Like many others, I am concerned about the sovereign debt market in the wake of Covid-19. But providing more funds to governments committed to maintaining an unsustainable course is not a solution. These countries need serious institutional reforms.” ~ Nicolás Cachanosky
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Investment Management for Mortals
Modern Portfolio Theory Part 10 | July 18, 2011 Overconfidence and self-deception are part of human nature. But knowing this opens the way to better decisions and wiser allocations. Donald […]
