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The ECB is today widely expected to introduce a number of measures to ease monetary conditions in the euro zone and it seems like the ECB is finally beginning to recognize the serious deflationary risks facing the euro zone.
Over the past week we have had reports of the deteriorating state of public finances in France and particular the drop in tax revenues. It seems like Hollande's steep tax increases are not bringing in any extra revenue. President Hollande has been hit right in the face by the Laffer curve.
Recently there has been a debate about whether low interest rates counterintuitively actually leads deflation. Narayana Kocherlakota, President of the Minneapolis Fed, made such an argument a couple of years ago (but seems to have changed his mind now) and it seems like BIS' Claudio Borio has been making an similar argument recently. Maybe surprisingly to some (market) monetarists will make a similar argument. We will just turn the argument upside down a bit. Let me explain.
Julien Noizet's blog 'Spontaneous Finance' in my view is the best blog out there on banking issues. Julien's blog often deals with the economic and financial impact of financial regulation. Noizet used to be a banking analyst for Fitch Rating so he surely should understands about credit risk and banking. I highly recommend to everybody interested in financial and banking regulation to follow Julien's excellent blog.
Any respectable economist should have a view on who will win the upcoming World Cup in football in Brazil. Therefore I of course also have a view on this.
The last couple of months have been quite busy for me with a lot of traveling and particularly the Ukrainian crisis has taken a lot of time so I have not had enough time - or energy - to blog. But don't worry - I hope that I soon will be back to getting more blog posts out every week. After all as long as we have central banks monetary policy failure is a given and I love to blog about it - even when it makes me very angry.
Scott Sumner has a great post on the very scary state of US housing finance. This is something that many Europeans might not realise, but when it comes to housing finance the US is likely one of the most socialist countries among the developed economies of the world.
This morning we got strong GDP numbers from Japan for Q1. The numbers show that it is primarily domestic demand - private consumption and investment - rather than exports, which drive growth.
Most economists pay little or no attention to nominal GDP when they think (and talk) about the business cycle, but if they had to explain how nominal GDP is determined they would likely mostly talk about NGDP as a quasi-residual. First real GDP is determined - by both supply and demand side factors - and then inflation is simply added to get to NGDP.