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European horror graph of the day - the Greek price level collapse

European horror graph of the day - the Greek price level collapse

It has been said that the recent decline in European inflation to a large extent is due to a positive supply shock. This is to some extent correct and it is something I have acknowledged on a number of occassions. However, the main deflationary problem comes from the demand side of the European economy and the fact that monetary policy remains extremely tight in the euro zone is the main cause of the deflationary pressures in the European economy. A simple (but incomplete) way to strip out supply side effects from the price level is to look at the GDP deflator. This is what I here have done for Greece. This is the horror graph of the day - it is the level of the Greek GDP deflator relative to the pre-crisis trend (2000-7).

Christopher Pissarides: Is Europe Working? (The answer obviously is no)

Christopher Pissarides: Is Europe Working? (The answer obviously is no)

Nobel laureate Christopher Pissarides earlier this week gave a lecture at the London School of Economics on the theme "Is Europe Working?". It is an extremely interesting lecture. I disagree with a lot of what professor Pissarides is saying. He focuses far too much on fiscal policy issues and far too little on monetary policy. But it is in general a very enlightened lecture and he raises a number of extremely important questions about the future of the euro zone.

Stanley Fischer - this guy can keep NGDP on a straight line
There is no bubble in the US stock market

There is no bubble in the US stock market

Before you start reading this post note that I am not an equity market analyst and this is not investment advice. Rather it is an attempt to discuss the impact of monetary easing on the US stock market and to what extent the Fed's actions have created a stock market bubble.

The (Divisia) money trail - a very bullish UK story

The (Divisia) money trail - a very bullish UK story

Recently, the data for the UK economy has been very strong, and it is very clear that the UK economy is in recovery. So what is the reason? Well, you guessed it - monetary policy.

There is a pragmatic (but not a libertarian) case for a "Basic Income Guarantee"

There is a pragmatic (but not a libertarian) case for a "Basic Income Guarantee"

When I first read Milton Friedman's Free to Choose when I was in my teens two things particularly impressed me. First of course Friedman's monetarist ideas and second his strategies for moving from a Welfare State to a classical liberal society.

This is why we love Scott Sumner
The end of Prohibition and two great monetary thinkers

The end of Prohibition and two great monetary thinkers

Today it is 80 years ago that US alcohol prohibition was ended. Interestingly enough two of my favorite monetary thinkers of the time - Irving Fisher and Clark Warburton - had strong views on prohibition.

HAWKISH Market Monetarists

HAWKISH Market Monetarists

Over the past five years Market Monetarists have gotten a reputation for always being dovish in terms of monetary policy. The Market Monetarists have day-in and day-out been pushing for monetary easing in the US, the UK and the euro zone. So our reputation is correct in the sense that we – the Market Monetarists – in general have favoured a more dovish monetary stance both in the US and in Europe than has been implemented by central banks.

I just ordered "Fragile by Design"

I just ordered "Fragile by Design"

I must admit that I am a bit of a "serial shopper" when it comes to buying books on Amazon. Today I (pre) ordered a book I have been waiting for some time -  “Fragile by Design: Banking Crises, Scarce Credit,and Political Bargains”  by Charles Calomiris and  Stephen Haber. I have written about the book before:

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