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Until recently the global financial markets were on an one-way trip to recovery. Basically since the Federal Reserve in September implicitly announced the Bernanke-Evans rule investors have been betting on an US economic recovery - higher real and nominal GDP growth - and the Bank of Japan's decisive actions to implement a 2% inflation target also have helped the sentiment. However, the picture has become a lot more confusing in recent weeks as turmoil has returned to the global financial markets.
China has certainly moved to the very top of the agenda in the financial markets this week and a lot of what is playing out in the Chinese markets is eerily similar to what happened in the US and European markets in 2008.
My friend professor Steve Horwitz has a very good offer for students. He is offering an eight-week long program on the Great Depression at the Learn Liberty Academy.
"Fed tapering" seems to be repeated in every single story in the financial media over the last couple of days. However, I am afraid that the financial media - as often is the case - is overly US centric. We might want to look at another central bank than the Fed. We should instead pay some (a lot!) of attention to the People's Bank of China (PBoC).
I should really be sleeping but George Selign just put out a blog post on Free Banking and NGDP Targeting.
A friend wrote this on Facebook (I paraphrased it slightly):
My three year old son Mathias had an accident in his kindergarden the other day. He fell from a tall chair and as a result hurt is lip so his mom had to take him to the emergency room.
Among 'internet Austrians' there is an idea that there is gigantic bubble in the global bond markets and when this bubble bursts then the world will come to an end (again...).