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Tight money = low yields  - also during the Great Recession

Tight money = low yields - also during the Great Recession

Anybody who ever read anything Milton Friedman said about monetary policy should know that low interest rates and bond yields mean that monetary policy is tight rather than easy. And when bond yields drop it is normally a sign that monetary policy is becoming tighter rather than easier.

Monetary disorder - not animal spirits - caused the Great Recession

Monetary disorder - not animal spirits - caused the Great Recession

If one follows the financial media on a daily basis as I do there is ample room to get both depressed and frustrated over the coverage of the financial markets. Often market movements are described as being very irrational and the description of what is happening in the markets is often based on an "understanding" of economic agents as somebody who have huge mood swings due to what Keynes termed animal spirits.

Is Matthew Yglesias now fully converted to Market Monetarism?

Is Matthew Yglesias now fully converted to Market Monetarism?

The always interesting Matthew Yglesias comments on my point that we should stop talking about national accounting standards. In the process Matt is having a bit of fun with two identities.

The cheapest and most effective firewall in the world

The cheapest and most effective firewall in the world

While the European crisis has escalated ECB officials have continued to stress that the ECB’s mandate is to ensure inflation below, but close to, 2%.

David Cameron on the euro crisis

David Cameron on the euro crisis

This is British Prime Minister David Cameron on the euro crisis:

The discretionary decision to introduce rules

The discretionary decision to introduce rules

At the core of Market Monetarists thinking is that monetary policy should be conducted within a clearly rule based framework. However, as Market Monetarists we are facing a dilemma. The rules or rather quasi-rules that is presently being followed by the major central banks in the world are in our view the wrong rules. We are advocating NGDP level targeting, while most of the major central banks in the world are instead inflation targeters.

Mr. Hollande the fiscal multiplier is zero if Mario says so

Mr. Hollande the fiscal multiplier is zero if Mario says so

 The newly elected French president Hollande’s rallying cry has been “Yes to growth and no to austerity”.

Maybe Jens Weidmann and Francios Hollande should switch jobs

Maybe Jens Weidmann and Francios Hollande should switch jobs

There seem to be two main positions on how to solve the European crisis. One represented by Bundesbank chief Jens Weidmann and that is that monetary policy should not be eased anymore and fiscal policy needs to be tightened (this is the Calvinist position). The other position is held by the new French president Francios Hollande who wants to spur European growth by easing fiscal policy (this is the keynesian position)

Gold nuts! Tell me what is happening!

Gold nuts! Tell me what is happening!

Gold prices continue to decline. Therefore I ask all of you internet Austrians and gold bugs out there who think that we are heading for hyperinflation what the hell is the reason for the drop in gold prices? I thought you told us that we where going to have hyperinflation?

Next stop Moscow

Next stop Moscow

I am writing this as I am flying to Moscow to spend a couple of days meeting clients in Moscow. It will be nice to be back. A lot of things are happing in Russia at the moment – especially politically. A new opposition has emerged to President Putin’s regime. However, even though politics always comes up when you are in Russia I do not plan to talk too much about the political situation. Everybody is doing that – so I will instead focus my presentations on monetary policy matters as I believe that monetary policy mistakes have been at the core of economic developments in Russia over the last couple of years. I hope to add some value as I believe that few local investors in Russia are aware of how crucial the monetary development is.

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