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The exponential rise of debt is stifling its economic growth. It thus takes ever more dollars of debt to generate an extra $1 of GDP. In Fortune magazine on 22 November 1999, Warren Buffett recounted to Carol Loomis: “Someone once told me that New York has more lawyers than … [Read more...] about America’s real debt crisis

It admits it owes more than it owns, and if it were a company it’d be bankrupt, but insists this doesn’t matter. I’m sceptical. In Why the RBA should be abolished – and what could replace it (10 April) I demonstrated that, for more than a century, central banks haven’t … [Read more...] about Does the RBA’s “negative equity” matter?

Central banks’ inflation destroys currencies and worsens the boom-bust cycle. Milton Friedman reckoned that computers would do far better. In What Causes – and How to Prevent – Bank Crises (27 March), I showed that there’s a straightforward way – which entails no change of … [Read more...] about Why the RBA Should Be Abolished – and What Could Replace It

Duration mismatch regularly causes some banks to fail. Matching the duration of short-term assets and liabilities will eliminate failures. In my previous wire (The Risk of Higher Rates the RBA’s Overlooking, 21 March), I noted that the failures of the crypto-friendly … [Read more...] about What Causes – and How to Prevent – Bank Crises

Its policy rate is well below the Fed’s. That can’t last: the RBA can’t indefinitely fight and must ultimately follow the Fed. In a recent wire, I substantiated my doubts that central banks in Australia and the U.S. will be able to return the genie of consumer price inflation … [Read more...] about The Risk of Higher Rates the RBA’s Overlooking