Tag: QE

Business history, of a sort, was made last week by the French pharmaceutical company, Sanofi, its blood thinner Plavix familiar to those with arteriosclerosis,...

Last week, I reiterated the immutable foundation of double-entry bookkeeping. For every financial asset there is a corresponding financial liability. But it may not be...

This is the first of several essays on monetary policy. There is a priesthood which believes that money and finance are special, beyond the normal scope of logic, economic reasoning, or common sense, and full of arcane mysteries which can only be fully understood by those who have been fully initiated into the priesthood. In these essays I plan to debunk this idea.

Long term real interest rates are negative in Britain and in the Eurozone and barely positive in the United States. The impact on pension funding is dramatic.

On June 29th, John attended a launch event for the launch of a paper by Radix, a new think tank of the radical centre, on "Quantitive easing: The debate that never happened". This is the his foreword introducing the fundamental issues on both the effectiveness and legitimacy of quantitative easing.

The term “helicopter money” is derived from a vivid image created by the US economist Milton Friedman in which a central banker showers notes on a grateful populace. More recently, the notion has been promoted by Adair Turner, the former chairman of the UK financial regulator, in his book, Between Debt and the Devil .

The belief that the zero lower bound to interest rates is a significant obstacle to stimulating demand supposes that there is a host of projects that promises a prospective return less than zero but more than, say, minus one half per cent. This completely misunderstands the nature of the barriers to long-term productive investment. We need less financial ingenuity and more common sense.

John looks at the lack of evidence for the effect of quantitative easing as a driver for economic growth.

In the modern financial economy, the main effect of QE is to boost asset prices, as market gyrations of recent weeks have clearly illustrated. But is the pursuit of higher asset prices an effective or desirable means of promoting economic growth?