It's The Economics, Stupid!
Features:
5. Minieconomic theory
- Minieconomic monetarism is the key to the past and the future
- Reasons for poor forecasting
- Split the money supply ---
- ---incorporate the velocities of circulation
- ---then forecast the future
- Econometric models need paradigm shift
- What causes inflation?
- Time is the key
- Efficiency leads to lower inflation
- The economists have not realised -the fax and Internet cause economic deflation
- Why is inflation so important?
- Reducing interest rates causes inflation (in assets)
- Understand the effect before hitting the cause
- What inflation should be measured?
- Financial Deregulation changed everything
- Inflation measurements are only useful in a ‘status quo’ environment
- Then the monetarists are right!!!
- --- but printing of money can cause deflation!
- Corollary, if printing money causes inflation then, if there is inflation, money must have been printed
- Inflation in stock markets - a trend is a trend is a trend and a friend
- Turning points are difficult to spot
- A different pattern before Financial Deregulation
- So what has been the effect of interest rates greater than inflation?
- Beware of recession inflation
- The financial hangover is too great
- Steady wealth creation
- Overnight wealth creation
- Price for one, price for all
- It’s the inflation, stupid!
- 1980s banking bubble burst but Greenspan to the rescue
- 1990s stock market bubble formed
- Effect of 1980s burst bubble
- Minieconomics is right again
- Greenspan came to the same conclusion but went too far
- What was the world thinking?
- We can sell paper to the ex-commies!
- If we sneeze you catch a cold – it is in your interests to keep selling to us
- Difference between strong and weak countries – confidence –i.e. banking system and velocity of circulation of money
- Banks don’t make decisions they follow the crowd and the newspapers
- Investment managers are as bad
- Reason that Japan did not join in the 1990s financial party
- Economic multipliers are as important as financial multipliers
- The car is rated highly
- --- but the new technology companies win hands down
- Recession cycle
- Economic growth needs more money or faster money
- Longer the upturn must mean longer the downturn
- Beware of the importance of economic multipliers
- Inflation replaced by deflation
- The economic portents are not just bad they are horrific
- ---mismatching assets and liabilities
- ‘We were told we could make easy money’
- Using Minieconomics for the stock markets
- Inflation dead – Deflation very much alive
- Economies now completely reliant on the banking system
- Stock market money supply growth x increasing velocity = Bubble
- Who sold you the value argument?
- Banking boom stemmed from Financial Deregulation
- Securitisation hides increases in bank lending
- Declining stock market money supply x decreasing velocity = Burst Bubble
- Can we have our money back please?
- Rampant demultipliers
- Interestingly, interest rates are not the solution
- Economic demultiplier is larger for capital intensive countries
- Protectionism, here we come!
- Financial deregulation was the key
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