The consequences of budget deficits for international trade
In all the economic mayhem ahead, no one is yet thinking of the consequences for trade imbalances. The twin deficit hypothesis informs us that…
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An unexpected systemic crisis is for sure
Downturns in bank credit expansion always lead to systemic problems. We are on the edge of such a downturn, which thanks to everyone’s focus…
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Explaining the credit cycle
This article summarises why the credit cycle leads to alternate booms and slumps. It is only with this in mind that they can be…
Read MoreUnintended consequences of monetary inflation
“In short, the Fed is committed to rescue businesses from the greatest economic catastrophe since the great depression and probably even greater than that,…
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The looming derivative crisis
The powerful forces of bank credit contraction are at the heart of a rapidly evolving financial crisis in global derivatives, whose gross value is…
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The destructive force of bank credit
Commentators routinely confuse the deflationary effects of a contraction of bank credit with the inflationary effects of central bank policies designed to offset it….
Read MoreEstimating the shape of the coming crisis
With a recession become increasingly certain and the end of the expansionary phase of the credit cycle in sight, we can expect a periodic…
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Statistical misdirection
Economists who understand credit cycles expect the current cycle to enter its crisis stage at any moment. Furthermore, it combines with increasing trade tariffs…
Read More150 years of bank credit expansion is near its end
The legal formalisation of the creation of bank credit commenced with England’s 1844 Bank Charter Act. It has led to a regular cycle of…
Read MoreThe Ghost of Failed Banks Returns
Last week’s failure in the US repo market might have had something to do with Deutsche Bank’s disposal of its prime brokerage to BNP,…
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