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Why isn’t inflation higher?

August 31, 2018 Bilal 0

Excess reserves held at the Fed are down from their peak of about $2.8 trillion, but still close to $2 trillion , massively higher than their long-run historical average. Inflationary pressures are modestly higher than they had been, but still in the range of roughly two percent. Source: Why isn’t inflation higher?

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Household Leverage and the Recession

August 31, 2018 Bilal 0

We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. Source: Household Leverage and the Recession

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Valuation vs. Momentum Investing

August 31, 2018 Bilal 0

Bill Spitz (who is known to the readers of this blog for his prescient calls in the past, As Risk Increases, Spreads Widen ) has written another gem documenting the “manias” leading up to the current market. Students will learn something about about two strategies for investing: Valuation (long run) vs. Source: Valuation vs. Momentum Investing

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Japan: Is life getting better?

August 31, 2018 Bilal 0

I’m choosing Japan for this post, but it could refer to almost any developed country. I would argue that the answer to the question in the title depends on how you define “life”: Definition A: The total utility of the typical life. Source: Japan: Is life getting better?

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This is the most hopeful take on American productivity growth relative stagnation I have seen. I thought it was coheren…

August 31, 2018 Bilal 0

This is the most hopeful take on American productivity growth relative stagnation I have seen. I thought it was coherent and might well be right 20 years ago. I think it is coherent and might possibly be right today. But is that just a vain hope?: Michael van Biema and Bruce Greenwald (1997): Managing Our Way to Higher Service-Sector Productivity : “What electricity, railroads, and gasoline power did for the U.S. economy between roughly 1850 and 1970, computer power is widely expected to do for today’s information-based service economy… …But there is increasing concern because improvements in productivity growth are […]

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The big tech innovation from Amazon-Bershire Hathway-JP Morgan joint venture could be…

August 31, 2018 Bilal 0

Narrow networks? That is one proposition from Bill Gurley, a general partner at Benchmark Capital, in an article from Business Insider . Berkshire Hathaway vice chairman Charlie Munger, prefers the Kaiser model. “If the whole nation had Kaiser Permanente care, the average quality of the care would go way up and the cost would go way down,” Munger has said. Source: The big tech innovation from Amazon-Bershire Hathway-JP Morgan joint venture could be…

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Divergent – the breakdown of stock market correlations, temp or perm?

August 31, 2018 Bilal 0

Macro Letter – No 101 – 31-08-2018 Divergent – the breakdown of stock market correlations, temp or perm? Emerging market stocks have stabilised, helped by the strength of US equities Rising emerging market bond yields are beginning to attract investor attention US tariffs and domestic tax cuts support US economic growth US$ strength is dampening US inflation, doing the work of the Federal Reserve To begin delving into the recent out-performance of the US stock market relative to its international peers, we need to reflect on the global fiscal and monetary response to the last crisis. Source: Divergent – the […]

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Who should pay for fixing externalities?, by Scott Sumner

August 31, 2018 Bilal 0

Bloomberg has an interesting article on Amazon: For a little while earlier this year, it seemed as though 87-year-old Rosie Thomas and her neighbors in the small town of Gainesville, Va., had beaten Amazon. Virginia’s largest utility, Dominion Energy Inc., had planned to run an aboveground power line straight through a Civil War battlefield—and Thomas’s property—to reach a nearby data center run by an Amazon.com Inc. subsidiary. Source: Who should pay for fixing externalities?, by Scott Sumner

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Are weaker property rights behind the fall of the RAND?

August 31, 2018 Bilal 0

In the chart to the right, denoting prices over the past six years, we see a big increase in price of Pounds measured in RAND, indicating an increase in the demand for Pounds (people who want to sell RAND and buy Pounds). It fell, but it is going up again. Source: Are weaker property rights behind the fall of the RAND?