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from Mises Institute
RIGHT-CENTER BIAS, MIXED
The Stimulus Boom Is Already Over. Now Comes Stagnation.
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RIGHT-CENTER BIAS, MIXED
The Stimulus Boom Is Already Over. Now Comes Stagnation.
The United States retail sales and jobless claims weakness, significantly below estimates, coincides with the largest fiscal and monetary stimulus in history. Something is not right when these figures come significantly below estimates in an environment of massive upgrades to gross domestic product (GDP). Why? The diminishing returns of stimulus plans are very evident. Artificially boosting GDP with large government spending and monetized debt generates a short-term sugar high that is rapidly followed by a sugar low. The alleged positive effects of a $1 trillion stimulus plan fade shortly after three months. I recently had a conversation with Judy Shelton where she mentioned that the recovery would be stronger without this latest massive stimulus package. The economic debacle happened due to lockdowns and the recovery comes from the reopening. We need to let the economy breathe and strengthen, not bloat it.
[This article is part of the Understanding Money Mechanics series, by Robert P. Murphy.]
Although it conjures up scary imagery, shadow banking is simply a term for banking operations that occur through financial intermediaries that are not traditional commercial banks. The term was coined in 2007 by economist Paul McCulley and is related to the fact that standard banking regulations often do not apply to nonbank institutions (such as hedge funds and private equity lenders), which are hence operating “in the shadows.” According to estimates of nonbank credit intermediation made by the Financial Stability Board, “the global shadow system peaked at $62 trillion in 2007, declined to $59 trillion during the crisis, and rebounded to $92 trillion by the end of 2015.” The existence of a shadow banking system thus limits the ability of governments to regulate the credit markets if they merely restrict attention to traditional banks. To understand the mechanics of today’s monetary system, it is therefore important to recognize that the nexus between savers and borrowers doesn’t necessarily flow through a commercial bank, the way economics textbooks often imply. Similarly, American textbook treatments often provide a USA-specific viewpoint, even though in reality there is a global market for US dollars. In this chapter we will provide an overview of these complications to give a more accurate description of money and banking practices.
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from Reason Magazine
Magazine in Los Angeles, California
The process uses 99 percent less land and 96 percent less freshwater than traditional meat production.
from The Spokesman-Review
Newspaper in Spokane, Washington
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