You Know, Capping Interest Rates A La Bernie And AOC Might Be A Bad Idea. Maybe?

If you cap a price below the cost of providing that item then you effectively ban that item. If you cap interest rates on certain types of loans, below the cost of loan provision, then you ban that type of loan. This has been proven with interest rate caps on payday loans. Where the cap bites there are no such loans. So, the idea of capping credit card interest is a good or a bad one?

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What An Interesting Banking Situation In Ghana – Yes, It’s Politics

We do have to warn that our information source here is more than only slightly partial. But it does hang together, does make sense. Further, it does so in a manner that an independent number which is publicly known accords with the analysis.

So, how does a government get to buy lots of votes without pissing off the World Bank, IMF and so on, the people who are largely paying the government’s bills? The answer being to do the spending to buy the votes then not pay the bills for the spending.…

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Producer Price Inflation Isn’t There – Thus No Change In Federal Reserve Policy

Whether and or when the Federal Reserve is going to change its monetary stance is one of those questions we’d like an answer to. The Fed even tell us what it is they’re looking at which will guide their decision. Therefore we can go look at the same things and make up our own minds about that evidence. And, of course, hope like hell that we’re drawing the same conclusions as the Fed:

Food and energy are always more volatile in price than the rest of the economy.

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A Bit Of Economics That Gordon Brown Actually Understood

Yes, obviously, we all fall back in amazement as we contemplate the idea that Gordon Brown understood any part of economics. And yet he did and it was a major reason why we’re not in the euro today. How interest rates affect an economy will depends upon the structure of that economy. One major pathway being through mortgages and household budgets. A country with largely floating rate mortgages will be more leveraged to interest rate changes than one with fixed rate.

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Well, Yes, Obviously Mr. Dalio – The Fed Raising Interest Rates Should Impact Asset Prices

This is not the most remarkable observation of all time by Ray Dalio, that the Federal Reserve interest rate rises are reducing asset prices. For the point and purpose of the Fed’s reducing interest rates – and that QE – during the recent unpleasantness was to raise asset prices. Now that’s all over things should return to normal, including the inflationary effects of that increase in the money supply upon asset prices. This isn’t a mistake nor an oversight, it’s the point:

Hedge fund billionaire Ray Dalio argued Thursday that the Federal Reserve has raised rates to a point where they’re hurting asset prices.

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This Economic Analysis Requires A Little More Work

There really is such a thing as the business cycle. Even Keynes agreed there was and that the task of macroeconomics is to moderate it for it will – as with JC and the poor – always be with us. We have two sets of tools with which to do that moderating, fiscal and monetary policy. Thus this set of views needs, umm, moderation:

However, a “poisonous mix” of ­reduced fiscal stimulus, higher inflation, rising interest rates and protectionism could combine to slow the US economy in the coming years, Gregory Daco, US economist at Oxford Economics, argued.

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Trump’s Shouting At The Fed Over His Own Tax Policies

There is a certain amusement to watching Donald Trump shouting at the Federal Reserve over interest rate rises. Less amusement about the Dow falling 800 points but still. For the rate rises are the result of the tax policies that Trump has pushed through.

Do note, I think the tax policies are just fine, beneficial. But the rate rises are still the result of them:

President Donald Trump has renewed criticism of the US central bank, blaming “crazy” interest rate rises this year for prompting steep stock market falls.

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Erdogan’s Losing It About Turkish Inflation

Erdogan appointed his son in law as finance minister. This has worked out about as well as appointing the bloke shagging your daughter is likely to. There may well be a certain amount of loyalty there but competence – at anything other than keeping your daughter happy – is unlikely to be in great supply. As we’re actually seeing.

For the solution suggested to Turkish inflation is that everyone ought to try and go bankrupt. Not that it’s being phrased in quite that manner but that is what is being suggested:

Turkish businesses should announce a 10 per cent discount on goods and services, the country’s finance minister said on Tuesday as he launched a new campaign to tackle runaway inflation.

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Oh Aye, Bank Of England Should Freeze House Prices For 5 Years, Should It?

We’ve another one of these lovely ideas from IPPR, the Institute for Public Policy Research. As with all of their suggestions it manages to spot a useful nub of an idea and then completely blow it by not understanding how economies work. They think that a period without house price inflation would be a pretty good idea. They’re right, it would. To do this they suggest that the Bank of England shout be given all the powers that we stripped it of some decades ago.…

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