Global economy: Melt up and take my money
Expectations for the global economy have turned very sour in the last nine months and especially these past two months. Growth forecasts are down and expected inflation is way down. The same is true for the Australian economy. Does that mean investors should wind back their allocation to global shares, Australian shares and other risky […]
Global tax rate winners and losers
Should we cut Australia’s corporate tax rate to 15% and eliminate dividend imputation? That question arises again now that the G7 countries have agreed, in principal, to a global minimum corporate tax rate of 15%. There would be winners and losers in such a change and the losers have a lot more political influence than the winners, […]
Correct Terms: Institutions
\’Institutions\’ is a word that is used so freely that many people don\’t even realise they don\’t know its true meaning. That is unfortunate because an understanding of the nature and purpose of institutions, and how they evolve through time, is essential to not only economics, but history, politics, and much else. This article is the second […]
Personal Investing: Money out
Most investors don\’t have a clue how much they pay across all the different types of investment fees they are charged. There are fees for advice, administration, investment management, tax planning, and more. The examples below are intended to help you better understand these fees and roughly calculate how much you pay in total. Many […]
Global Economy: Bathtubs versus Stagnation
Does the recent acceleration of growth in the global economy mean that we are finally turning the page on the GFC, which began in 2007? That depends on which narrative of the GFC you subscribe to – the Rogoff and Rinehart \’bathtub\’ explanation or Larry Summers\’ \’secular stagnation\’ explanation.
Global economy: Janet and Mario go too early
Inflation bulls are currently in the ascendency. The US Fed raised its overnight rate again in June and is discussing the unwinding of quantitatvie easing (QE). The European Central Bank Governor Mario Draghi now says that the \”deflationary forces have been replaced by reflationary forces\”. It is good to talk up inflation, but let\’s not […]
The swap curve gets weird
The biggest global markets for transferring risk (by far) are the interest rate (IR) risk markets. A key relationship in these markets has recently broken down. It is the relationship between the treasury yield curve and the swap rate curve. It is another example of how broken the global financial system is, and it seems […]
Inflation is the only way out: Part I
Many economists believe that an extended period of inflation is ultimately the only way out of the low growth aftermath of the GFC. Moreover, the measures needed to stimulate inflation, such as: quantitative easing, negative interest rates, higher inflation targets and commitments to \’do whatever it takes\’, are blunt instruments. Therefore, a degree of overshooting […]
On the money
Quantitative easing is often described as \’printing money\’. But that statement is incorrect and portrays a misunderstanding of what QE really is.
Inflation or deflation?
Inflation fell rapidly in every major economy during 2014 – see the graph below. In 2015 global inflation has temporarily stabilised at very low levels. What will happen next is the biggest question facing global investors.