Tag Archive for: falling interest

Falling Interest Causes Falling Wages

Interest rates have been falling for over three decades. Conventional economics has two things to say about this. One, inflation expectations are falling. Monetarists believe that the interest rate is set based on bond traders’ predictions of future price increases. Two, if employment and GDP are weak, then the central bank should increase the money […]

100% of Mainstream Interest Rate Theory is Wrong

An interesting article on MarketWatch today caught my attention. The subhead is the money quote, “Back in April every economist in a survey thought yields would rise. Guess what they did next.” Every? The article refers to 67 economists polled by Bloomberg, all of whom would seem to believe in the quantity theory of money. […]

Why is the Gold Standard Urgent?

After President Nixon’s gold default in 1971, many people have advocated a return to the gold standard. One argument has been repeated: consumer prices are rising. While this is true, it wasn’t compelling in the 1970’s and it certainly doesn’t fire people up today. Rising prices—what most people think of as inflation—is a dead-end, politically. […]

Oscillation, Feedback, and Resonance

I just saw this fascinating video of a bunch of metronomes that begin ticking out of sync with one another, but slowly line up until they all beat in unison. I really love the title slide where it says “NONLINEAR DYNAMICAL SYSTEMS”, how apropos! Watch the video, the outcome is counterintuitive. The metronomes show some principles […]

Swapping Equity for Debt

When I was working out at the gym a few weeks ago, TJ Rodgers was on the Mad Money show on CNBC (I recall this being Friday January 25, but I cannot find video of this show on the Internet). For those who haven’t seen the show, the host, Jim Cramer, affects a loud and […]

Falling Interest Rates Destroy Capital

I have written other pieces on the topic of fractional reserve banking here and here duration mismatch, which is when someone borrows short-term money to lend long-term and how falling interest rates actually encourages duration mismatch (http://keithweiner.posterous.com/falling-interest-rates-and-duration-mismatch). Falling interest rates are a feature of our current monetary regime, so central that any look at a […]

Falling Interest Rates and Duration Mismatch

Since 1982, US Treasurys have been in a bull market. This is Exhibit A: the yield on the 10-year Treasury bond (the yield and the market price of the bond are inversely related, like a teeter-totter). This statement should not be controversial. But outside Austrian circles, most people don’t understand that this structural decline is […]