The Fed vs. the Real Economy

2024-02-03

To prevent public debt from soaring in the wake of the global financial crisis in 2009, Germany has enshrined a “debt brake” in its constitution. The debt brake sets strict limits on federal public debt levels and restrains government borrowing. This fiscal rule has served its purpose, and public debt has been on a downward path, dropping by about 15 percentage points of gross domestic product (GDP) since its introduction. Yet the government suspended it during the pandemic and raised an extra €370 billion of debt in 2020 and 2021. It also tried to circumvent this rule on several occasions by setting up off-balance sheet funds, such as a €100 billion special fund for military spending during the war in Ukraine.
In 2022, the German parliament decided to shift about €60 billion from the

2024-02-02

Javier Milei has already been sworn in as the new president of Argentina and faces a Promethean challenge, having inherited a country riddled with debt and inflation. Balancing the books is going to be his priority before he can implement most of his innovative ideas, and that is going to cause temporary pain as he has clearly admitted. He does not seem keen on wasting time though, and in his first weeks we have seen a historic revocation of more than three hundred laws that have formed part of the crippling, overregulated Argentinean system for decades (many inherited from the military dictatorships). We have also seen a reduction in the number of ministries and public workers, an update of the official peso-dollar exchange rate to match the real market rate, a colossal effort to deal

2024-01-31

The physical sciences have greatly advanced knowledge by elucidating the workings of simple phenomena. In a simple phenomenon, we have a limited number of important variables, all of which are identifiable and measurable. This allows us to run a scientific experiment. In such an experiment, we hold all other variables constant and examine the influence of one variable on the phenomenon. We can therefore measure this variable’s direction and how important it is to this phenomenon. We can then do this same experiment to all the other variables to determine their direction of influence and relative importance. We can identify which assumed relationships are correct and which are wrong. We can draw conclusions on hypotheses about simple phenomena.
Complex phenomena, on the other hand, have

2023-11-02

Is a true populist US government on the horizon? Probably not.
Original Article: The Spirit of the Establishment Will Thrive under a "Populist Opposition" Government

2023-10-31

Germany is the euro area’s economic powerhouse and most competitive economy. It accounts for close to 30 percent of the euro area gross domestic product (GDP) and has recorded sizable current account surpluses since the introduction of the euro. Substantial fiscal and labor market reforms in the early 2000s propelled the German economy.
However, these golden days seem all gone now. Years of misguided energy policies—part of the government’s interventionist green agenda—increased energy prices and uncertainty for investors. In addition, the business environment deteriorated due to heavy bureaucracy and taxation, seriously weakening Germany’s productivity and output growth. The real beneficiary of Germany’s economic woes seems to be China, which has replaced it as the top global

2023-10-30

It’s been more than three decades since the Berlin Wall fell and the disintegration of the Soviet Union. At the time, when everyone knew that the time for the “mothership” of socialism had come, China didn’t want to take the Soviet Union’s position but opted for an ambiguous role. In the three decades after the downfall of the Soviet Union, it was clear which country was at the top of the world.
Those were the times to which the Beltway wanted to return. Having never learned a lesson about their failures in thinking that if America doesn’t assume the role of policeman of the world, D.C.’s reputation in hotly contested regions only deteriorated. After Saddam Hussein and ISIS, once the news of the US openly backing Israel after the Hamas attack hit the pages of Arabic outlets, the Iraqi