How Washington and the Fed Caused the Commercial Real Estate Crisis
2024-06-17
Mainstream financial news today is replete with stories about “distress” in the commercial real estate market. But what is the precise nature of this distress, and what implications does it have for those outside of the respective industry or asset class? More importantly, what set of factors contributed to the distress, and what does that say about its potential alleviation?Broadly, “distress” in the commercial real estate context refers to the inability of a property, or portfolio of properties, to make required payments on the underlying loan (to “service debt,” in industry terms). There is also physical distress—lack of physical upkeep, accumulation of deferred maintenance, etc.—but the inability to service debt is what’s generally referred to as distress in the financial media. I’ll
Marx, Class Conflict, and the Ideological Fallacy
2024-04-03
Tu ne cede malis, sed contra audentior ito
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Does Government Spending and Money Expansion Create New Wealth or Destroy It?
2024-01-19
Many economists claim that economic growth is driven by increases in the total demand for goods and services, additionally claiming that overall output increases by a multiple of the increase in expenditures by government, consumers, and businesses. Thus, it is not surprising that most economic commentators believe that a fiscal and monetary stimulus will strengthen total demand, preventing the US economy from falling into a recession.
These economists believe that increasing government spending and central bank monetary pumping will increase production of goods and services and strengthen total demand. This means that demand creates supply. However, is this the case?
Why Supply Precedes Demand
In the market economy, producers do not produce solely for their own consumption. Some of their