Chart of Financial Repression and Real Interest Rates; Money Market Exposure; Bubble Morphs in Form, Still Growing

November 14, 2012

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Research:

Carmen Reinhart on Financial Repression:

  • For the advanced economies, real interest rates were negative roughly ½ of the time during 1945-1980, resulting in a rapid reduction in debt. ~ IMF (pdf)

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Steve Keen vs the Austrians ~ debunkingeconomics

U.S.

If you own Money Market Funds, you may have exposure to French and U.K banks

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Blowing a new bubble, or has the credit bubble merely undergone a metamorphis:

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In fiscal 2011, the federal government held $2.7 trillion in assets and $17.4 trillion in liabilities ~ Mercatus

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When states go broke ~ AEI

  • David Skeel makes a persuasive case arguing states should be allowed to enter bankruptcy
  • State employees would likely be more careful in their pension demands, wondering if promises are real.
  • Some debt is extremely difficult to renegotiate outside of bankruptcy
  • Sacrifices shared between employees, recipients of services and taxpayers.
  • Default or government rescue only options currently should California face trouble, alternative preferable

World: 

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China:

China’s Aristocratic Class reasserting influence to protect business ties ~ NYT – little chance of reform without a crisis World:

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