In Finance, Slow is Good
“What the central bank RTGS/LSM two-step teaches us is that we need a good balance between fast and slow. Sure, real-time settlement is a nice feature. But let’s also have delayed settlement. If brokerages have a choice to use some combination of two-day and real-time settlement, we may arrive at a socially optimal stock settlement rate.” ~ J.P. Koning
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Mastercard’s Crypto Ruse
“With more corporate powerhouses supporting cryptocurrencies by the month, it appears that crypto is here to stay. Whether those cryptos are the ones currently popular or this announcement by Mastercard acts to initiate a path dependent development process is presently unknown and unknowable. Other recent initiatives by the massive processing firm suggest a focus that may thwart, rather than promote, the expansion of genuine, public cryptocurrency use.” ~ Peter C. Earle
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Escape Hatches: Migration, Bitcoin, and the Ability to Get Out
“Keep more mobile assets; have larger buffers, financial and physical; instead of a large house in a nice suburb, perhaps aim for a smaller home coupled with a condo or house in a different jurisdiction? Don’t put all your financial eggs in one portfolio – keep some gold and some bitcoin; keep healthy; update your survivability skills. Ensure that your escape hatches remain open.” ~ Joakim Book
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Are the Conditions Right for Another Commodity Super-Cycle?
“With unemployment rates still elevated and much of the global economy in some form of lockdown, it is hard to imagine the conditions for an economic boom, especially one that will see wage increases, but the size and scale of the global monetary and fiscal response to the pandemic is unprecedented. It creates the conditions for a continued appreciation of a wide range of essential commodity prices as the pandemic ends and demand rebounds.” ~ Colin Lloyd
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When Financial Markets Bubble, There’s Something for Everyone
“Whenever something seems bubbly, accusations of tulips and South Sea bubbles are never far away – even though the proportion of people who could actually explain those iconic episodes of our financial past is frighteningly close to zero. Levenson’s account of the South Sea Bubble will not, I daresay, be the last time historians find reason to look at this grand event of our financial past.” ~ Joakim Book
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Accountants Have Learned To Live With Crypto
“Accounting professionals need to learn to live and work with crypto, and standard setters need to be proactive in the creation of crypto-specific standards. Applying standards developed for the 20th century economy to 21st crypto assets is already causing issues, and should be rectified to avoid wider market disruptions.” ~ Sean Stein Smith
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A Suddenly Soaring Stock Price Might Be Bad for Business (Video)
“I went on Cheddar TV to discuss the risk to companies from the wild speculative buying inspired by investor chatrooms. Eventually the fundamentals have to catch up else the highs are unsustainable.” ~ Edward Stringham
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Do These Money Supply Charts Portend Hyperinflation?
“Financial markets indicators suggest that high inflation is not likely. Even with a very large balance sheet, the Fed has proven that it can control inflation by paying high rates of interest on bank reserves. Whether Fed officials choose to do so is the open question.” ~ Thomas L. Hogan
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Presidential Impeachment and US Equity Markets
“The gradual pace of what is fundamentally a political (as opposed to legal) action tends to result in dampened, rather than heightened, volatility. And nearly as soon as any latent uncertainties are ironed out, broader economic trends resume driving the direction of financial markets. A more profound degree of political upheaval, with a more sudden onset, is required to throttle the stock markets.” ~ Peter C. Earle
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Will the Fed’s “Feelgood” Medicine Cause an Economic Collapse?
“The promise of cheap money leading to perpetual asset price sunshine may seem like a reality today. Tomorrow the consequences will be like Dr. Feelgood’s needles. To avoid the worst, markets—not politicians or bureaucrats, must be free to uncover the real cost of borrowing money.” ~ Barry Brownstein
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Monetary Policy is Pushing Americans, Kicking and Screaming, Up the Risk Curve
“Gamestop is only a symptom. The size and frequency of monetary policy interventions is pushing investors further and further up the risk curve.” ~ Peter C. Earle
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Robinhood and Redditors: Who’s Robbin’ Who?
“We don’t need more regulation; we need better regulation. We need the rule of law not only in monetary institutions but in financial markets too. We need to replace the ‘regulatory leviathan’ in financial markets with ‘a regulatory constitution.'” ~ Roger Koppl
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