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Tag Archives: Keynes

You Will Never Bring It Back Up If You Have No Idea Why It Falls Down And Stays Down

It wasn’t actually Keynes who coined the term “pump priming”, though he became famous largely for advocating for it. Instead, it was Herbert Hoover, of all people, who began using it to describe (or try to) his Reconstruction Finance Corporation. Hardly the do-nothing Roosevelt accused Hoover of being, as President, FDR’s predecessor was the most aggressive in American history to that point, economically speaking. Roosevelt just took it a step (or seven) further. The principle is of pump...

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Mauldin: The Dirty Secret Behind America’s “Full Employment”

Should just being “employed” make people/workers happy? On one level, any job is better than no job. But we also derive much of our identities and self-esteem from our work. If you aren’t happy with it, you’re probably not happy generally. Unhappy people can still vote and are often easy marks for shameless politicians to manipulate. Their spending patterns change, too. So it ends up affecting everyone and everything. Unhappy Employment There’s this plight of people who, while not...

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Mauldin: We Are On The Brink Of The Second “Great Depression.”

You really need to watch this video of a recent conversation between Ray Dalio and Paul Tudor Jones. Their part is about the first 40 minutes. In this video, Ray highlights some problematic similarities between our times and the 1930s. Both feature: a large wealth gap the absence of effective monetary policy a change in the world order, in this case the rise of China and the potential for trade wars/technology wars/capital wars. He threw in a few quick comments as their time was running out,...

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Mauldin: The Calm Before The Economic Storm

The global economy is slowing. Germany, for instance, may already be in recession. GDP there dropped 0.1% in this year’s second quarter, with little reason to expect better from Q3 which we will learn soon. Whatever you call it, Germany is certainly not in a good spot. It is highly dependent on exports which, for various reasons, are weakening, particularly in their auto industry. Meanwhile, Brexit (depending on how it ends) could greatly reduce UK purchases of German goods. On top of that,...

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Mauldin: China’s Grand Plan To Take Over The World

When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today. There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from. But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western...

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Mauldin: Modern Central Banking Is More Vulnerable Than We Think

Banks are a place where you store your cash, right? Not exactly. When you deposit money in a checking or savings account, you aren’t just letting the bank hold it on your behalf. You are lending the bank that money and the bank is borrowing it. That’s why deposits show as a liability on the bank’s balance sheet. We think of banks as lenders, and they are, but they’re also borrowers. They make money by lending at higher rates than they pay as borrowers, and by leveraging their deposits via...

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Mauldin: How GE Screwed Over Its Retirees

Remember “defined benefit” pensions? That is the kind of plan in which the employer guarantees the worker a set monthly benefit for life. They are increasingly scarce except for small closely held corporations. The same rules apply for small closely held businesses as for large corporations. These plans can be great tools for independent professionals and small business owners. But if you have thousands of employees, DB plans are expensive and risky. The company is legally obligated to pay...

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Mauldin: Social Security Is Screwing Millennials

Social Security is a textbook illustration of how government programs go off the rails. It had a noble goal: to help elderly and disabled Americans, who can’t work, maintain a minimal, dignified living standard. Back then, most people either died before reaching that point or didn’t live long after it. Social Security was never intended to do what we now expect, i.e., be the primary income source for most Americans during a decade or more of retirement. Life expectancy when Social Security...

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Mauldin: Economics Is Like Quantum Physics

I often say a writer is nothing without readers. I am blessed to have some of the world’s greatest. Your feedback never fails to inspire and enlighten me. My last week’s That Time Keynes Had a Point letter brought many more comments than usual. Apparently Keynes is still provocative 73 years after his death, no matter what you say about him. But my real point was about the twisted economic thought that is having dangerous effects on us all. And we can’t blame it just on Keynes. Today I want...

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J.M. Keynes: The Time He Had A Point

John Maynard Keynes once said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” While true, it doesn’t go far enough. The problem isn’t simply defunct economists or “scribblers of a few years back.” We are in the grip of economists who, far from being defunct, hold great...

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