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RP’s Diary

Recycling the rewards of equity finance

How vested interests bar financial reform

There is an urgent need to reintegrate society with its productive side through broadening share ownership. This is the theme  of a new book,  “Debtonator”. (Elliott and Thompson, £9.99), by Andrew McNally, an experienced institutional investor. In a lively account, McNally shows how equity finance benefits society, companies and individuals. Equity should form the basis…
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Are central banks masters or slaves of markets?

They remain key determinants of stock market valuations

Central banks disown any responsibility for stock markets; yet we all know they take market conditions into account. How will they respond if the turmoil continues? Apparently the banks want central banks to get interest rates back to “normal”. Axel Weber, head of UBS, former head of the Bundesbank and former council member of the…
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Scary scenarios for investors

What to invest in? Investors are at their wits’ end. What should they do to protect their assets? Well, your choice of assets depends on what you think central banks will do – especially if the stock market rout goes on. Will they EITHER extend/revive QE, keep rates low and  print more money? OR will…
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What would be the ideal money?

German newspaper discusses the concept behind the Ikon

To prevent a new eruption of the financial volcano we need deep monetary reform – much more radical change than anything discussed by governments or economists as yet. So any signs of such an interest are encouraging. On July 8 and 14 of this year, Gerald Braunberger, economics editor of the Frankfurter Allgemeine Zeitung,  wrote two articles…
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Money, civilisation and their discontents

QE increases state money but reduces the quality of money

The usual way to destroy the social value of money is through inflation, and that has indeed been the fate of most fiat currencies. Yet there are other ways to reduce the quality of money and thus its ability to support a civilisation. Money becomes less useful, for example, when the objects you can spend…
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Between Debt and the Devil: A Review

According to Adair Turner, Britain’s former chief financial regulator, the global financial crisis had one big cause: bad ideas.  These are ideas that Turner disapproves of. The key proposition of his new book is simply stated: “banking systems left to themselves are bound to produce too much of the wrong sort of debt, instability and…
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‘The Money Trap’ now

Three years after publication, it is time for a new look at the arguments put forward in the book.

The book argued that the crisis was the joint product of  inflation targeting, irresponsible banking and a weak international monetary system. The book tried to show how these were inter-related: First, inflation targeting, which had been a valuable tool in combatting 1970s inflation, had by the 2000s outlived its usefulness as a guide and discipline for…
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William White: Why we need to debate exchange rates

A currency war or a war on currency?

William White, formerly head of monetary and economic affairs at the Bank for International Settlements and now chair of a key OECD committee,  is one of the few mainstream economists willing and eager to keep the debate about exchange rates systems alive. Most of them want to bury it. In a paper published by the…
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A few encouraging signs

China's challenge is good news

  Thank you for visiting my site. I am taking a sabbatical to research a new project so will not update my website for the next few months. Suffice to say that nothing governments or central banks have done since the crisis has changed the analysis or policy recommendations I offered in The Money Trap…
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Does the ‘reserve’ dollar harm America?

The flawed international monetary system is to blame for the crisis

  For many years  Lewis E. Lehrman and John D. Mueller have been calling attention to what they call the “reserve-currency curse.” Since some politicians and economists have recently insisted that the dollar’s official role as the world’s reserve currency is instead a great blessing, it is welcome that they have recently revisited the issue…
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