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RP’s Diary

What Brexit and Trump’s victory have in common

Trump rides to victory on a tide of popular anger

Many facile comparisons have been made between Brexit and the election of Donald Trump today. They have an important element in common. But the commentators have missed it. It is said that both represent a backlash against globalisation. Others say it is a revolt of the uneducated, the marginalised, the people who have been left…
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Brexit: Britain’s biggest mistake for 1,000 years

A long-term perspective reveals enormity of decision

Matthew Parris (The Times, Oct 15) says Brexit is set to be Britain’s biggest screw-up since the Suez crisis of 1956. It is worse than that. The invasion of Egypt to regain Western control of the Suez Canal was an ill-judged gesture,  from which Britain recovered quickly; Brexit is likely to prove its greatest mistake…
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The real reasons for low real rates

The lowest interest rates in history are failing to spur sustained recovery. Rather, low real rates mirror financial and structural weaknesses Economists cannot agree on the causes of these low real rates. They discuss various hypotheses. Central banks have held policy rates low for years – have these ultra low nominal rates reduced real rates,…
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Are the chances of real reform improving?

  In The Money Trap, I argue that our problems result from the way in which we have applied a particular concept of money – the state theory of money. This dominated government policy in the 20th century. As Keynes said, all modern money is state money – it is seen as a creature of…
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Mad money: parallels with the 1970s

Current monetary policies and arrangements are immoral as well as ineffective

The current debate about monetary policies reminds me of the 1970s. Keynesian policies as then understood involved adjusting the fiscal “stance” of policy to ensure sufficient, but not excessive, effective demand. But these policies no longer had “traction”. The world was changing in ways that economists at the time struggled to understand.  Money was becoming…
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Wolf of the City

A gloomy and inconclusive debate among monetary policy-makers

Martin Wolf’s recent radio programme – “How Low can Rates Go?” – described and illustrated the dilemmas facing monetary policy-makers. Nine years from the start of the great financial crisis, Wolf reported, economies had still not returned to “normal”.  Capitalism was perceived by many to be failing to deliver; globalisation a con trick.  The political…
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Kissinger calls for US to save the global order

How to restore confidence?

Henry Kissinger says that today’s international order was “founded upon conceptions that emerged from the British Isles, were carried by Europe around the world, and ultimately took deep root in North America” He adds that “American leadership in reinvigorating the contemporary order is imperative.” In a few words, Kissinger shows a depth of understanding and a…
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Globalization: a warning from Brexit

Britain is the latest victim of the money trap

  “Yesterday’s vote speaks to the ongoing changes and challenges that are raised by globalization,” President Obama said yesterday in his first comment on the UK referendum. He is right. The “Out” vote should be viewed as part of the geo-political fallout of the financial crisis and the failure of governments and bodies such as…
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Brexit shows need for new rules on money

The vote for Brexit is about much more than the UK and Europe.

The vote for Brexit is about much more than the UK and Europe. It shows that new rules to guide the process of globalization are needed. The policies followed since the financial crisis have two major errors. First there is a failure to diagnose the true causes of the crisis. Second, governments have failed to…
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Mervyn King’s alarmist warning

Former governor questions US debt service commitment

According to the World Gold Council, Mervyn King, former governor of the Bank of England, believes that in certain circumstances China’s assets in the US could be “annulled”. Mervyn King’s alarmist warning is  made in an interview, entitled “Present perilous, future imperfect” that appears in the June issue of Gold Investor,  a WGC publication.  After pointing…
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