Thoughts on Trade. “Economic nationalists” from both sides of the political aisle think this situation is unsustainable…Running a trade deficit means the US gets to buy more than it produces. In turn, we have this ability because investors from around the world think the US is a good place to put their savings, leading to a net capital inflow that offsets our trade deficit.
Category Archives: Weekly Market
Ignoring the Invisible Hand. Traveling around the country with our high school juniors looking at colleges, hither and yon… we notice on our visits: at some point, the college admissions officers in charge of the meeting will talk about great accomplishments by students or recently-graduated alumni. Invariably, the accomplishments are volunteer efforts of various sorts that help people in some far off land or, sometimes, here in the US.
“Making the world a better place” is not just about volunteer work; it’s about personal ambition and desire mixing with the invisible hand to raise the standard of living for everyone.
Capitalism isn’t a dirty word and the long-term success of our civilization means making sure our children know it.
Stock market volatility scares people. So, we watch the Four Pillars. These Pillars – monetary policy, tax policy, spending & regulatory policy, and trade policy – are the real threats to prosperity. Right now, these Pillars suggest that economic fundamentals remain sound.
The Powell Fed: A New Era. The rate hike itself is not worrisome. It’s expected and, at 1.75%, the federal funds rate is still below inflation and the growth rate for nominal GDP. There are also still more than $2 trillion in excess bank reserves in the system. The Fed is a very long way from being tight.