Judy Shelton, a Trump nominee to the Fed Board of Governors, may not have coined the excellent term “Fed bug,” but she used it to delicious effect in this 2019 Financial Times interview:
“People call me a goldbug, and I think, well, what does that make them? A Fed bug,” she says.
The saying goes: “The grass is always greener on the other side.” But is it really?
US dollar supremacy is something to which we have become accustomed. It’s easy to take for granted that the dollar is still the world’s reserve currency despite relentless efforts made by central bankers and governments to destroy it.
While Congress argues about how many trillions of dollars to create in the new coronavirus bill to pay for things like basic income or a new $1.75 billion FBI building, the Swiss National Bank posted a quarterly profit of $43 billion for the second quarter. As Reuters reports:
Growth in total employment slowed in July, following two months of big gains in employment, during May and June. But it all comes after the US economy shed more than 19 million jobs during March and April.
In July, the US added 591,000 payroll jobs, with total employment rising to 139.1 million. This is a sizable slowing from June, when more than 5 million jobs were added. At its most recent peak in November 2019, more than a 153 million Americans were employed. From November to July, the US is down 14 million jobs, or 6.7 percent of the US’s working age population.
[Published in Chronicles, Nov. 1993, p. 23–25]
Those of us who get drawn, often against our better judgment, into Internet debates soon discover that the case against the market economy in the popular mind boils down to a few major claims. Here I intend to dissect one of them: under the unhampered market we’d be at the mercy of vicious monopolists.
Measured in dollars, the current bull market for gold started in December 2015, since which its price in dollars has almost doubled. Other than the odd headline when gold exceeded its previous September 2011 high of $1,920, only gold bugs seem to be excited. But in our modern macroeconomic world of government-issued currencies, which has moved on from the days when gold operated as a monetary standard, it is viewed as an anachronism—a pet rock, as Jason Zweig of the Wall Street Journal called it in 2015, only a few months before this bull market commenced.
Negative interest rates have long since become a reality. But we are not talking about negative real interest rates. This is the case when the return on an investment is lower than the officially stated inflation rate. In today’s context, negative interest rates are rather negative nominal interest rates; that is, the nominal interest rate is below 0 percent.
