Author: David James
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ECONOMICS
- David James
- 18 October 2022
3 Comments
The world is facing cross-currents: a collapsing financial system that is balanced by the benefits of massive, long term improvements in production efficiencies, mainly because of technological advances. It is a bad news/good news story that can only be seen accurately if the intractable errors of contemporary economics are jettisoned. We are in a battle between finance fictions and reality.
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ECONOMICS
- David James
- 03 October 2022
5 Comments
For Europe, especially Germany, there should be enough gas in storage to limp through winter but by next spring there may be severe trouble. The leaders of Europe and the United States expected that they would win the economic war against Russia and force the invader to withdraw. Not only did that not happen, it is likely to lead to severe unintended economic consequences.
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ECONOMICS
- David James
- 23 August 2022
4 Comments
Now that it is becoming hard to avoid just how much trouble the global financial system is in, it is interesting to speculate about what should be done about it. The first thing to understand about the global financial system is that the assumptions that were used to shape it are demonstrably false.
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ECONOMICS
Monetary authorities are caught in an impossible situation. Inflation is rising: it is over 5 per cent in Australia and over 9 per cent in the United States. Inflation is often seen as a way out of excessive debt because it erodes the real value of money and therefore the real value of the debt. But what is increasingly being discussed are ways to cancel the debt.
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ECONOMICS
The question that should be posed is how effective has the Reserve Bank been at ‘managing’ the economy and financial system? ‘Not very’, has to be the answer. Not that the RBA is alone. The same pattern has been seen across the developed world. Central banks have one weapon at their disposal, the cost of money (the interest rate), and there is not much evidence they have used this tool to make their systems sustainable. Mostly, they have made matters worse.
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ECONOMICS
As commodity prices and inflation soar in the ‘real’ world we may be witnessing a prelude to another 2008-style crisis triggered by the foreign exchange markets. The risks certainly look similar and can be described with a simple question. Can the fictions produced by out-of-control financial actors survive reality?
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ECONOMICS
In purely economic terms, the upcoming Federal election is extremely unusual. The shut down of the Australian economy for almost two years because of health measures really has no precedent in our history. Only war can produce that type of shock. The Federal government’s financial response was as extreme as the state of emergency measures, including a sharp increase in Australian government debt. It remains to be seen, however, if the government gets much credit for injecting so much free money into the economy. It is unlikely.
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INTERNATIONAL
- David James
- 19 April 2022
2 Comments
Elon Musk’s proposed hostile takeover of Twitter will be a fascinating battle that will have consequences far beyond the stock market. It is exposing just how financially strange social media and conventional media have become.
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ECONOMICS
- David James
- 22 March 2022
5 Comments
Russia’s invasion of Ukraine has led to severe financial sanctions being imposed on the country that are likely to have lasting consequences. Problem is, they may not be the ones the sanctioners are expecting. They may even come to regret what they have done.
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ECONOMICS
- David James
- 01 March 2022
3 Comments
Australia’s Reserve Bank mainly concentrates on keeping inflation within an acceptable range and maintaining a high level of employment. Social equity has never been considered to be part of its mandate. It should be. Interest rates have been the biggest cause of economic and social division in Australia, not just between rich and poor, but also between older and younger generations.
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ECONOMICS
- David James
- 31 January 2022
5 Comments
There is a great deal of commentary about the growing importance of artificial intelligence, or AI, especially in business circles. To some extent this is a self-fulfilling prophecy — if people think something will have a seminal effect then it probably will. But if the supposed commercial benefits are significant, the dangers are potentially enormous.
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ECONOMICS
- David James
- 04 January 2022
3 Comments
There really is no such thing as ‘capitalism’ — or rather there are so many capitalisms that the word is altogether too imprecise to be useful. A much better term to identify the problems, even evils, of modern developed economies is ‘corporatism’. This can be precisely identified and its transgressions and general harm are getting worse.
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