In some respects, we are back to where we were in 2021 when the supply constraints that arose from the COVID lockdowns and widespread illnesses started to reveal themselves in escalating prices around the world. This time it is the US-Israel folly in the Middle East that is the culprit and the supply constraints are…
inflation
Last week, the RBA hiked interest rates again and tried to claim the economy was overheating. One way that we assess that claim is via the wages pressure in the labour market. An economy that is running out of productive resources, typically sees firms competing for scarce workers and bidding up wages to attract them.…
A lot of the post WW2 institutional structure is being challenged at present and/or vanishing altogether. Some of the changing environment will prove to be disastrous for the world, while some of the changes are likely to be beneficial. There will also be pro and con of many of the disruptions. Tomorrow (May 1, 2026),…
Aaron Clements-Partridge and Ryland Thomas Broad money aggregates failed policymakers when used as an intermediate target in the 1980s, but they appeared to predict the post-pandemic inflation. Where does that leave their role in setting monetary policy today? That was the topic of a recent workshop hosted by the Bank on ‘Analysing the Information Content … Continue reading Money talks, broadly speaking
Regular readers will know that I hate the term NAIRU – or Non-Accelerating-Inflation-Rate-of-Unemployment – which is a concoction invented by mainstream economists to maintain unemployment at elevated levels (to keep the working class in its place) and give cover to central banks to run monetary policies that redistribute income from poor to rich. If you…
I have been thinking about the recent inflation trajectory in Japan in the light of constant calls from mainstream economists (including a bevy of private bank economists who work for institutions that benefit from interest rate hikes) for the Bank of Japan to hike rates. What is driving CPI movements? What has been the impact…
Jan 23, 2026 I The economics of John Maynard Keynes (1883–1946) was built on his philosophy. Economics was the means to the good life, not the good life itself. Keynes’s own genius was practical, and so both his temperament and the events of his time conspired to keep him anchored in the realm of means. … Continue reading Keynes and Money, or Where Has All the Money Gone?
The Reserve Bank of Australia (RBA) increased the policy rate by 0.25 points on Tuesday and claimed that it was because the inflationary outlook was in danger of accelerating out of control as a result of excessive demand pressures. This followed last week’s CPI release which showed the December increase to be 0.96 points. When…
Last Friday (December 5, 2025), I filmed an extended discussion with my Kyoto University colleague, Professor Fujii about a range of issues concerning the Japanese and Global economy. Once it is edited, the video will be available on YouTube. Fujii-sensei is advising the new Japanese Prime Minister and is the author of the ‘Responsible proactive…
In an early blog post – Inflation targeting spells bad fiscal policy (October 15, 2009) – I outlined prior research that I had done on the issue of inflation targetting (IT). In my 2008 book with Joan Muysken – Full Employment abandoned – we provided further analysis on the issue. We found that there was…