VECKA 14
Torsdag
02
April
BT-annons
2020-02-21
photo


Still going strong
Guru corner, Sveriges Riksbank, SEK mm.

SVERIGES RIKSBANK GRUNDAD 1668 ÄR VÄRLDENS ÄLDSTA CENTRALBANK OCH DEN FJÄRDE ÄLDSTA I VÄRLDEN SOM FORTFARANDE ÄR ”STILL GOING STRONG” (ungefär som Johnny Walker som dock är född 1820)

THE GURU CORNER
Over the past three months the year-over-year rate of growth in US True Money Supply (TMS), a.k.a. the US monetary inflation rate, has jumped from a 12-year low of 1.5% to a 2.5-year high of 6.1% 

The Roman Empire never doubted that it was the defender of civilization. Its good intentions were peace, law, and order. The Spanish Empire added salvation. The British Empire added the noble myth of the white man's burden. Americans have added freedom and democracy. Yet the more that may be added to it the more it is the same language still. A language of power. The irony is that the word for the ultimate end is invariably peace. Peace by grace of force. 

Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists who start from a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and therefore saving must be penalized. 

As dismissive as many of us would like to be toward Marx’s thoroughly debunked labor theory of value, it still holds currency among today’s budding socialists. 

It is not a conclusive proof of a doctrine's correctness that its adversaries use the police, the hangman, and violent mobs to fight it. But it is a proof of the fact that those taking recourse to violent oppression are convinced of the untenability of their own doctrines. 

The budgetary restraints that the eurozone placed on member states are now in the crosshairs of ECB President Christine Lagarde. 

Many modern economists think the standard for a "good" economic theory is how well it predictsnfuture trends. Not only are most economists terrible at making predictions, but the whole premise of economics as being about predicting things is a flawed idea. 

The Riksbank has voted to exit negative rates but, with the economy deteriorating, this is likely to be a 'one-and-done' move. The move is expected to bring little support to SEK, which is set to remain a laggard in the G10 FX cyclical space. 

Göran Högbergs Finanskrönika varje vecka – klicka här för mer information! 

 
Göran Högberg

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