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The relationship between the price of money and real-world behavior is non-linear

Fed governors are ALL part of the same inbred, arrogant, frequently wrong but never in doubt, Soviet nomenklatura-esque priesthood of central economic planning and control.

More than FOUR HUNDRED PhD economists with a budget of literally hundreds of millions of dollars—got the 2021 transition to an embedded inflationary environment completely and utterly wrong, it’s also that Mester et al. got the prior embedded deflationary environment completely and utterly wrong.

Since early 2009, the Fed has provided the most accommodative monetary policy in human history with the express purpose of stimulating inflationary expectations and behaviors to something close to their 2% target. 

This effort was based on an essentially linear model of the macroeconomic relationship between the price of money and the velocity of money.

Does lowering the price of money from 8% to 7.5% create more risk-taking? 
Does it increase the velocity of money through the real economy as corporate and household risk-takers are willing to borrow and spend and invest more at 7.5% than they were at 8%?

The relationship between the price of money and real-world behavior is non-linear.
Just like water.

It’s a miracle of life that liquid water—the foundation of life on our planet—gets lighter instead of heavier right before it changes state into solid ice.

John Mauldin 29 April 2022

Our institutions are malfunctioning

“Our institutions are malfunctioning because of the way that social media amplifies performance and moralism and mob dynamics, which brings the normal process of dissent to a grinding halt,”

“Why the Past 10 Years of American Life Have Been Uniquely Stupid” in The Atlantic. In the essay, which he /Jonathan Haidt/ calls “the most important thing I’ve ever written”, Haidt argues that social media is having a devastating impact on society.  

He invokes the parable of the Tower of Babel, in which God, “offended by the hubris of humanity”, makes the people unable to communicate.

 “I cannot imagine voting Republican because the Republican party has completely lost all sense of constitutional responsibility and has lost all touch with conservatism. I have a lot of respect for liberalism, but there’s a lot of illiberalism on the left, and I have a lot of respect for conservatism, but there’s not much conservatism left on the right,” he says.

In his bestselling 2012 book, The Righteous Mind: Why Good People Are Divided by Politics and Religion, Haidt lays out the “moral foundations theory”, arguing that a set of core moral foundations — which we might think of as “political taste buds” — can help explain our differences. Liberals build their “moral matrices” on care, fairness and liberty; conservatives add three other important foundations: loyalty, authority and sanctity.

Jemima Kelly FT 29 April 2020

Jemima Kelly writes for FT Alphaville. She was previously a reporter at Reuters, where she mainly wrote about the foreign exchange market, cryptocurrencies and fintech. She has also written for The Economist.

She is now one of my Gurus.


Börsen fredag 29 april 2022


Nasdaq dropped 4.2% Friday, bringing its losses for the month to more than 13%, its worst showing since October 2008. 

The S&P 500 has fallen for four consecutive weeks to drop 8.8% in April. 


Did You Catch What Happened To the Stock Market?

The Money GPS 1 May 2022

There’s angst about recessions and stagflation in the air

The job of braking the economy seems to be under way already. But we still need to explain exactly why growth ran negative.

The decline was driven by the trade balance

That leads to the issue of currency: A strong currency is good for inflation, because it makes imports cheaper, but is bad for growth, as it makes exports less competitive in both the home and foreign markets. 

We find that the greenback’s surge has brought it to its strongest valuation in 20 years

The prospect of higher rates is attracting fund flows to the U.S.

Emerging countries are far less dependent on dollar debt now than they were in the 1990s, but this will still hurt.

The carry trade — borrowing in a currency with low interest rates and parking in a higher-rate currency — is appealing. So far, it’s working.

The problem with carry trades, as was learned in 2008, is that when they turn, they can turn with a vengeance.

John Authers Bloomberg 29 april 2022


U.S. Goods-Trade Gap Soars to Record, Surpassing All Estimates


Carry Trade Biggest Returns Since 2016



Börsen torsdag 28

 Fyra av de fem senaste handelsdagarna har slutat neråt

U.S. stocks rose sharply on Thursday, with technology stocks in the lead, after Meta Platforms posted solid earnings despite high U.S. inflation.

U.S. GDP Falls 1.4% as Economy Shrinks for First Time Since Early in Pandemic

Many economists think that the economy can withstand higher interest rates and return to modest growth in the second quarter and beyond, in part because consumers and businesses are continuing to spend.

WSJ 28 April 2022

US GDP fell at a 1.4% annualized rate
The median projection in a Bloomberg survey of economists called for a 1% increase. 

Bloomberg 28 april 2022

US GDP fell at a 1.4% annualized rate

 The median projection in a Bloomberg survey of economists called for a 1% increase. 

The contraction was due to a jump in imports and a drop in exports, coupled with a slower buildup of businesses’ stockpiles. On a year-over-year basis, the economy grew 3.6%.

 Bloomberg 28 april 2022


Global Supply Chain Crisis Flares Up Again

Ports are already snarled, with the $22 trillion trade in global goods facing months of severe disruption.

Bloomberg 25 april 2022  


Nio av tolv analytiker trodde att Riksbanken skulle lämna styrräntan oförändrad ännu en tid,

 och bara tre trodde att reporäntan skulle höjas. 

Johan Hellekant SvD 28 april 2022


Riksbanken förlänger perioden med nollränta åtminstone fram till tredje kvartalet 2024

RE: Är dom alldeles från vettet?

Englund blogg 27 april 2021


 ”Epoken med extremt låga räntor är över”

 Riksbanken höjer räntan från 0 till 0,25 procent

Inom tre år väntas reporäntan ligga på 1,8 procent.

SvD 28 april 2020


Sweden’s Riksbank raises rates in policy U-turn

The Riksbank reversed the stance it had adopted at its previous meeting in February, when it said it would only lift interest rates from zero towards the end of 2024. 


Sensommaren 1989 vid gränsen mellan Ungern och Österrike

Sensommaren 1989 visade svensk tv dag efter dag bilder från bilköerna vid gränsen mellan Ungern och Österrike. Dit hade hoppfulla östtyskar på semester kört i hopp om att bli utsläppta.

Jag minns av någon anledning detta förebådande fjärilsslag bättre än murens fall. 

Jag var 21 och kunde inte tro det. Ingen kunde tro det.

Not one inch – America, Russia and the making of post-cold war stalemate

Mary E Sarotte Yale university press


Habsburgs picknick och slutet på järnridån och kommunismen


Why I’m still not taking crypto seriously

 It may be the latest political and financial obsession, but cryptocurrencies remain something with no inherent value

Jemima Kelly FT 27 April 2022


Jemima Kelly, Cryptocurrencies and all that (Bitcoins, Tulips, South Sea Company)

Börsen onsdag


Årets börsutveckling har inte varit något för de nervsvaga

U.S. Goods-Trade Gap Soars to Record, Surpassing All Estimates

Shortfall widened almost 18% to $125.3 billion in March

The figures, which aren’t adjusted for inflation, far exceeded all estimates in a Bloomberg survey of economists.

Bloomberg 27 april 2022



The average U.S. home earned more last year than the average American worker


Home-Price Growth Accelerated in February

WSJ 26 April 2022


The euro dropped to a five-year low against the dollar

Falling further than during the worst of Covid panic in March 2020 

A weak euro, which tends to make imports more expensive, is exactly what the ECB doesn’t need. 

Import price inflation in the major European economies is already easily at its highest since the creation of the euro in 1999 

Unemployment throughout the eurozone continues to run on a different scale from the U.S. The sovereign debt crisis a decade ago, and the desperate austerity measures that accompanied it, have left a joblessness problem that remains unvanquished

John Authers Bloomberg 27 april 2022

ECB Must Act Soon to Avoid a Currency Crisis

The euro. The slide this time is worrisome. 

The NYSE Fang+ has now lost 20% since the beginning of April

At the peak of the pandemic surge the FANGs traded at almost double the multiple of the S&P. 

That gap is now as narrow as it has been since the FANGs have been a thing. 

That in turn implies that assumptions they can keep minting money in perpetuity are at last coming into question

John Authers Bloomberg 27 april 2022


Roughly four in every 10 companies on Nasdaq market values cut in half from their 52-week high

Bloomberg 2022-01-07



Årets börsutveckling har inte varit något för de nervsvaga

Stockholmsbörsen bjöd på en ordentlig nedgång under måndagen och har nu handlats ned över 4 procent under de senaste två handelsdagarna.

Allt började däremot bra och så sent som i början av januari rådde stor börseufori med börsrekord och 2000-talets hittills största julrally. 

Risken för fortsatt börsoro och kraftiga kursfall är överhängande så länge som aktiemarknaden inte är i stånd att se slutet på ränteuppgången. 

DI 25 april 2022



These 21 large-cap stocks have now crashed at least 50%

Pummeled stocks include Netflix, PayPal and Facebook parent Meta Platforms

MarketWatch 26 April 2022 


Emissions must peak by 2025 to keep global warming well below the 2°C limit set by the Paris agreement

A new IPCC report says the window to meet UN climate targets is vanishing 

Pursuing 1.5°C means that global use of coal must decline by 95% by 2050. Oil use must drop by 60% and gas by 45% over the same period

The time for meaningful action to avert the worst effects of global warming is running out.

The Economist 4 April 2022


The international goal to limit global heating to 1.5° Celsius


Investors will begin to follow Italy’s politics again

What an end to quantitative easing means for Italian debt

Ms Lagarde emphasised the bank’s philosophy of “flexibility”, in the name of ensuring that borrowing costs in weaker (ie, southern) parts of the euro area do not deviate too much from those for the rest of the bloc. 

In 2018 the formation of a populist coalition led the spread between Italian and German bond yields to double within days to nearly three percentage points. The fate of Italian bonds, in other words, ultimately rests with Rome.

The Economist 23 April 2022

 What an end to quantitative easing means for Italian debt | The Economist

The usual way to rein in inflation is to raise rates above their neutral level

—thought to be about 2-3%—by more than the rise in underlying inflation. That points to a federal-funds rate of 5-6%, unseen since 2007.

Rates that high would tame rising prices—but by engineering a recession.

Does the Fed have the stomach to inflict such economic pain? 

Many economists advocate higher inflation  There is nothing special about 2%, except the fact that the Fed has promised it in the past.

Editorial The Economist 23 April 2022


Powell wants to get closer to neutral. But what’s that? 

Think between 5% and 6%

MarketWatch 3 May 2022


Fed Officials’ plans for their $9 trillion asset portfolio 

reflect many similarities—and differences—from earlier experiment to shrink holdings

In 2017, when the Fed concluded the stimulus was no longer needed, it began to shrink its portfolio passively—that is, by allowing bonds to mature without reinvesting the proceeds, rather than actively selling them in the open market.

WSJ 1 May 2022


Riktiga karlar är inte rädda för lite inflation


A nasty slide for U.S. stocks into Friday’s close

A number of history’s most notorious crashes occurred on a Monday reopening after a bad Friday, so it’s understandable this provoked concern

It’s possible that the market has over-reacted. After both the Fed and the market were too relaxed for too long, the course of rates now embedded in prices suggests the kind of tightening that’s almost bound to bring about a recession. Will the Fed really be able to go through with it?

Governor Ingves of Sweden – an outspoken dove until a few weeks ago —  threw “low for long” out of the window.

Netflix Inc., down a third after not particularly disappointing results, demonstrates what could lie in wait. 

Investors are uncomfortably aware that equity valuations have for years been predicated on historically low interest rates. If rates really are rising, that assumption is no longer any good, and — as Netflix discovered — there’s a long way to fall for companies that look optimistically priced.

John Authers Bloomberg 25 April 2022


Dow Tumbles Nearly 1,000 Points 

WSJ 22 April 2022



The summer of 2021 was the hottest summer Europe has experienced on record

According to the annual report published by the Copernicus Climate Change Service (C3S), the temperature in Europe was 1 degree Celsius above the 1991-2020 average.

Globally, the last seven years have been the warmest on record

Deutsche Welle 22 April 2022


Dow Tumbles Nearly 1,000 Points


Dow Jones Industrial Average posted its worst one-day percentage change since October 2020, losing 981.36 points, or 2.8%, to close at 33811.40. 

The S&P 500 dropped 121.88 points, or 2.8%, to 4271.78, while the 

Nasdaq Composite fell 335.36 points, or 2.5%, to finish at 12839.29. 

WSJ 22 April 2022

Dow Tumbles Nearly 1,000 Points as Stocks Extend Selloff - WSJ

US stocks tumble 2.8% as investors gird for higher interest rates

The US 10-year break-even — a closely watched gauge of market inflation expectations over the next decade — climbed to 3.08 per cent on Friday, its highest level in at least two decades.

FT 22 April 2022


SvD | Sveriges kvalitetssajt för nyheter

What If Stocks Don't Always Go Up?

Bloomberg  31 October 2020

Sanctions alone will not bring Russia to its knees

 Sanctions alone — at least any sanctions that European countries would be willing to now consider — will not bring Russia to its knees any time soon. 

The West has turned to sanctions as a tool with growing frequency since World War II — in places as varied as South Africa, the Soviet Union, Cuba, Venezuela, North Korea and Iran. It is relatively easy to apply sanctions, and they nearly always satisfy the domestic political need to “do something” short of military engagement.

Sanctions are often sold as an alternative to war. But they can also be a precursor to war, as seen with the institution of the American oil embargo against Japan and the freezing of Japanese assets about five months before the attack on Pearl Harbor.

 As it is wise to have definite goals and an exit strategy when a country enters a military conflict, the same is true for waging economic warfare.

New York Times editorial 22 April 2022


It’s hard to see how any of the western countries and companies that have imposed sanctions could justify lifting them. 

It’s a situation that directly implies a drawn-out economic cold war.

John Authers 14 March 2022


This inflation is driven by strong demand—not kinks in supply chains

 If one considers these excess savings alongside the persistence of low interest rates through most of 2021, a rising stock market, pent-up demand, and additional fiscal support, the magnitude of the increase in nominal GDP is not particularly surprising.

Jason Furman MarketWatch 20 April 2022


Jason Furman, a former chair of President Barack Obama’s Council of Economic Advisers, is professor of the practice of economic policy at Harvard University’s John F. Kennedy School of Government and senior fellow at the Peterson Institute for International Economics.

Inflation is, of course, unacceptably high. 

Some of this reflects disruptions — supply-chain problems, surging food and energy prices from the war in Ukraine — that are likely to fade away over time.  

But inflation, which used to be mainly confined to a few sectors strongly affected by the pandemic, has broadened. 

So I find myself in reluctant agreement with economists asserting that the U.S. economy is overheated — that overall demand exceeds productive capacity and that the two need to be brought in line.

The good news is that there’s essentially no evidence that inflation has become entrenched

Paul Krugman NYT 22 April 2022

Opinion | How a Recession Might — and Might Not — Happen - The New York Times (nytimes.com)


Gravitas Plus: The Supply chain crisis


This week’s World Economic Outlook report from the IMF, Tett

 The message in this tome that grabbed most attention this week was that the world faces rising inflation, high debt and stalling growth — stagflation, in other words, although the IMF tactfully downplays that term.

But on page 62 of the report there was also an intriguing little sidebar about the “Saving Glut of the Rich”. 

Western central bankers have limited incentive to study these issues too publicly, since many feel privately embarrassed that quantitative easing has made inequality worse.

Gillian Tett FT 21 April 2022


Hunger and Blackouts Are Just the Start of an Emerging Economy Crisis

Fed hikes and pandemic debt piles add to the risks for developing nations. Some are already sliding into turmoil

The IMF, in its latest World Economic Outlook, likened the war’s impact to “seismic waves” rolling over the global economy. It also warned of the possible return in emerging markets of the sort of “doom loop” that led Russia to default in 1998, helped bring Vladimir Putin to power and took hedge fund Long Term Capital Management to the verge of collapse. 

The World Bank slashed its global growth forecast and announced the creation of a $170 billion rescue package — bigger than its Covid-19 response — for crisis-hit nations.

Bloomberg 20 april 2022 


Torun Nilsson på Dagens Industri - klok och förståndig

 Netflix har visat första avsnittet av framtiden

Det nya är vilka hävstänger som de senaste decennierna satts under bedömningarna och drömmarna.

Den viktigaste ekonomiska hävstången är förstås räntan. Satsa 100 kronor i eget kapital och låna 900

Det började på 1990-talet, och det är ingen tillfällighet att rasen i Netflix och andra teknikaktier påminner om när it-bubblan sprack i början av 2000-talet.

Nästa gång, fem-sex år före 2008, kom en ytterligare urkraft, billig kinesisk arbetskraft. Inflationen tycktes utrotad och när smällen kom vräkte kinesiska makthavare in stödpengar och räntan sänktes igen, inte konstigt att börserna repade sig oväntat snabbt.

Det är därför som chocken blir så stor när alla krafter plötsligt och samtidigt verkar åt fel håll - kriget, räntan, globaliseringen och samarbetena.

Men den viktigaste lärdomen är att försöka förstå hävstängerna och svängningarna. 

Ledare:Torun Nilsson DI 21 april 2022


I torsdags frågades riksbankschefen Stefan Ingves och vice chefen Anna Breman ut i riksdagens finansutskott. Ännu är det för tidigt att säga vad kriget leder till, sa Ingves.

Men att lugna marknader är riksbankschefers jobb, och i realiteten ökar risken för panikbromsning för varje dag som kriget fortsätter.

På finansmarknaderna letar man nervöst efter dolda risker i banksystem, hedgefonder och på derivatmarknader.

Meningen var att centralbankscheferna så småningom skulle börja höja igen, för att undvika obalanser. Men varje gång kom något emellan, it-bubblor, terrordåd, skuldkriser och, till sist, pandemi. Räntor sänktes, polariseringen ökade och politikerna fick allt svårare att göra något.

I Sverige har Stefan Ingves, formad av den djupa svenska fastighetskrisen i början av 90-talet, länge klagat på att politikerna inte tagit itu med bostadspolitiken.

Ledare:Torun Nilsson DI 4 mars 2022



So what’s a doom loop?

When bond yields rise, their prices fall, which means a loss for the owners if they mark them to market. For a bank, those losses eat into its capital base, the foundation of its balance sheet. 

In the euro-zone crisis a decade ago, weak government finances, especially in Italy and Greece, led investors to sell their bonds, which local banks also owned in spades. 

Bond prices tumbled and local banks suffered heavy losses, raising the risk they might need to be bailed out. That threatened a further strain on government finances, making their debt more risky, pushing yields higher and feeding back into more losses for banks. It’s a vicious circle that still haunts Europe.

Big banks like JPMorgan Chase & Co. did suffer losses on U.S. government bonds in the first quarter, which led some to slow their stock buybacks, disappointing investors.

Is the doom loop coming to America? The short answer is no, at least not the euro-zone version.

Paul J. Davies Bloomberg 20 april 2022 


Europe /Euroland/ Is Heading Toward a New Financial Crisis

Completing the EU’s banking union might be the only way to avoid the dreaded “doom loop.”

Banks avoided debilitating losses in large part because the Fed and the Treasury pledged trillions of dollars to stabilize markets and help borrowers make good on loans. 

Authorities successfully pushed for more capital in the aftermath of the 2008 financial crisis, but never went far enough. 

ECB Must Act Soon to Avoid a Currency Crisis

The euro. The slide this time is worrisome. 

The euro has declined steadily for the past year from above 1.22 per dollar to within close range of the 1.0640 low of March 2020, when the pandemic first hit.

The only logical answer is for the ECB to raise its official deposit rate from the current super-stimulatory negative 50 basis points.

Marcus Ashworth Bloomberg 20 april 2022



Stefan Ingves, Viktor Munkhammar och Centralbankernas konspiration

 Enligt skolboken ska en centralbank inte bry sig om prisförändringar på sådant som energi och livsmedel, säger Viktor Munkhammar i en fråga till Stefan Ingves. Ändå höjer centralbankerna världen över nu ränteläget (utom ECB som först måste hitta på en metod att höja räntan utan att Italien går i konkurs och spräcker euron).


Headline inflation är nu hög och svider i konsumenternas plånböcker. Alla vet att nu är det inflation. Se där ett gyllene tillfälle för centralbankerna att höja räntan och därmed sätta stopp för den långvariga skuldökningen hos hushåll och företag.


Stefan Ingves ”Vi har haft en lång diskussion i många centralbanker på temat att många av de prisuppgångar vi har sett har varit av övergående karaktär. Men det här övergående har dragits ut i tid väldigt mycket mer än vad vi trodde tidigare. Dessutom har inflationen blivit högre än vi trodde tidigare. Då har jag och flera av mina kolleger sagt att det uppenbara med facit i hand är att vi är någon annanstans än vi trodde tidigare.”

Viktor Munkhammar: Enligt skolboken ska en centralbank inte bry sig om prisförändringar på sådant som energi och livsmedel så länge de inte sprider sig till övriga delar av ekonomin. Ser vi en sådan spridning nu?

Ingves: Det handlar inte bara om utbudet. Många länder, inklusive Sverige, har med sig en väldigt expansiv finanspolitik. Det innebär att man lagt till en hel del på efterfrågesidan. Då kommer vi förr eller senare i ett läge där finns skäl att fundera på vad som händer med inflationsförväntningarna och olika andrahandseffekter.

Ingves: Företagen och hushållen har en större räntekänslighet än vad de förmodligen någonsin har haft. Det betyder att när räntorna stiger så slår det rakt in i plånboken... Penningpolitikens genomslag i dag är förmodligen ganska stort jämfört med tidigare. Det har fördelen att vi sannolikt får stor effekt på rätt kort sikt och i en sådan värld finns skäl att tro att man kanske inte behöver höja räntan riktigt lika mycket som man skulle ha behövt annars.”

Viktor Munkhammar DI 19 april 2022

Räntorna är på väg upp vilket kan innebära ett brott mot den långvariga prisuppgången på bostadsmarknaden, enligt FI, som dock inte ser en nedgång i sig som som något negativt.

– Det bästa i det här läget vore om vi fick en viss dämpning av priserna, säger Erik Thedéen.

SvT 20 april 2022

Fed’s efforts to control inflation will work mainly through the housing market

Paul Krugman NYT 19 April 2022

Interest rates are still almost ridiculously low by historical standards

Merryn Somerset Webb FT 15 April 2022

Det är dock inte alltid så lätt att skilja på lönepengar och lånepengar. Bilarbetarna på Saab, GM, Opel och Volvo anser sig hämta lönepengar i lönekuvertet, men om bilarna köps med lånepengar kanske även deras lönepengar är ett slags lånepengar.

Likaså anser sig den som fått ett arv av sina avlidna föräldrar bestående av pengar erhållna vid en försäljning av deras hus med stor rea-vinst ha rätt att med gott samvete köpa en segelbåt för pengarna. Detta utan att tänka på att segelbåten är köpt med lånepengar; lånade av den som köpte huset.

Om lönepengar och lånepengar Rolf Englund 12 augusti 2009

År det så hemskt att vi faktiskt inte vet hur vi skall undvika att den nuvarande ekonomin byggd på en allt högre belåning av stigande huspriser skall kunna brytas och ersättas med något annat, vad det nu kan vara?

Rolf Englund 8 juli 2014


Det ser annorlunda ut om boräntan ligger kring 4 procent i stället för kring 2 procent

SEB:s chefsstrateg Johan Javeus: Bostadspriserna är i någon mening dopade av att vi har haft sju år av nollräntor. 

Om de räntehöjningar som marknaden nu ser komma blir verklighet spår Johan Javeus att det får störst påverkan på bostads- och fastighetspriserna. 

DI 19 April 2022


Fed’s efforts to control inflation will work mainly through the housing market

 Mortgage rates — and long-term rates for business borrowers — have already shot up more or less to prepandemic levels, even though the Fed has just begun to hike

Since about 2014, the cost of shelter has been rising considerably faster than the overall cost of living. I’m not talking about house prices; I’m talking about rental rates for apartments and “owner’s equivalent rent,” 

We need higher interest rates, at least for a while, to bring inflation down. But higher rates will “work” largely by depressing housing construction, which was already too low.

Paul Krugman NYT 19 April 2022


In reality there is no such thing as a safe asset - Gold Dollar Plender

The nearest the world has come to one was a British gilt-edged security during the gold standard era. 

But then in the 20th century Britain abandoned the gold standard, demonstrating that super-safety in gilts was illusory.

Before the financial crisis, these global creditors also invested in supposedly safe private assets, namely triple-A rated mortgage-backed securities. Their claim to safety was blown in the credit crunch of 2007. 

Richard Nixon, then president, break the dollar’s link with gold — a de facto sovereign default.

John Plender FT 18 april 2022


Englands beslut att lämna guldmyntfoten 1931 framkallades av att det rådde myteri inom Royal Navy, ett myteri framkallat av de lönesänkningar som regeringen beslutat om.


On August 15, 1971, US President Richard Nixon announced in a televised address that he was “closing the gold window.”

By ending the dollar’s convertibility into gold (at an official rate of $35 per ounce), Nixon severed the millennia-long link between money and precious metals.



US ‘real yields’ to brink of positive territory

So-called 10-year real Treasury yields have soared more than 1 percentage point since early March, hitting a high of minus 0.04 per cent on Tuesday, in a sign bond payouts are coming close to exceeding medium-term inflation expectations.

The jump in real yields has been triggered by the Federal Reserve’s bid to slow intense price growth by aggressively tightening monetary policy. 

The move is already eroding one of the pillars that has underpinned a powerful rally in stocks and riskier corporate bonds from the depths of the coronavirus crisis two years ago.

 FT 19 April 2022


The yield on so-called 10-year TIPS rose  

Positive U.S. Real Yields Will Rip Up Global Markets Playbook

Rising real rates, a crucial barometer of true interest costs for corporations, have come as traders raise their aggressive bets on policy tightening from the Federal Reserve and central banks around the world to combat still-hot inflation levels

“Real yields rising signal we’re progressing back to normality as central banks withdraw stimulus,” said Stephen Miller



Andreas Cervenka bok om den ekonomiska utvecklingen i Sverige

Olof Palme-citatet från 1985 när den svenska kreditmarknaden avreglerades med hans välsignelse: ”Gör som ni vill. Jag begriper ändå ingenting”. 

Cervenka pekar ut den här avregleringen som ett startskott för den utveckling som tog fart kring mitten av 1990-talet.

Bostadsmarknaden skenar hejdlöst och vi undsätter gång på gång bankerna när de hamnar i kris. Staten och kapitalet sitter i samma båt. 

Therese Eriksson SvD Kultur 18 april 2022


Den 21 november 1985 vid ett-tiden fick jag - som chef för Stadshypotek - meddelandet om att Riksbanken hade upphävt alla utlåningsrestriktioner. Jag tittade på mina medarbetare och undrade om man på Riksbanken verkligen förstod vad man gjorde.

Lars Wohlin i Ekonomisk Debatt nr 1/1998

Men just som jag /Feldt/ började tro att han tänkte säga nej till hela idén reste han sig och sade: Gör som ni vill. Jag begriper ändå ingenting. Varpå han återgick till att grubbla över sina egna bekymmer. 

Det var faktiskt enda gången jag hört Olof Palme göra en sådan deklaration. Jag måste tillstå att jag aldrig känt mig så ensam under min tid som finansminister.


Patriots vs globalists

 It was France that gave the world the concepts of the left and right in politics 

Now it is France that is leading the way in the destruction of this divide and its replacement by a new politics, one in which the two dominant camps are nationalists and internationalists.

Gideon Rachman 18 april 2022



BlackRock neutral rate around 2%-2.5%

Estimates that bringing inflation down to the Fed’s target of 2% could push unemployment to nearly 10%.

Fed will eventually “choose to live with inflation,” said Alex Brazier

Data this week showed that U.S. consumer prices rose by 8.5% in March, the most since 1981.

Bloomberg 14 april 2022


Den tongivande medelklassen i Sverige skulle inte klara av någon mer omfattande ränteuppgång

Henrik Mitelman DI 11 april 2022



Ulvsunda Traneberg Hornsberg och Österskär

En del av mitt liv har utspelats här.

Min barndoms somrar var här


Interest rates are still almost ridiculously low by historical standards

Overall it seems obvious that this house price boom must end — and soon. 

Or not. 

The last time inflation was this high, the base rate was 10 per cent. 

Today, if you have a deposit of 40 per cent or more you can get a 10-year fixed-rate from Halifax at 2.48 per cent. 

Have 25 per cent and the rate goes to 2.58 per cent.

Long-term borrowing at 5.5 percentage points below the rate of inflation? That is as close to free money as you are going to see this year.

House prices to fall? Definitely, but not quite yet.

While values are high, real interest rates are negative, making homes surprisingly affordable.

Merryn Somerset Webb FT 15 April 2022


Min gissning är att  de rörliga boräntorna toppar på 3-3,5 procent. 

Det blir kännbart, men vi överlever. Räntechocken uteblir.

Henrik Mitelman DI 11 april 2022


“I urgently need your help,” said the ex-candidate for the grand old political movement of Charles de Gaulle

Only weeks ago Pécresse, a seasoned politician and former minister, seemed to have a chance of becoming France’s first woman president. 

Yet here she was, pleading for cash outside party headquarters after taking on €5mn of personal debt and realising the state would not reimburse €7mn of campaign expenses because she unexpectedly secured less than 5 per cent of the votes.

FT 14 April 2022



The stock-market rally may be nothing more than ‘wishful thinking,’

 Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, warning that recent resilience in stocks could be “nothing more than a bear-market rally, fueled by wishful thinking and excess liquidity,” 

MarketWatch 13 April 2022


- There is no such thing as rational expectations. 

There is wishful thinking, or panic.

Rolf Englund, many years ago

(probably in 1997)


This is a perilous time for the world. The best explanation for stocks’ rally is that investors somehow don’t get that.

Which is alarming.

Why is there so much talk of recession when fewer people are claiming unemployment insurance in the U.S. than at all other times since 1970?

Why are corporate credit spreads so tight when at all other times that interest rates are rising, they have widened?

Why are emerging markets investments performing so badly when at all other times, strong commodity prices have helped them?

Why have stocks risen, and bond prices fallen, since the Russian invasion of Ukraine when at other times of war, investors have sheltered in bonds?

Two of the great religious traditions are about to come together for a day. Friday is both Good Friday, when Christians commemorate the crucifixion of Jesus, and the first night of Passover, when Jews commemorate their exodus from Egypt. It’s unusual for the two to fall on the same day, but they did originate on the same day. 

The Last Supper, after which Jesus was betrayed, was a Passover seder — the highly stylized meal that Jews eat to memorialize Moses and the escape from Pharaoh. It involves drinking wine and eating unleavened bread, which became the basis for Christians’ Holy Communion.

John Authers Bloomberg 14 april 2022

Why 1980s Oxford holds the key to Britain’s ruling class

 Every country produces its own elites, but in today’s western world possibly only France, where the École Nationale d’Administration educated four of the last six presidents, has a ruling caste as small as the UK’s. (And France recently abolished the ENA and replaced it with the Institut National du Service Public.)

 “To understand the man, you have to know what was happening in the world when he was 20.”

Simon Kuper 14 April 2022



The economy could start to slow abruptly, for three reasons

Fiscal policy, Purchasing power has been sapped by inflation, Rising interest rates.

Greg Ip WSJ 13 April 2022


I diagrammet nedan har MarketDesk identifierat fem så kallade ”bear market rallies”

11april 2022


I-Bonds are U.S. savings bonds whose yields are adjusted by the prevailing inflation rate

 You are allowed to purchase $10,000 of such bonds each year ($20,000 per married couple) and an additional $5,000 per year with your tax refund. 

 Zvi Bodie has done as much as anyone, if not more, to champion I-Bonds. Bodie, now retired, was for four decades a finance professor at Boston University.

MarketWatch 12 April 2022



World Markets Are Falling Again

The feel-good days for global markets at the end of March are firmly over.

Everything from stocks to bonds is falling -- even oil has pulled back from near records -- in a concerted cross-asset selloff with echoes of the rate-spurred rout of October 2018.

With the Fed mired in what’s expected to be the most aggressive tightening cycle since 1994, the drumbeat of recession warnings is getting louder.

Lu Wang Bloomberg 11 april 2022


Den tongivande medelklassen i Sverige skulle inte klara av någon mer omfattande ränteuppgång

För det är vi alltför skuldsatta. Vi har helt enkelt bakbundit centralbankscheferna. 

Min gissning – och efter 25 år i prognosbranschen är man mer ödmjuk än 25-åringen – är att  de rörliga boräntorna toppar på 3-3,5 procent. 

Det blir kännbart, men vi överlever. Räntechocken uteblir.

 Henrik Mitelman DI 11 april 2022


 Bill Gross warns Fed rate rises will ‘crack the US economy’

Former Pimco ‘bond king’ predicts central bank will be unable to go above 2.5% to 3%

“We’ve just gotten used to lower and lower rates and anything much higher will break the housing market.”


Can the Fed shrink its $9tn balance sheet without causing market mayhem?

Euro’s founding father Otmar Issing rebukes ECB over inflation response

Sees a risk of stagflation if central bank policymakers continue to misjudge factors driving up prices.

His criticism that the ECB is being too slow to raise interest rates underscores the fractious debate in Germany and much of the 19-country euro area about how fast it should reverse eight years of ultra-loose monetary policy — including negative rates and €4.9tn of bond purchases.

Axel Weber, the outgoing chair of UBS and former head of Germany’s central bank,  told financial newspaper Handelsblatt it was “incomprehensible” the ECB was taking so long to turn its policy around.

FT 12 April 2022


Otmar Issing är sannolikt, vid sidan av USA:s Volcker, världens mest respekterade centralbanksperson. 

Jag har en gång i London lyssnat på ett föredrag av Otmar Issing och jag kan intyga att han ser ut som, och låter som, en engelsk gentleman utbildad i Oxford.

När man i hans artikel i Financial Times läser att han använder ord som "economically absurd", "economically erroneous and politically dangerous", "a scandal", "insane", höjer man därför onekligen på ögonbrynen.

IN THE FIRST CENTURY AD, a merchant setting off from Rome on a journey to Cologne was able to pay his bills with the same coin, the denarius, over his entire journey.

Initially, Rome safeguarded cohesion of its large empire by fire and sword, then increasingly by placing even the most remote provinces under the legal system and administration of Rome.

The precise lessons to be drawn from such historical episodes may not be entirely clear.

Så elegant brukar han uttrycka sig.

Läs hans artikel i Financial Times via denna länk


‘Nowhere to hide’ for investors

Fund managers have been tripped up by global stocks and bonds falling in tandem in the first quarter.

The two key markets underpinning global finance are seldom correlated and such moves tend to be rare and brief. This year’s quarterly slump — the worst synchronised decline since both benchmarks have been available

FT 11 April 2022


The Nasdaq 100 Stock Index sank more than 2% Monday, adding to losses sustained last week that have erased over $1 trillion in market value in the past five sessions.

Bloomberg 11 April 2022


KI räknar till 2026 med att inflationen under varje år väntas vara högre än räntan

 Trots att långräntan väntas klättra blir alltså realräntan (nominell ränta minus inflation) negativ för hela perioden om prognosen slår in. 

Nu är den tioåriga räntan 1,2 procent, vilket med KI:s inflationsprognos för året ger en negativ realränta på hela 4 procent (5,2-1,2 procent).

En bransch som gynnas av negativa realräntor är fastighetssektorn då i stort sett alla kommersiella hyreskontrakt i Sverige är länkade till inflationen.

Magnus Dagel DI 11 april 2022


 Den 50-åriga statsobligation som Riksgälden sålde i juni förra året. Obligationer till ett värde av 10 miljarder kronor emitterades då med en ränta på 1,386 procent. Räntan nådde som lägst 1,00 procent under slutet av sommaren.

Den senaste dryga månaden har räntan stigit med omkring 1 procentenhet till strax under 2,40 procent. Obligationen har under samma period tappat cirka 25 procent av sitt värde. Det är en mycket kraftig rörelse för AAA-stämplad statsobligation.

Viktor Munkhammar DI 11 april 2022


Five-year TIPS 

At the start of this year, the five-year TIPS yield starting in five years had a yield of 0.47 percentage points below inflation. 

Now it yields 0.27 points above inflation 

James Mackintosh WSJ  9 April 2022 



Svenskarna betalade mindre i bolåneräntor under 2021 än 2011, trots att skulden dubblats

Svenskarna har lånat nästan 4 000 miljarder kronor till bostäder enligt siffror från statistiska centralbyrån SCB från i februari i år. 

Det är en ökning med nästan 2 000 miljarder kronor på tio år. 

Denna skuldexplosion har dock inte märkts så mycket i svenskarnas plånböcker eftersom boräntorna samtidigt har sjunkit stadigt.  

I slutet av 2021 betalade svenska hushåll enligt SCB  i genomsnitt 1,47 procent på sina bolån - både bundna och rörliga. Det är de lägsta nivåerna någonsin. I slutet av 2011 var siffran 4,1 procent. 

Räknat i pengar innebär det att svenskarna betalade sammanlagt mindre i bolåneräntor under 2021 (före skatteavdrag) än 2011, trots att skulden dubblats. 

Andreas Cervenka Aftonbladet 2 april 2022

Andreas Cervenka: Svenskarnas räntesmäll kan bli 100 miljarder (aftonbladet.se)


The new era of inflation has only just begun

 Who Will Buy Bonds the Fed No Longer Wants?

Much as the alleged benefits of quantitative easing resist quantification, it’s impossible to calculate the repercussions of the exit plan in advance.

U.K. hedge fund manager Crispin Odey: “Everybody knows that the West is bankrupt somewhere around interest rates of 3%, so the fight now is how can 0.5% interest rates slow down inflation which is potentially on its way through 10%.”

Marcus Ashworth and Mark Gilbert Bloomberg 8 April


Fed may end up pushing into a recession an economy that, 

for too many years, has been conditioned to live with near-zero rates and ample liquidity injections. 

Stocks after having benefited significantly from Fed-induced conditioning that made valuations a function of TINA (there is no alternative to stocks), FOMO (the fear of missing out on yet another move higher for stocks) and, therefore, BND (buy the dip, regardless of its cause).

Mohamed A. El-Erian Bloomberg 8 april 2022



The alternative to Unconditional surrender by Russia

 The urge to do something should not be so intense that it overpowers analysis as to whether any actions can possibly work.

Eurointelligence addressed the issue in a post simply called It's Complicated 

What we do see instead of a Russian defeat is that Ukraine and the west will eventually cut a dirty deal with Putin.

Mish 8 April 2022


IPCC Adaptation Report: It’s Later Than You Think

 Yves here. While the West is busy fixating on the war in Ukraine, and fossil fuel companies salivate over being allowed to ramp up greenhouse gas emissions, ever-grimmer warnings from the IPCC are being ignored. 

 Yves Smith 8 April 2022 


The international goal to limit global heating to 1.5° Celsius is officially on life support



Lidingö har tagit emot 191 asylsökande – Lidingö Nyheter (lidingonyheter.se)


Rates May Still Need to Rise 300 Basis Points, Fed’s Bullard

Federal Reserve Bank of St. Louis President James Bullard favors raising interest rates sharply 

“I would like the committee to get to 3-3.25% on the policy rate in the second half of this year,

Bullard cited a version of the Taylor Rule that uses inflation, the unemployment rate and an estimate of the neutral interest rate -- a rate neither contractionary nor expansionary -- to come up with his estimate for how high rates should go.

Bloomberg 7 April 2022

Who’s Afraid of Rules-Based Monetary Policy?

John B. Taylor Project Syndicate 16 October 2020

Last week, at least two dozen Chinese real-estate companies whose shares trade in Hong Kong failed to file audited financial results for 2021 by a March 31 deadline

 More than 10 Chinese property firms have defaulted on their dollar debt since last year, and more are likely to follow.

WSJ 7 April 2022


Weaponisation of finance: how the west unleashed ‘shock and awe’ on Russia

The sanctions on Russia’s central bank use the omnipresence of the US dollar to penalise an American adversary

The plan agreed by Yellen and Draghi to freeze a large part of Moscow’s $643bn of foreign currency reserves was something very different: they were effectively declaring financial war on Russia.

FT 6 april 2022


Financial warfare: will there be a backlash against the dollar?

The sanctions freezing Russia’s foreign currency reserves have created an incentive for countries to bypass the US currency

FT 7 April 2022



“Dollar Hegemony Ended Last Wednesday“  

Every country in the world now realizes its reserves and assets in foreign banks are subject to seizure  I’m not arguing that’s bad; I am suggesting it’s new. 

John Mauldin 4 March 2022


The U.S. Treasury Department this week blocked Russia from paying off a bond 

it had due on Monday by denying a sanctions waiver to JPMorgan Chase & Co. to process the transfer. 

Unlike previous defaults, Russia has plenty of money to pay off its debts, with $600 billion of foreign currency reserves and billions of dollars in new revenue each week from sales of oil and gas that continue thanks to exceptions written into sanctions policy. 

But U.S. and European sanctions on Russia’s central bank and finance ministry have hemmed in what it can do with the money.

WSJ 7 April 2022


US Sanction Policy Forces Russia to Default

The Biden administration is hell bent on making Russia default on its US dollar debt payments that are coming due. This is not a good idea.

Essentially, the US is forcing Russia to not pay its bills which means Russia keeps its Euro and dollar reserves.

How Silly is This?

From a practical standpoint, the US should want Russia to diminish its reserves as quickly as possibly. Instead, US policy will force Russia to keep its reserves.

What About Legality?

Assuming Russia defaults, the US will have forced that outcome. How can this possibly be legal?

We are supposed to be a nation of laws. 

Mish 7 April 2022


ECB Could Kick Off With Half-Point Hike

One move of that size would bring the deposit rate to zero, ending eight years of negative borrowing costs

Bloomberg 7 April 2022


Money markets see ECB rate climbing to zero by October

Bloomberg 30 mars 2022


How high do mortgage rates need to climb before it’s time to worry?

Above 5.75%, says UBS.

But don’t expect a 2008-style meltdown in housing even if the interest rate on the benchmark 30-year loan hits that level

MarketWatch 5 April 2022


Home prices in Canada have soared more than 50% over the past two years

Benchmark price of a home $693,000. 

Bloomberg 6 April 2022


Canada ranks as the word's second most overheated market

Sverige på tredje plats före Norge och UK.

Bloomberg 24 Januari 2022


The return of inflation may end up fundamentally altering policy makers’ mind-sets and priorities

That’s the key takeaway from a noteworthy speech by Agustín Carstens, general manager of the Bank for International Settlements.

The financial crisis was rooted in the assumption that markets are largely self-correcting, and individual firms and sectors could collapse without consequences for the broader financial system.

The return of inflation was almost universally unexpected, including by the BIS. 

Second, the return of inflation, while most pronounced in the U.S., is global. 

Whether we are now shifting from a low-inflation environment to a high-inflation environment is the biggest question facing central banks. 

Greg Ip WSJ 6 April 2022 


The return of inflation
Speech by Agustín Carstens, General Manager of the BIS at the International Center for Monetary and Banking Studies, Geneva, 5 April 2022.


Interest rates are still zero and the Fed is still soaking up $120bn of bonds each month 

Ambrose Evans-Pritchard Telegraph 1 July 2021



Is high inflation here to stay?

Globalization, robust policy frameworks, demographic changes, structural factors, and technological advances were instrumental in keeping inflation low until 2020. 

These factors provide clues to questions about whether the current surge in prices is transitory or more long-lasting. Should these forces recede, increases in short-term inflation may become much more persistent.  

Brookings 5 April 2022 




”Börsapan” slog både fondproffsen och index

Vid årsskiftet utmanade Di:s ”börsapa” fjolårets mest framgångsrika Sverigefonder med en slumpmässigt sammansatt portfölj. 

Nu står det klart att apan slagit både index och fondförvaltarna under årets första kvartal.

DI 7 april 2022

Di:s ”börsapa” slår fjolårets bästa Sverigefonder och index


“A blindfolded monkey throwing darts at a newspaper’s financial pages 

could select a portfolio that would do just as well as one carefully selected by experts.”– Burton Malkiel, author of “A Random Walk Down Wall Street” 

Burton Malkiel’s metaphor has been one of the most controversial in Wall Street. It questions an active manager’s ability to outperform the market and reduces outperformance to sheer luck. 

Although the book “A Random Walk Down Wall Street”  was initially published in 1973, this quote still remains one of the most controversial among active asset managers.

 “Any monkey with a dart may possibly earn money in a rising market.”. Well, this stands true, and apparently, even monkeys blindfolded or not can make money in a bull market.


The random walk hypothesis does not mean that companies (and their stock price) rise and fall randomly. 

The existence of persistently successful investors like Warren Buffett suggests that long-term investments based on a business’s fundamentals can pay off, and all investors can ride the slow, steady upward trend of the market.

But the random walk hypothesis would mean that Wall Street types delude themselves when day trading and trying to arbitrage short term fluctuations in a stock’s price. It would mean that daily fluctuations are too random to predict by a stock’s trading history or news announcements. All those day traders — by the random walk idea — are simply confusing the signal for the noise.


Random walk theory proclaims that stocks take a random and unpredictable path that makes all methods of predicting stock prices futile in the long run.

Sharp and Malkiel concluded that, due to the short-term randomness of returns, investors would be better off investing in a passively managed, well-diversified fund. A controversial aspect of Malkiel’s book theorized that "a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts."2

The most well-known practical example of random walk theory occurred in 1988 when the Wall Street Journal sought to test Malkiel's theory by creating the annual Wall Street Journal Dartboard Contest, pitting professional investors against darts for stock-picking supremacy. 

Wall Street Journal staff members played the role of the dart-throwing monkeys.



most investment firms, whether they passively track a benchmark or actively pick stocks, have chosen to echo the weights of China in leading market indexes, no matter what happens.