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Author Archives: Dr. Dirk Ehnts
Why Doesn’t IMF Track Inflation for the Eurozone?
IMF Says Inflation Likely to Remain Stable – What About the Eurozone? by Dirk Ehnts, Econoblog101 The latest IMF Survey has this to say: Inflation barely budged during Great Recession despite rising unemployment Independent central banks reduce risk that policies … Continue reading
Posted in Economics, macroeconomics, money
Tagged consumer confidence, Dirk Ehnts, ECB, Economy, Federal Reserve, GDP, inflation, recovery
1 Comment
An Exchange Rate Myth Puzzles the Financial Times
The Chinese yuan recent high against the dollar – a puzzle for the FT? A Very Brief Lesson in Sovereign Currencies 101 by Dirk Ehnts, Econblog 101 The Financial Times reported 12 October 2012: The renminbi has jumped to its … Continue reading
Posted in China, money
Tagged China, currency exchange rates, Dirk Ehnts, sovereign currency, Yuan
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The U.S. China Economic and Security Review Commission 2011 Annual Report to Congress
by Dirk Ehnts The U.S.-China Economic and Security Review Commission released its 2011 Annual Report to Congress on November 16, 2011.Below I discuss some paragraphs where I think the authors are mistaken in their beliefs. China’s foreign currency reserves are … Continue reading
Why Financing is not Saving: Fable of the Breads
by Dirk Ehnts I must admit that it took me some time to understand this: financing is not saving. You may finance all sorts of things, and savings are not a necessary part of this story. The reason why this … Continue reading
Posted in macroeconomics, money
Tagged Dirk Ehnts, Fable of the Bees, fiat, keynes, Mandeville, mmt, modern monetary theory
1 Comment
How Germany Did Not Profit From The Euro
by Dr. Dirk Ehnst
Often in articles on the euro zone crisis I read things like this (written by Michael Pettis):
“In the end this is Germany’s crisis to resolve, not China’s. Germany has benefited tremendously from the euro. Nearly all of its growth in the past decade can be explained by its rising trade surplus which, given monetary policy driven almost exclusively by the needs of slow-growing and consumption-repressed Germany, came at the expense of the rest of Europe.”
I think this is basically right, but on the other hand misleading. Let me point out two things. Continue reading
The Role Of Reserve Ratio Requirements In China – A Brake For Credit Growth?
by Dr. Dirk Ehnst
I have recently presented some joint work with Finn Körner, showing Chinese data at a conference in Berlin. We had the impression that China is using the reserve ratio requirements (RRR) to fight inflation. Increasing the RRRs would lessen room for the banks to expand credits. This would only work if banks care about the RRR. In case they are not constrained by RRRs, changes in the RRR might only have psychological implications, which doesn’t mean that they wouldn’t work. Continue reading
Posted in Business News and Analysis, China, macroeconomics
Tagged banking, China, Dirk Ehnts, economics, inflation, PBOC, reserve requirements
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Nominal GDP Targeting
by Dirk Ehnst
Paul Krugman has embraced nominal GDP targeting. And we are back at the old QE discussion. It is Richard Koo in the red corner, vs Paul Krugman in the blue corner. One is left with the impression that the whole case for a nominal GDP target is based on dubious assumptions and mixed evidence at best. The case for fiscal policy is much more clear-cut. Targeting nominal GDP is OK with me, as Paul Krugman says, why exclude the fiscal side? As it stands, it is a lender’s strike. Investors want to see aggregate demand rise, and not expect that it rises. Only then you get back to talking about credibility and confidence and all those things. Since we are in a situation which resembles the Great Depression, I am not aware that any country escaped from that event by changing expectations. Two things did it: exiting the gold standard (which gave you control over the interest rate and money supply), and ramping up fiscal policy. I wish there were another way. Continue reading
Posted in Economics, macroeconomics
Tagged Dirk Ehnts, fiscal policy, GDP, inflation, interest rates, quantitative easing
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EU: Treating Symptoms, Ignoring Disease
The bail-out plan brings no real news. Europe keeps on fighting the crisis by keeping Greece on financial life support and demanding austerity. There is still no coherent theory to explain how this exactly should work. Continue reading
Posted in Eurozone
Tagged bailout, debt crisis, Dirk Ehnts, EU, Germany, Greece, Ireland, Portugal
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Sovereign Bonds: Japan vs Italy
Paul Krugman wonders why Italian government bond yields are much higher than Japanese bond yields – Dirk Ehnts responds for Econintersect. Continue reading
Posted in International Economic data
Tagged bonds, Dirk Ehnts, Italy, Japan, Krugman
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Estonia’s Manipulated Euro Adoption
Price stability conditions needed for entry to the euro were not met by Estonia unless some extreme manipulations are practiced. Continue reading
The ECB as the Lender of Last Resort
Central Banks as a lender of last resort only can be effective in a liquidity crisis. We now have solvency issues and the ECB is on a questionable course. Continue reading
Posted in Banking News, Eurozone
Tagged ECB, European Central bank, insolvency, liquidity
3 Comments
Euro Zone – Abwarten und Tee trinken?
Resolution of the stress in the Euro zone seems to require currency devaluation, deflation or a combination of the two. None of the solutions is pretty. And none will be quick. Continue reading
(Un)Happiness with Democracy in the Euro Zone
There are variations in satisfaction with democracy in the financial crisis. The spectre of the hard shifts both left and right during the Great Depression is haunting. So far there is much less extreme shifts than in the earlier era. Continue reading
Posted in Government, International Economic data, Uncategorized
Tagged crisis, democracy, dictatorship
3 Comments
The Great Debate©: Schäuble Speaks his Mind – Dirk Ehnts Responds
Those with a trade balance surplus want to solve imbalances by deflating economies with a trade deficit. German Minister of Finance, Wolfgang Schäuble, argues for this while Dierk Ehnts explains why that is destructive to the global economy. Continue reading
Posted in Business News and Analysis, Government, Great Debate©, International Economic data, Trade Data
Tagged China, Germany, trade, trade balance, U.S., Wolfgang Schäuble
5 Comments
Gary Gorton replaces Gordon Gekko at the Fed
It appears that the Fed has regained some intellectual awareness of what is going on. The problem now is that they have to find new ideas how to run monetary policy by whatever instruments they can think of. One outcome is the possibility that they may abandon inflation targeting. Continue reading
Posted in Banking News, Federal Reserve
Tagged Dirk Ehnts, Fed, Gary Gorton, Gordon Gekko, inflation
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