Malinvestment and Endogenous Money

So much has been written about the endogeneity of money that I thought it was now widely accepted. But recent exchanges have shown me that people STILL aren’t getting it. Most recently, there have been two themes doing the rounds that bother me:

ZIRP and QE are Deflationary

The headline Producer Price Index for November was down 0.1%, in line with the consensus guess of economists. What’s going on? Aren’t QE and ZIRP supposed to be inflationary?

Today’s Wealth Destruction Is Hidden by Government Debt

Still unnoticed by a large part of the population is that we have been living through a period of relative impoverishment. Money has been squandered in welfare spending, bailing out banks or even – as in Europe – of fellow governments. But many people still do not feel the pain.

Five Ways for China to Rebalance

by Michael Pettis No matter how sincere its intentions, what Beijing says it will do over the next few years is meaningful only if its policies are both internally consistent and do not violate external constraints. As I proposed two weeks ago, in this post I will try to lay out as logically as possible …

Real Estate: Not the Big Overinvestment Problem in China

by Michael Pettis Before starting on the subject of debt I wanted to make a quick reference to something sent to me by Charles Horner, a senior fellow at the Hudson Institute. I am glad to say that the overinvestment thesis is much more widely acknowledged today than it was even two or three years …