Benefits and risks of a great trade surplus
From time to time, some politicians (who care about their votes) bring up trade imbalances as a problem. You might even take some seriously, if they would take a balanced approach. Instead,…
Quantitative easing
What is Quantitative Easing? Quantitative easing (QE) is a monetary policy tool employed by central banks to stimulate economic activity, particularly during periods of low inflation or economic recession, when traditional methods…
Inflation expectations trap
When you expect rising inflation, so you spend now instead of tomorrow, and other people know that you spent today as to avoid the expected inflation tomorrow, which induces them to spend…
Debt deflation
Imagine all prices were to fall. Your income now buys an extra week worth of widgets, and everyone is better off. But you can only consume so many widgets now, and if…
Structural reforms
Households and firms do not operate in a vacuum. Everyone has to play within a structure of rules, conventions, and their enforcement. Often these rules are not written down when they form…
Choosing a good level of abstraction
Is opening the black box a valuable use of my time? Or is it nuance in the pejorative use of the word. Here is what I learned on choosing a good level…
Economic Knowledge pays off
