What we’re reading (10/15)
“What This Year’s Nobel Economists Can Teach Us About Financial Crises” (John Cochrane, National Review). “It’s time for another idea, generated in the 1930s and analyzed in the 2000s with the kinds of contemporary tools our Nobelists brought forth: Banks should fund risky investments by issuing equity, now extremely liquid. Run-prone securities like deposits should be backed 100 percent by reserves or short-term Treasury securities.”
“Monetary Wisdom From Milton Friedman” (Greg Mankiw’s Blog). “From his famous AEA presidential address, still relevant more than a half century later: ‘The reason for the propensity to overreact seems clear: the failure of monetary authorities to allow for the delay between their actions and the subsequent effects on the economy. They tend to determine their actions by today’s conditions—but their actions will affect the economy only six or nine or twelve or fifteen months later. Hence they feel impelled to step on the brake, or the accelerator, as the case may be, too hard.”
“Meet The Army Of Robots Coming To Fill In For Scarce Workers” (Wall Street Journal). “A new wave of robots is arriving—and, in a world short of workers, business leaders are more eager to welcome them than ever. A combination of hard-pressed employers, technological leaps and improved cost effectiveness has fueled a rapid expansion of the world’s robot army. A half-million industrial robots were installed globally last year, according to data released Thursday by the trade group International Federation of Robotics—an all-time high exceeding the previous record, set in 2018, by 22%.”
“Jamie Dimon Says Expect ‘Other Surprises’ From Choppy Markets After U.K. Pensions Nearly Imploded” (CNBC). “JPMorgan Chase CEO Jamie Dimon says investors should expect more blowups after a crash in U.K. government bonds last month nearly caused the collapse of hundreds of that country’s pension funds. The turmoil, triggered after the value of U.K. gilts nosedived in reaction to fiscal spending announcements, forced the country’s central bank into a series of interventions to prop up its markets. That averted disaster for pension funds using leverage to juice returns, which were said to be within hours of collapse.”
“Growth Push Went ‘Too Far, Too Fast’, Says UK Finance Minister Hunt” (Reuters). “Britain's new finance minister Jeremy Hunt said the government had gone "too far, too fast" in its drive for growth after Prime Minister Liz Truss was forced to fire his predecessor and make U-turns on tax-cutting plans amid market turmoil.”
