Understanding inflation is essential for comprehending the global economy and predicting how changes in inflation are likely to impact economic activity, employment, and asset prices. Inflation, which refers to a general increase in the price of goods and services, results in a reduction in the purchasing power of money over time. Since 2008, the rate […]
Category: Economics
This is the second article in a series about the U.S. Federal Reserve. The Fed has significant influence over much of the U.S. economy, which in turn impacts economic growth and government policies worldwide. Thus, Jeremy Powell, current chairman of the Fed, is arguably the most powerful man in the world — in some ways […]
In recent years, the news has been filled with stories about the impending collapses of the banking system. The Federal Reserve (the Fed) influences U.S. interest rates. Since the U.S. dollar is the global reserve currency, this means that the Fed also influences the level of interest rates around the world. As a result, Fed […]
BRICS – Brazil, Russia, India, China, and South Africa – are the group of five major emerging economies that have been a serious topic of discussion in recent years. These countries have some of the largest populations and have experienced rapid economic growth and increasing global influence over the past decade. These countries have been […]
While CBDCs are still a relatively new concept, they have gained significant attention due to their potential to transform the financial system. What are CBDCs, and how do they work? Central Bank Digital Currencies (CBDCs) are a new form of digital currency that will be issued and backed by central banks. Unlike traditional currencies, which […]
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” ~ John Maynard Keynes Inflation in America is currently running hot, with the official rate hitting 6.2% in October, its highest level since 1990. Some market commentators saw this coming, and those same players predict that higher […]
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10 Flaws with Mainstream Economics
Having taught undergraduate economics for a number of years, I wanted to pen a list of some of the ideas that appear flawed but which form the basic pillars of mainstream economics. Although professional economists are often familiar with the weak points in their discipline, the problem lies in the fact that the ideas are […]
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China’s Role in Africa
In a mere two decades, China has become Africa’s biggest economic partner, surpassing the United States and EU member states. This is driven by China’s increasing participation in the global economy. According to a McKinsey report, China is one of the top economic partners for Africa across five dimensions: trade, level of foreign direct investment […]
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Combatting COVID-19 in Emerging Markets
When the COVID-19 crisis became evident in South Africa in mid-March, the South African government put strict lockdown measures in place, including school closures and store lockdowns which were accompanied by reducing the output of production facilities. The government implemented a number of policies including social distancing, curfews, mandatory facial masks, and stay at home orders. […]
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The Cantillon Effect
Richard Cantillon was a 17th century merchant and banker, as well as arguably the world’s first modern economist. He authored Essai sur la Nature du Commerce en Général (Essay on the Nature of Trade in General), which 19th century English economist William Stanley Jevons later referred to as the “cradle of political economy”. Cantillon’s most famous idea, the […]
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Bitcoin vs Gold
With the US Federal Reserve printing up several trillion dollars of new money in 2020, market commentators have been banging the war drum. Inflation is coming! Some suggest gold as an inflation hedge, and others suggest bitcoin. But before we look at these two potential solutions to the inflation problem, let’s first consider whether inflation […]
I have written multiple financial crises articles in the past but have yet to touch on my home turf, New Zealand. These tumultuous times make for quite the backdrop to finally highlight this nation. New Zealand found itself in quite an enviable position following the GFC due to a number of policy decisions that put […]
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Descent of the Global Monetary System
When I studied economics at Sydney University in the early 2000s and financial economics at Oxford in the early 2010s, I learned pretty much the same thing about money; very little. Money is not really respected in academia, and so most of the attention tends to focus on other topics: the interaction between buyers and […]
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Rising COVID cases, falling economy
As the coronavirus continues to spread, the combined health and economic impacts are likely to be truly massive. Where did it all go wrong? Since this is not a medical sciences blog, we will leave the health related issues to the relevant experts. However, that leaves plenty of topics to examine on the economic front. […]
Cryptocurrency has often been a divisive and controversial topic in the world of finance and economics. Some notable figures have written it off, claiming it to be nothing more than a complex Ponzi scheme, while others are insistent that cryptocurrencies are the future of the monetary system. Regardless of which party is correct, the near […]
I’ve mostly looked at demand driven components of health economics in previous articles. Now though, I will look at an aspect of health economics that flips the equation on its head. Organ donation has a fairly steadily increasing rate of demand, but the rate of organ donations has not risen in tandem. Therefore, there is […]
Simple linear regression is an important tool for understanding relationships between quantitative data, but it has its limitations. One obvious deficiency is the constraint of having only one independent variable, limiting models to one factor, such as the effect of the systematic risk of a stock on its expected returns. Real relationships are often much more […]
In part one of my series about health economics I gave an overview of the drivers of demand in the medical care market. In this post, I will go beyond a general interpretation of demand and give you an in-depth overview of a specific and expensive issue: the rising cost of public liability insurance. Public […]
Statistical inference helps us understand the data, and hypothesis testing helps us understand if the data is different from another set of data. These techniques are important when exploring data sets, as they help guide our analysis. However, these techniques are not enough. Most times, we are looking to understand the relationship between two sets of […]
This post is the first in a series of articles exploring concepts of one of the lesser known fields of economic study – health economics. When one thinks of economics their mind usually turns to concepts of trade, resource allocation, and other similarly business-related concepts. However, ideas of supply and demand have gone beyond traditional […]
As a generalist consultant you are unlikely to need any statistics for day-to-day project work (there are specialists to call on for situations where it’s needed). The workaday numerical tool is Excel which, with the “Analysis Toolpak”, gives most consultants more than enough of what they need. However, you are likely to build a lot […]
My friends and I walked out of the Big Short several years ago feeling like a group of global financial crisis experts. We were shocked, how could no one have seen the collapse coming? It all seemed so clear. Many an economics and finance course later, I see that the layers of complexities to the […]
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The age old tale of financial crises
The story of the 2008 financial crisis begins somewhere shortly after the death of Jesus Christ himself. Not 33 years after Christ’s passing did Emperor Tiberius of the Roman Empire have to rescue his constituents’ financial sanctity through the age-old process of quantitative easing. The Roman Empire was in shambles following a severe economic downturn […]
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10 Amazing Examples of Nudge Theory
Nudge Theory, first formulated by the Nobel Laureate Richard Thaler, is part of a relatively new field called behavioral economics, which believes that subtle conditioning and small environmental changes can actually have a profound impact on the behavior of individuals and groups. This theory, and the practical repercussions of it, have been taken to heart […]
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Lest We Forget
This past week we saw violent protests in Charlottesville, USA. They deserve our attention. A rally called “Unite the Right” had formed to prevent a statue of Robert E. Lee from being torn down. Lee was a General during the American Civil War who fought for the Confederacy, a collection of southern states that supported […]
Blockchain, the underlying technology used by Bitcoin, has implications that reach far beyond the financial services community and banks. This is where new development and implementation may have focussed so far. However, as the technology and its implications become better understood, it will rapidly expand to new industries and verticals. Blockchain systems operate as a […]
Merry Christmas! Joyeux Noël! Sheng Dan Kuai Le! (圣诞快乐!) Wishing you an enjoyable day, and a happy holiday season spent with good people, surplus amounts of food and drinks, and a large number of gifts! One idea that is firmly associated with Christmas is gift giving. This is a central part of the Christian tradition, […]
Frankfurt is one of the oldest business centres in the world. From at least Roman times, the low-lying city, bifurcated by the welcoming River Main, has been a hotspot for global endeavours that changed the nature of many industries – including but not limited to banking. Mayer Rothschild, a courtier to the German king of […]
Six months ago I predicted that Trump would most likely win the US election. The official opinion polls told the opposite story, that Hillary was the preferred candidate, but my reading of the situation was different. It was mid-July, and I was attending a talk given by Elizabeth Economy, Director for Asia Studies at the […]
Since 1972, Britain has been part of the European continent. I remember the opening very well. I was a kid, living in London. The new openness meant we could afford oranges from Spain. Every week, an old French farmer would also peddle through London with strings of onions hanging from his bicycle. I thought the […]
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Levered Monkeys
As Oxford’s poet-philosopher Ludovic Phalippou once put it, “we are all just levered monkeys!” What did Phalippou mean by this comment? Well, as I explained to my corporate finance students this week, the use of debt by companies is called “financial leverage”. That is, debt acts like a lever which can magnify the size of both gains […]
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Capital For You and Me
This past Friday marked the 40th anniversary of the passing of Mao Zedong, the founding father of the People’s Republic of China. Most notable here in China was the absence of discussion or commentary. This is perhaps understandable since it is Chinese government policy to celebrate past leaders’ birthdays rather than the anniversary of their […]
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Cheap money, what is it good for?
Cheap money should help to stimulate the world economy, but is it working? Following the leave campaign winning the Brexit referendum, which will see the UK leave the EU two years after the Prime Minister notifies the European Council of its intention to do so, there was much fear about what this would mean for the strength of […]
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End of the Republic
If I were a betting man, at this stage my money would be on Trump to win the American presidential election. This is not an endorsement, or a show of support of any kind. I think a Trump victory would be a horrible outcome. So, why do I think Trump has more than a 50/50 chance? And what […]
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Harnessing Creative Energy
China comes up for criticism in modern times for stealing software technology from the West. Software is a language (or a set of languages) which can be used to make computer hardware do marvelous things, and because software is easy to copy (or reverse engineer), it’s easy to steal. But if there is software stealing going on in China and elsewhere, […]
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Efficiency vs Fairness
On Thursday 23rd of June, the British people voted by a majority of 52% to 48% to leave the EU. This is a monumental event, and it is worth trying to piece together what happened, and what some of the implications might be. The voter turnout was strong with around 72% of voters casting a ballot. However, the results […]
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Taking Profit
I am currently living in Beijing, lecturing strategy and finance courses to undergraduates. One observation I’ve made is that the people here are good at identifying opportunities for profit. And I use the word profit not in a financial sense, but with the broader meaning of the French verb profiter, which means “to make the most advantage of”. This […]
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In Search Of Returns
The wonderful thing about financial markets is that they help to get funds from people who have them to people who have a productive use for them. In other words, they help to make things more efficient by enabling money to be put to good use. The problem with financial markets, though, is that more […]
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Scarcity or Abundance
Not enough, or more than you need. It’s generally one, or the other. Are you working for the money, with grand plans for what you will do when you one day finally have “enough”? Or are you just happy to be here, every day, because you can’t believe they are paying you to do what […]
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The sky is falling
Back in September last year, the Wall Street Journal wrote an article about how low oil prices could lead to a global recession. An article by the Guardian last Friday repeated the sentiment with a suggestion that low oil prices could hurt the stock market. Look out, Chicken Little, the sky is falling! The doom and gloom argument appears […]
In many areas of today’s economy, numerous jobs go unfilled due to a lack of people with the proper qualifications. However, as this dilemma continues, more and more employers are starting to re-examine the typical business thinking that aptitude must always take the lead over attitude when it comes to new hires. As Human Resource […]
There are different kinds of capital that individuals and organisations use to pursue their goals and deliver value. Employees usually trade human capital (their individual talent, skills, knowledge and efforts) and intellectual capital (their thoughts and ideas) in exchange for financial capital (money). Effort, ideas and money are not, however, the only forms of capital that […]
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Proven vs Actionable
You don’t always need proof that a threat exists in order to take action. You don’t need to know everything, you just need to know enough to get moving. In behavioural economics the common human bias towards doing nothing is called the “status quo bias”. Faced with a difficult decision in the midst of uncertainty, […]
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Trust Based Business
I recently bought a coffee from Quarter Horse Coffee, my new favorite Oxford coffee house. Not having exactly the right change, I asked the friendly bearded hipster behind the counter whether they accept card payments. He told me that they accept payment by card, but they charge a 20P surcharge for amounts under five pounds. I […]
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Immediacy Bias
(Source: Flickr) Whether it be pictures of cats on the Internet, a phone call from a friend asking you to come to the movies tonight, or a university assignment due tomorrow morning, we all suffer from it. We tend to perceive immediate emotions much more intensely when making decisions about what we should do right […]
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You, Humans and Life
When a baby is born it knows nothing about the world. So little, in fact, that it has no concept of self. The baby, its mother, and the world are one. As the baby grows it discovers the world for the first time. Hands, feet, pee, poop, mumma and dada. The baby’s mother whispers “you […]
Phil Libin, CEO of Evernote, doesn’t like the word “cannibalisation” because it’s zero sum. It implies that you’re the guy doing the eating or being eaten. He says being in business is not like playing a sport or being in warfare. It’s more like music, it’s more like art. It’s not a zero sum game. […]
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Free Services vs Privacy Online
Big data (combined with data analytics and machine learning) offers exciting opportunities to decipher patterns and solve complex problems more quickly and cheaply than ever before, but it also has the potential to infringe the privacy of individual users. Looking at a company like Evernote, which uses a freemium business model to help tens of millions of people be more productive […]
(Source: Flickr) When can you consider something that you have to be an asset? This may sound like a funny question, but it is particularly important for the success of organisations and your success as an individual. The answer turns out to be largely a matter of perspective. If you are an accountant, then your goal is to categorise resources into groups: assets, liabilities, and […]
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Impending Grexit?
(Source: Flickr) We have seen this week some heated negotiations between Greece and its European lenders. Here are some of the issues facing Greece at the moment: Technical default: Greece is due to repay €1.6bn (£1.2bn) to the IMF at the end of June. On Wednesday, Athens announced that it is stony broke and will not be able to pay […]