https://www.scmp.com/rss/310395/feed Steve Hanke is a professor of applied economics at Johns Hopkins University. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com Stagnationists have been around for centuries. They have embraced many economic theories about what causes economic stagnation. That’s a situation in which total output, or output per capita, is constant, falling slightly, or rising sluggishly. Stagnation can also be characterised by a situation in which unemployment is chronic and growing. Before we delve into the secular stagnation debate – a debate that has become a hot topic – a few words about current economic developments in the U.S. are... https://www.scmp.com/business/global-economy/article/1895509/secular-stagnation-nothing-more-phoney-rationale-more?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/1895509/secular-stagnation-nothing-more-phoney-rationale-more?utm_source=rss_feed Mon, 28 Dec 2015 05:14:55 +0000 The plunging Shanghai stock market and the sudden reversal in the yuan’s appreciation have caused fears to spread beyond China’s borders that something is wrong with the world’s growth locomotive. There is. The path of an economy’s nominal gross domestic product is determined by the course of its money supply. The trajectory of mainland money supply and private credit tells us why the economy is in trouble. The annual trend rate of money supply (M2) growth is 17.1 per cent. In early 2012, M2 was... https://www.scmp.com/business/money/article/1854038/how-anchoring-chinas-currency-could-deliver-stability-mainland?utm_source=rss_feed https://www.scmp.com/business/money/article/1854038/how-anchoring-chinas-currency-could-deliver-stability-mainland?utm_source=rss_feed Mon, 31 Aug 2015 04:39:40 +0000 The rule of law subjects the State to a fixed set of rules that limits the scope of its coercive powers. Individuals and their property are protected from the arbitrary, ad hoc actions of the State and other individuals. In consequence, individuals can plan their activities within the confines of known, fixed “rules of the game.” This allows people to pursue their personal ends, as long as their actions do not infringe on the broadly-defined property rights of their fellow citizens. When... https://www.scmp.com/comment/insight-opinion/article/1824728/why-rule-law-vital-value-money?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/1824728/why-rule-law-vital-value-money?utm_source=rss_feed Mon, 22 Jun 2015 03:01:46 +0000 As Greece’s economic drama moves towards its final stage, investors are anxious to see how it will end. This is not the first time Greece has been in financial hot water. Following its recognition as a state in 1832, Greece spent most of the remainder of the 19th century under the control of creditors. The pattern started with a default in 1832. In consequence, Greece’s finances were put under French administration. Following Greece’s defeat at the hands of Turkey in 1897, Greece’s fiscal house... https://www.scmp.com/comment/insight-opinion/article/1822749/depth-greek-crisis-best-measured-texas?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/1822749/depth-greek-crisis-best-measured-texas?utm_source=rss_feed Tue, 16 Jun 2015 07:48:58 +0000 We are still in the grip of the Great Recession. Economic growth remains anaemic and below its trend rate in most parts of the world. And what’s more, this state of subdued economic activity has been with us for more than seven years. True to form, central bankers have steadfastly denied any culpability for creating the bubbles that so spectacularly burst during the panic of 2008-09. What’s more, they have repeatedly told us that they have saved us from a Great Depression. To understand why, we... https://www.scmp.com/business/global-economy/article/1752289/restrictive-banking-policies-lead-low-growth?utm_source=rss_feed https://www.scmp.com/business/global-economy/article/1752289/restrictive-banking-policies-lead-low-growth?utm_source=rss_feed Tue, 31 Mar 2015 04:00:54 +0000 The spectre of currency wars rises like a phoenix once again, with a strong US dollar inflaming the currency warriors. These warriors (read mercantilists) are mainly based in the United States and are led by Senator Chuck Schumer, a Democrat from New York, and Senator Lindsey Graham, a Republican from South Carolina. They argue that “cheap” foreign currencies give US trading partners an “unfair” advantage, something worth doing battle over. About the only thing the mercantilists have right is... https://www.scmp.com/business/article/1729840/currency-warriors-rise-again?utm_source=rss_feed https://www.scmp.com/business/article/1729840/currency-warriors-rise-again?utm_source=rss_feed Thu, 05 Mar 2015 00:58:17 +0000 The Russian rouble ended 2014 in bad shape. For most of 2014, Russia faced ever-increasing economic sanctions which set the stage for what was to come late in the year: the collapse of oil prices and the announcement on November 10, 2014 that the rouble would be allowed to float. When it was allowed to do so, the currency sank like a stone. In addition to witnessing most of the rouble’s purchasing power vanish, Russians saw the volatility of their currency explode. Not a pretty picture, but, one... https://www.scmp.com/comment/insight-opinion/article/1692057/indonesia-experience-explains-russian-roubles-rout?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/1692057/indonesia-experience-explains-russian-roubles-rout?utm_source=rss_feed Mon, 26 Jan 2015 19:00:15 +0000 Bankers facing a barrage of new capital requirements, regulations and investigations must feel as if they are targets of a witch hunt. If truth be told, they are. It’s got so bad that the Dutch authorities have forced bankers to swear the following oath: “I swear that I will endeavour to maintain and promote confidence in the financial sector. So help me God.” But beating up on bankers and banks – which produce most of the world’s money – creates a problem because it constrains the growth of... https://www.scmp.com/business/article/1670395/global-banker-witch-hunt-hurts-economic-recovery?utm_source=rss_feed https://www.scmp.com/business/article/1670395/global-banker-witch-hunt-hurts-economic-recovery?utm_source=rss_feed Mon, 29 Dec 2014 03:25:27 +0000 Shortly after the Great Recession started, I wrote a column in December 2008 titled "A Great Depression?" In it, I stressed the findings contained in Robert Higgs' book Depression, War and Cold War: Studies in Political Economy. Higgs concluded that because of regime uncertainty, investors were afraid to commit funds to new projects during the Depression. They simply didn't know what President Franklin Roosevelt and the New Dealers would do next. I warned, back in December 2008, that regime... https://www.scmp.com/business/economy/article/1604115/regime-uncertainty-posing-problem-us-economy?utm_source=rss_feed https://www.scmp.com/business/economy/article/1604115/regime-uncertainty-posing-problem-us-economy?utm_source=rss_feed Mon, 29 Sep 2014 20:30:00 +0000 Misery in macroeconomic terms is measured simply by the sum of a country's unemployment, inflation and bank lending rates, minus the percentage change in real gross domestic product per capita. A higher misery index score reflects higher levels of "misery". The charts show misery index patterns by major regions over the past decade. Several things are worth noting, particularly that even on an aggregate basis, there are two poles of attraction: one centred at a score of 20 and another at... https://www.scmp.com/business/article/1558515/measuring-global-misery-index?utm_source=rss_feed https://www.scmp.com/business/article/1558515/measuring-global-misery-index?utm_source=rss_feed Thu, 24 Jul 2014 17:29:53 +0000 In late April this year, the Bureau of Economic Analysis at the United States Department of Commerce announced that it would start reporting a new data series as part of the country's national income accounts. In addition to gross domestic product, the bureau will start reporting gross output. This announcement went virtually unnoticed and unreported. Yet gross output (GO) represents a significant breakthrough. The classical school of economics prevailed roughly from Adam Smith's Wealth of... https://www.scmp.com/business/article/1543887/time-gdp-go-key-economic-growth-measure?utm_source=rss_feed https://www.scmp.com/business/article/1543887/time-gdp-go-key-economic-growth-measure?utm_source=rss_feed Mon, 30 Jun 2014 20:00:15 +0000 In late April this year, the Bureau of Economic Analysis (BEA) at the US Department of Commerce announced that it would start reporting a new data series as part of the US national income accounts. In addition to gross domestic product (GDP), the BEA will start reporting gross output (GO). This announcement went virtually unnoticed and unreported. Yet GO represents a significant breakthrough. The Classical School of economics prevailed roughly from Adam Smith’s Wealth of Nations time (1776) to... https://www.scmp.com/business/banking-finance/article/1543497/french-economists-long-forgotten-demand-theory-gets-its-due?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/1543497/french-economists-long-forgotten-demand-theory-gets-its-due?utm_source=rss_feed Mon, 30 Jun 2014 05:15:00 +0000 Financial markets have been primed for about a year now to expect higher US interest rates. They haven't arrived yet and probably won't until well into 2016. Don't be fooled into thinking that the tapering of the Federal Reserve's massive asset purchase programme heralds the imminent normalisation of monetary policy. The massive distortions created by the Fed's interest rate manipulations will be with us for far longer than most analysts anticipate. Why? Because the American economy is still in... https://www.scmp.com/business/banking-finance/article/1528409/why-us-interest-rates-arent-going-higher-any-time-soon?utm_source=rss_feed https://www.scmp.com/business/banking-finance/article/1528409/why-us-interest-rates-arent-going-higher-any-time-soon?utm_source=rss_feed Mon, 09 Jun 2014 02:30:15 +0000 The recession grinds on, and as it does, politicians of all stripes are asking: "Just how miserable are our citizens?" The chattering classes offer a variety of opinions, but there is a straightforward way to measure misery. The late Arthur Okun, a distinguished economist who served as chairman of the President's Council of Economic Advisers during president Lyndon Johnson's administration, developed the original misery index for the United States. Okun's index is equal to the sum of the... https://www.scmp.com/business/economy/article/1505375/world-misery-index-puts-venezuela-top-it-actually-worse?utm_source=rss_feed https://www.scmp.com/business/economy/article/1505375/world-misery-index-puts-venezuela-top-it-actually-worse?utm_source=rss_feed Mon, 05 May 2014 16:42:17 +0000 US President Barack Obama set the chattering classes abuzz after his unilateral decision to raise the minimum wage for newly hired federal contract workers. "It's good for the economy, it's good for America," he said in his recent State of the Union address. As the worldwide economic slump drags on, the political drumbeat to either introduce minimum wage laws (read Germany) or increase the minimum in countries where these laws already exist, such as Indonesia, is becoming deafening. Yet the... https://www.scmp.com/business/economy/article/1461593/high-minimum-wage-kills-jobs-and-makes-poor-worse?utm_source=rss_feed https://www.scmp.com/business/economy/article/1461593/high-minimum-wage-kills-jobs-and-makes-poor-worse?utm_source=rss_feed Mon, 31 Mar 2014 03:30:15 +0000 Karl Schiller, West Germany's economics minister between 1966 and 1972, pithily pronounced that "stability is not everything, but without stability, everything is nothing". I agree. And I think the world's great destabiliser is the United States. How could this be? In the post-second world war era, the world has been on a US dollar standard and the US Federal Reserve the world's de facto central bank. But the world's central bank functions, for the most part, as if it were operating in a closed... https://www.scmp.com/business/economy/article/1439141/how-us-dollar-destabilises-world?utm_source=rss_feed https://www.scmp.com/business/economy/article/1439141/how-us-dollar-destabilises-world?utm_source=rss_feed Mon, 03 Mar 2014 02:30:30 +0000 The economic talking-head establishment has declared war on Germany. The opening shots in this battle were fired by none other than the United States Department of the Treasury, which had the audacity to blame Germany for a weak euro-zone recovery in its semi-annual foreign exchange report. The Treasury's criticisms were echoed by International Monetary Fund first deputy managing director David Lipton, in a recent speech in Berlin - a speech so incendiary that the IMF opted to post the "original... https://www.scmp.com/business/economy/article/1378470/economists-launch-blitzkrieg?utm_source=rss_feed https://www.scmp.com/business/economy/article/1378470/economists-launch-blitzkrieg?utm_source=rss_feed Wed, 11 Dec 2013 19:30:00 +0000 The economic talking-head establishment has declared war on Germany. The opening shots in this battle were fired by none other than the United States Treasury Department, which had the audacity to blame Germany for a weak euro zone recovery in its semi-annual foreign exchange report. The Treasury’s criticisms were echoed by the International Monetary Fund’s David Lipton, a first deputy managing director, in a recent speech in Berlin – a speech so incendiary that the IMF opted to post the... https://www.scmp.com/business/economy/article/1378139/whos-blame-slack-euro-zone-not-germany?utm_source=rss_feed https://www.scmp.com/business/economy/article/1378139/whos-blame-slack-euro-zone-not-germany?utm_source=rss_feed Wed, 11 Dec 2013 03:44:18 +0000 The World Bank has been producing its annual "Doing Business" report since 2004 and its 2014 edition ranking Hong Kong second out of 189 economies surveyed, in contrast to mainland China's score of 96, hardly seems controversial. Its rankings of 10 factors reflecting the ease with which entrepreneurs and businesses may conduct economic activity in a given economy offer an unbiased way of looking at business. After all, with so much unreliable data coming out of official government statistics... https://www.scmp.com/business/economy/article/1345595/rankings-rankle?utm_source=rss_feed https://www.scmp.com/business/economy/article/1345595/rankings-rankle?utm_source=rss_feed Fri, 01 Nov 2013 19:13:50 +0000 President Barack Obama has picked Janet Yellen as his nominee to be the next chairman of the United States Federal Reserve. In the months leading up to this announcement, the press dubbed Yellen the Queen of the Doves, pointing to her reluctance to roll back the Fed's quantitative easing programme. But when it comes to money supply, she seems downright hawkish. Traditionally, the dove label has referred to an emphasis on the Fed's mandate to pursue full employment (even at the expense of... https://www.scmp.com/business/economy/article/1339110/dove-or-hawk?utm_source=rss_feed https://www.scmp.com/business/economy/article/1339110/dove-or-hawk?utm_source=rss_feed Thu, 24 Oct 2013 19:23:12 +0000