Conservative Economics

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Subject: Currencies

Money, serving as a medium of exchange, that may be made reference to in securities transactions and financial product terms.

US Trade Deficit

America’s best unemployment insurance

Unemployed men hop train (Canada, 1933)

When the Sage of Omaha, Warren Buffet, fretted last year that the trade deficit signified that foreigners were taking over the United States, he echoed common misunderstandings about the excess of US imports over exports and the growing volume of dollar assets held by the rest of the world.

The nice thing about the US trade deficit is that it represents the exchange of foreign goods and services for dollars, not foreign money.

World Economy

What is ‘international liquidity’?

Hotel Mount Washington, Bretton Woods, 1944

It used to be that the term ‘international liquidity’ meant the relative amount of resources available to a nation’s monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation’s currency held by foreigners.

After Bretton Woods and the advent of the dollar-gold exchange standard, liquidity came to mean access to dollars, either held as reserves or as credit lines, or the SDR system maintained by the International Monetary Fund.

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Featured articles on inside pages

Stock buybacks

WSJ exposes the 9/11 caper

In a major exposé of misused executive options, the Wall Street Journal ran a front page article, reporting that as stocks sank after the the 9/11 attacks, scores of companies rushed to issue options to top officials. Some executives reaped millions.
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Securities Analysis

Truth, Fact, Opinion

In security analysis, it is important to get the facts, before forming an opinion. Effective collaborative research calls for rigorous separation of the fact-gathering from the decision-making stages of the process. More ...

US Politics

President Obama and the Lincoln Bible

The Crash of 2008 put Barack Obama in the Oval Office and was the culmination of two secular financial trends. Americans now have an untested, inexperienced leader, with strange radical friends and a leftist deficit spending agenda. More ...

US equities

GAO pooh-poohs a Boomer bust

In 2006, the GAO issued a report saying that the retirement of the Baby Boomers should not have a negative effect on stock prices. This article reviews the GAO reasoning and concludes that the conclusion is not credible. More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Signs of US losing its groove?

Thirty years ago, US income from abroad was more than double the amount of income that the US paid to the rest of the world. This year, or the next, this foreign income surplus may disappear forever. Is the US 'losing its groove'? More ...

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2011-01-05 09:43