In its original form, the equation FV = PV (1 + i) assumes nothing. It merely takes the facts of the transaction – $100 lent at 4% for one year, in our example – and calculates how much money is due to the end of the term. Of course, the lender, like all lenders, assumed …
An Excerpt from Vol. 4: A Primer on Bond Mathematics (2 of 2) Read More »
I am busy with Vol. 4 of Speculative Capital. Its subject keeps expanding because I digress. Each digression then proves to be the main subject. Here is a short excerpt on “bond mathematics” from the manuscript, with only minor editing for the blog, so you would see what I mean. *** Consider a borrower who …
An Excerpt from Vol. 4: A Primer on Bond Mathematics (1 of 2) Read More »
The “Bond Fears” in today’s Financial Times could be the epilogue to my 3-part series on the international monetary relations. (I do not provide a link because you need to subscribe to FT to read this particular article.) After pointing out that the yield on 10-year treasuries had gone up 26 basis points in two …
The Interest Rate Problem of the Federal Reserve Read More »
Hegel famously said that history repeats itself. Marx equally famously said that Hegel should have added: first time as a tragedy, the second time as a farce. Marx should have been more precise. History does not repeat itself only twice. It constantly “repeats” itself, each time at a qualitatively higher plane, corresponding to a progressively …
An Analysis of International Monetary Relations – Part 3: Where We Are Going Read More »
Today, the Center for Public Integrity, a journalistic watchdog, published the results of its investigation into the causes of the subprime mortgage meltdown which precipitated the larger meltdown. The Financial Times headline summed up the gist of the report: Few escape blame over subprime explosion. The paper went on to say, quoting the report, that …
“Of our time” description, when used for a poet, a writer or a philosopher, could have two distinct and opposite meanings. One is that of a fool who struts and frets his hour upon the stage but is nevertheless useful, the way an inanimate archeological object is useful, because in deciphering what he uncomprehendingly recorded …
These days, references to the Great Depression and the Bretton Woods system abound. Analogy with the past crises is supposed to shed light on the present. In analogy, we seek to establish sameness between two disparate objects. “Bone to dogs is like meat to cats” highlights the universal need of animals for food. The analogy …
An Analysis of International Monetary Relations – Part 2: Where We Are Read More »
David Kellermann, the acting CFO of Freddie Mac, was found dead of apparent suicide. He was 41. Alas, poor David Kellermann. I knew him not. The news reports said that he was a “hard worker”, “a good guy”, with “extraordinary work ethic” and “integrity”. His apparent suicide in a weird way confirms that; imagine a …
No economic event in the 20th century had a greater impact on world affairs than the Bretton Woods Agreement. The regime of fixed exchange-rates that it established and the collapse of that system after 25 years under the strain of its internal contradictions are both watershed events in the history of the world in general …
An Analysis of International Monetary Relations – Part 1: How We Got Here Read More »
The Financial Times reported that the chairman of the Federal Reserve Board is now concerned about the “use of tri-party repo and the systemic risks in this crucial, but little understood area of finance.” “Recent experience demonstrates the need for additional measures to enhance the resilience of these markets, particularly as large borrowers have experienced …