Bitcoin: might it just save finance?

The great American financial historian Charles Kindleberger used to say that after six decades of meticulous research into the origins of speculative bubbles, he had concluded that there was but a single constant: “There is nothing so disturbing to one’s well-being and judgement as to see a friend get rich.”

Well: if any of you have friends who got in early on Bitcoin – the price of which has quadrupled in the last six months – you must be suffering from a severe loss of mental equilibrium.

Yet it is worth looking past Bitcoin as the latest get-rich-quick scheme, and focusing instead on the deeper drivers of the global fascination with the crypto-currency phenomenon.  For if he were still alive, I am sure that Professor Kindleberger would judge Bitcoin to represent the ground zero at which three of the most important historical forces at work in the world today converge.

I explain what they are, and why Bitcoin might save – rather than displace – the traditional financial system, in an article in The Daily Telegraph published on December 5, 2017.

Leave a comment

Filed under Uncategorized

Inflation: Back to the Future

Another month, another impressively low unemployment number, but another flaccid inflation print.  No wonder the US Federal Reserve is baffled.

Modern macroeconomic theory depends upon the famous Phillips curve, and its pressure cooker model of the inflationary process. Let the economy run too hot, and inflation is sure to follow. Let the pressure drop too low, and wage and price growth will ease.

Yet in the US, unemployment is at multi-year lows but inflation is nowhere in sight. In the UK it is hardly better. In Japan it is even worse.

Across the developed economies, the Phillips curve has gone ignominiously flat. The world’s leading central bankers are scratching their heads.

I explain why older and less fashionable theories of inflation may be a more useful guide to the future in today’s circumstances in an op-ed in the Financial Times published on July 28, 2017.

Leave a comment

Filed under Uncategorized

50 Things…

Forget (if you can) 50 Shades of Grey: Tim Harford has a new book and BBC World Service radio series out exploring 50 Things That Made The Modern Economy.

One of these 50 things is the humble tally stick – a little-known curiosity of medieval monetary history which turns out to have much to teach us about both the nature of modern finance and how we think of it.

The episode – which like all of Tim Harford’s writings and broadcasts is concise, witty, and comes strongly recommended by me – is available online here.

My own book Money: The Unauthorised Biography is kindly mentioned as a source – and you can watch me giving a talk about the topic here if you are interested in following the story a little further.

Leave a comment

Filed under Uncategorized

It’s the young wot won it!

It’s the young wot won it!

All right, I know – Labour didn’t actually win the election. Nevertheless, it certainly felt like a loss for the Tories; and it’s equally certain that young people turned out in large numbers, and that age was one of the only characteristics reliably associated with the way people voted.

What is it that the young want from their representatives – and are the policies on offer from either main party likely to provide it?

I ask these questions in my latest article in the New Statesman.  It is available here.

 

Leave a comment

Filed under Uncategorized

Brexit and the City

The City of London has always (and not accidentally) baffled outsiders.  But Brexit has draped a new question over its age-old mystique: is London’s financial sector the UK’s trump card, or its Achilles’s heel, in the negotiations over leaving the EU?

I explore this question in my latest column in the New Statesman.  It is available here.

Leave a comment

Filed under Uncategorized

Basta!

What a difference four hours makes.

At six in the evening last Sunday, the champagne corks were popping in Brussels.  Norbert Hofer, the candidate of the far-Right Freedom Party, had just conceded defeat in the Austrian presidential election.

By ten o’clock, however, the bubbles were going flat.  The exit polls showed that in Italy, Prime Minister Matteo Renzi was going down to a heavy defeat in the referendum he had called and championed on constitutional change.

Together, these two results revealed a critically important truth about the rise of populism in Europe and its relationship to its troubled economic model.

 

I explain what it is in my latest column in the New Statesman.  It is available here.

Leave a comment

Filed under Uncategorized

Mr Trump goes to Washington

Donald Trump has won the US presidency with a campaign that broke all the rules. Is the stage therefore set for America’s economic policy to take off in an equally unprecedented direction – and should the rest of us be fearful or elated?

These questions cannot yet be answered with any certainty: so far, not much is known about who will take the most important economic posts in the new administration, nor what detailed policies they and the president-elect advocate. But we know enough from Trump’s campaign pledges and the Republican Party’s better-known conventional platform to make some educated guesses.

I make mine in my latest article in the New Statesman.  It is available here.

Leave a comment

Filed under Uncategorized