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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.

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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.

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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.


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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.

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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.

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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.

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Brooke Harrington’s Capital Without Borders

On April 2016, the International Consortium of Investigative Journalists published a vast cache of information leaked from Mossack Fonseca, a little-known corporate law firm based in Panama City. The “Panama Papers” revealed that this firm had for many decades specialised in devising schemes to enable clients from all over the world to hold their financial assets, often anonymously, in jurisdictions outside their home countries. In doing so, they shone a rare light on the secretive industry that is the topic of Brooke Harrington’s valuable new book, Capital Without Borders: the lawyers, accountants, tax advisers and professional trustees who collectively constitute the world of wealth management.

That world is, by definition, difficult to research. Previous studies have focused on the legal and constitutional anomalies represented by the so-called offshore jurisdictions where the corporate structures they build are incorporated: the British Virgin Islands, Mauritius, the Cayman Islands, and so on. What makes Harrington’s book unusual is that she chose instead to investigate the wealth management industry itself. There were no short cuts to doing so. Harrington went undercover as a trainee wealth manager for two years, living and breathing the profession. The result is an insight unlike any other into how wealth management works.

You can read my review of Capital Without Borders for the New Statesman here.

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