The Boiling Frog
- Martin Enlund
- 9/26/24
The boiling frog is a simple tale that illustrates the danger of gradual change: if you put a frog in boiling water, it will quickly jump out to escape the heat. But if you place a frog in warm water and gradually increase the temperature, it won’t notice the change and will eventually cook itself. Might the decline in cash usage be construed as an example of this tale?
Central bankers talk the talk, but fail to walk the walk
- Martin Enlund
- 4/8/24
Trust is a topic increasingly being discussed. Whether it is trust in each other, in the media, or in our authorities, trust is generally seen as a cornerstone of a strong and well-functioning society. The topic was also the theme of the World Economic Forum at its annual meeting in Davos earlier this year. Even among central bank economists, the subject is becoming more prevalent. Last year, Agustín Carstens, head of the BIS (“the central bank of central banks”), said that “[w]ith trust, the public will be more willing to accept actions that involve short-term costs in exchange for long-term benefits” and that “trust is vital for policy effectiveness”.
The colour of the cat doesn't matter
- Martin Enlund
- 3/31/24
Jerome Powell, Chairman of the US Federal Reserve, stated during a hearing in March that the central bank has no plans to introduce a central bank digital currency (CBDCs) or consider it necessary at present. He said this even though the material Fed staff presents to Congress suggests otherwise - that CBDCs are described as one of the Fed’s key duties.
Bitcoin and the waterwheel
- Martin Enlund
- 3/31/24
Biologist Stuart Kauffman introduced the concept of the “adjacent possible” in evolutionary biology in 1996. A bacterium cannot suddenly transform into a flamingo; rather, it must rely on small exploratory changes (of the “adjacent possible”) if it is ever to become a beautiful pink flying creature. The same principle applies to human societies, all of which exemplify complex systems. It is indeed challenging to transform shivering cave-dwellers into a space travelers without numerous intermediate steps.
You will have no freedom, and be happy
- Martin Enlund
- 2/5/23
Did you know that the Riksbank, the Swedish central bank, decided last year to burn 2.6 million kronor (Swedish currency) in cash that was found in a deceased person’s estate? That the central bank confiscated half a million kronor from a 95-year-old woman? That bank customers - individuals and businesses - are being de-platformed from banking services after trading in cryptocurrencies, that a major bank closed the account of a Swedish journalist last year, or that British banks are denying their customers the ability to transfer their own money to cryptocurrency exchanges?
CBDCs - utopia, dystopia, or both?
- Martin Enlund
- 11/17/22
“What is going on!?” my three-year-old exlaimed at the breakfast table the other day. And it’s indeed a valid question. Energy and food prices have been skyrocketing, yet another epidemic (monkeypox) has recently appeared to be spreading - at least it was declared a global emergency this past summer, and the world’s central bankers are changing their minds so quickly one suspects that they might soon land on their buttocks (perhaps in butter).
Monetary Poverty Policy
- Martin Enlund
- 6/21/22
Why is inflation so high, and what does the powers that be plan to do about it? Let’s start our attempt at answering this by looking at the supply side, where we have seen massive amounts of negative shocks to the supply side in recent years. In particular since the discovery of the COVID-19 virus.
Well, of course a recession is looming
- Martin Enlund
- 6/17/22
Well, of course a recession is looming.
In contrast to the PhD’s in charge, the US yield curve (i.e. the difference between the 2y yield and the 10y yield on US Treasury bonds) has a fairly long history of being predictive of economic recessions. Most if not all mainstream economists will disagree with this conclusion. That doesn’t mean that you should.