Monthly Archives: July 2014

Low interest rates are a killer

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Part of the Keynesian disease, a big part, is the fetish for low rates of interest. Not everyone now necessarily thinks so. This is from the Bank for International Settlements:

The international body representing central banks is warning its members that record low interest rates are generating conditions for another global financial crisis that may be worse than the first.

In its annual report, the Swiss-based Bank for International Settlements (BIS) expressed serious concern that global share markets had reached new highs and the interest rate premium for many risky loans had fallen.

“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” the bank wrote.

The BIS says the disconnect is largely due to continued monetary stimulus in the form of money printing and record low interest rates by many developed economy central banks.

Why interest rates too low are a problem is hardly obvious and is hardly taught. Very clear from reading the pre-Keynesian literature but who reads any of that now. But the BIS is sending out the clearest possible warning but is it even possible that anyone at the heights of our political establishment would either understand or act on this advice.

With thanks to Julie for sending the link along.

Let’s do the time warp, again

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I don’t know if this has been news in Canada but the front page of the Globe and Mail on Friday read, “Historic Ruling Upholds Land Rights”. The subheading was “Supreme Court decision recongnizes existence of aboriginal title, opening a new era in native relations with government.

The National Post was a bit more to the point: Supreme Court B.C. land-claim ruling has staggering implications for Canadian resource projects. All this will be familiar back home, but from the story:

Written by Chief Justice Beverley McLachlin, the unanimous ruling says that aboriginal title “flows from occupation in the sense of regular and exclusive use of land … Occupation sufficient to ground aboriginal title is not confined to specific sites of settlement, but extends to tracts of land that were regularly used for hunting, fishing or otherwise exploiting resources and over which the group exercised effective control at the time of assertion of European sovereignty.”

It means that economic development proposed by non-aboriginals — such as resource extraction and pipeline activity — requires explicit consent from host First Nations on land where the Supreme Court’s expanded concept of land title is established.

Let justice be done, as they say, though the heavens may fall.