13 March 2019 FT — Articles to Read

13 March 2019


Question: According to MSN: Money, what is the amount of money that Americans consider life-changing?


Japan’s rising consumer prices fail to lift inflation – Pg. 3

–          Spring has brought the biggest outbreak of consumer price rises in decades.  The increases are clearly linked to intense labour shortages, raising the prospect of an escape from decades of on-and-off deflation

–          The implication for the BoJ is that even signs of a red-hot economy may not suffice to push inflation towards its 2% objective

–          Consumer companies cite two reasons for price rises: distribution and input costs

–          The unemployment rate in Japan is 2.5%


UK Banking – Pg. 7

–          Data about the incident….showed unauthorized lending and evidence of possible money laundering and theft

–          …claims that Lloyds frustrated a police investigation, flouting its duty to report wrongdoing to the authorities

–          …lloyds spent years denying publicly that anything untoward had taken place

–          The convictions have not only forced Lloyds to admit it had been cheated and promise to compensate the affected customers, many of whom were left destitute for years.  They have also raised questions about Lloyds’ compliance with the law and regulations

–          (Prof Note: Read the entire article…WOW!)


Monetary policy has run its course – Pg. 9

–          First, a dramatic and progressive decline in real interest rates on safe assets has occurred, from over 4% in the 1980s to around zero now.

–          Second, this secular fall in real interest rates implies a roughly equivalent fall in the (unobservable) “neutral” or “equilibrium” rate – the rate at which demand matches potentially supply

–          Third, governmetns are not generating this structural weakness in demand.  On the contrary, by expanding social spending, deficits and debt, governments have raised equilibrium long-term real interest rates, other things being equal

–          Finally, changes in the private sector would, on their own, have generated a fall of more than seven percentage points in the equilibrium real rate of interest

–          This analysis has big implications now.  When recession hit, real short-term interest rates need to fall sharply and the yield curve (which shows the rates on bonds of varying maturities_ needs to become strongly upward slowing if monetary policy is to stabilize the economy


Answer: $19,800