Cassel’s main argument was that the mismanagement of the gold standard is what led to the severe depression of the 1930s. Just as Cassel argued that the mismanagement of gold led to the depression of the 1930s I’d argue that the mismanagement of the US dollar has already triggered the depression we are living in. Please click here to continue reading.
Karl Gustav Cassel, who is known for his notable contributions to the theory of Purchasing Power Parity, is also one of the only economist who rightly predicted the depression that we all now famously know as The Great Depression. Please click here to continue reading.
In a paper published, in early 2015, by the Bank for International Settlements the authors successfully demonstrate that, while global banks are deleveraging, and reducing their US dollar credit to non-US borrowers, the Federal Reserve’s attempts at compressing the term premium, via its portfolio rebalancing channel, has pushed global bond investors away from low yielding US Treasuries and into higher yielding US dollar bonds issued by non-financials outside the US, more than offsetting the slowing credit growth of banks. Please click here to continue reading.