TYR 22 October 2012 reads

Lessons In Fiat Reality: “Why I Learned To Trade Less And Love The Farm” @ Zerohedge Hedge fund manager Stephen Diggle argues for farmland as the best risk-adjusted invesment for the next decade. Central bank generated inflation, a slowdown in agricultural productivity, a still growing global population and a global trend towards meat consumption in human diet underpin his thesis. The thesis looks solid.

IMF’s epic plan to conjure away debt and dethrone bankers @ The Telegraph Ambrose Evans-Pritchard comments a controversial and revolutionary paper published by the IMF this last august, in which Jaromir Benes and Michael Kumhof defend that: At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher’s claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy. Can not get much more controversial than that.

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