Brian Romanchuk
  • Member for 4 years, 9 months
  • Last seen more than a week ago
Why is bartering uncommon in modern countries?
17 votes

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as ...

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Did real incomes drop significantly since the 1950s?
15 votes

The book “The Two Income Trap” (2003) by Elizabeth Warren (recent Democratic presidential candidate) and Amelia Warren Tyagi discussed this. They looked at spending breakdowns in the 1970s and when ...

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Mortgage loans from foreign banks at lower interest rates
14 votes

The low interest rate will be in a different currency. If your domestic currency falls in value, the value of the mortgage in terms of the domestic currency goes up. Entities borrowing in a foreign ...

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Why bankrupt firms continue to operate?
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10 votes

Declaring bankruptcy is a way to prevent creditors from seizing assets and pursuing lawsuits to recover what they are owed in a piecemeal fashion. It forces all parties to wait for a judgement that ...

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If Bitcoin becomes a globally accepted store of value, would it be liable to the same problems that mired the gold standard?
9 votes

If someday this "bitcoin standard" does come to fruition, would it be susceptible to the problems that plagued the gold standard? A bitcoin standard implies that all major countries have ...

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Why doesn't Nintendo fire up the old factories and re-produce *exact* copies of many of their most popular games, controllers and consoles?
8 votes

I am unsure whether this qualifies as economics, but it would be something that might be discussed in business school. Furthermore, the answer is almost entirely engineering. As such, I will do this ...

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What is the mechanism that triggers a stock price change?
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8 votes

I won’t discuss the fundamental reasons why stock prices change (discussed in another answer), but the mechanics (roughly) work like this. (Real world is more complex, since there are multiple ...

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how is new money actually introduced in the United States?
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7 votes

The Treasury auction process is described here: Treasury Direct Bidders can either enter competitive or non-competitive bids. Non-competitive bids are limited in size; the price is set by the ...

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Why does anyone prepare their own food?
6 votes

The weights used in the U.S. CPI (from 2016) are available here: link to BLS weights. Note that these weights are based on consumption data, so that they are meant to align with actual spending ...

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Why is the inverted yield curve a good predictor of impending economic recession?
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6 votes

There is a fair amount of ambiguity to this question. The first question is: what is the yield curve? A fixed income investor may refer to the yields across all maturities as the yield curve, while ...

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Why is a high government debt/GDP bad?
6 votes

Firstly, the use of debt/GDP as the ratio is somewhat arbitrary. One could easily look at debt/government revenue, and it may be a more useful metric. However, the convention to use GDP for scaling ...

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LIBOR rates: Are these monthly or yearly interest rates?
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6 votes

To answer the first part, it's an "annualised" interest rate convention - like all other quoted interest rates. For example, if a one-month money market rates are unchanged at 4%, you would receive ...

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How is money destroyed when banks issue debt?
5 votes

Generally, people do not pay for bonds with currency (e.g. pound notes). They pay with bank deposits. This means that Y has lost a deposit. If the deposit was with X, the deposit is just destroyed; X ...

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What are some of the good textbooks on Modern Monetary Theory and the Development of Monetary Theory?
5 votes

For Modern Monetary Theory, this is a list of textbooks/books that I used in a primer. Macroeconomics, by William Mitchell, L. Randall Wray, and Martin Watts. Red Globe Press, 2019. ISBN: 978-1-137-...

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Could eliminating all taxes and only creating new money theoretically work?
5 votes

The Modern Monetary Theory (MMT) literature discusses the historical experience of issuing “new” currencies. (Typically, the introduction of money in colonies that did not have a simple monetary ...

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Why do banks take deposits if they do not need them to make loans?
5 votes

Banking is confusing, and a lot of explanations apparently make things worse. In this case, ignore whatever you read, and go back to first principles. By definition: balance sheets must balance. ...

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Best way to measure inflation in real time?
5 votes

The highest frequency real time data that I am aware of the Billion Prices Project, which is daily. Link to website. These are prices on the internet, which can be mapped to the US CPI relatively well....

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Significance of circular flow diagram?
5 votes

My field of interest is the government bond markets. Based on a couple of decades of experience, I would argue that it is safe to say that people do not intuitively grasp the circular flow of income ...

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Why is such a high US national debt not resulting in another great depression?
5 votes

You answered question (1) with your own chart. The United States had a “high” debt-to-GDP ratio in World War II - and there was no subsequent depression. (There was a sharp recession as a result of ...

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How does the Federal Reserve unwind the asset purchasing scheme announced in response to the 2020 Coronavirus Pandemic?
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5 votes

The unwind depends upon what the central bank did. If the central bank did a repurchase agreement (“repo”) or lent against assets for a fixed time, the agreement automatically unwinds at the term of ...

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What happens with corporate deposits when a bank goes bankrupt?
4 votes

From a legal perspective, deposits are only protected up to the limit of deposit insurance in the jurisdiction. Beyond that, depositors need to recover their claims in bankruptcy court. However, the ...

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Austrian business cycle
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4 votes

As a disclaimer, I think the Austrian business cycle is incorrect. I will try to explain in a sympathetic fashion. Mises.org has a great deal of resources on Austrian economics, much of it free. From ...

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What is the purpose of the Treasury issuing bonds?
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4 votes

There are some semantic issues here. A more careful statement of the MMT position is that there is no economic reason for the Treasury to issue bonds. However, there is a self-imposed institutional ...

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What's the role of money multiplier in the banking system?
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4 votes

At present, this question resembles three questions. Are people on the internet saying incorrect things about bank money creation? Is money creation by banks fraudulent? Is money creation by banks ...

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Why does the answer not include increased negative unplanned stock investment?
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4 votes

Scenario “C” does not specify “unexpected.” Since greater growth was expected, planned inventory investment would rise to meet higher expected demand.

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Why did coronavirus cause a food shortage?
4 votes

This question is too open-ended, as it does not even specify a country. There are a number of issues that have shown up. These comments are based on my reading of news stories, and arguably not ...

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What is the purpose of monetary expansion during an economic lockdown?
4 votes

(There is a longer answer by @keepAlive that covers economic theory.) From a practical perspective, the effect of rate cuts is debatable. In most countries, central banks have undertaken lending ...

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What would happen if the U.S. "refinanced" its national debt?
4 votes

The Treasury continuously issues new debt, and retires matured issues. (This is called “rolling over debt.”) The Treasury has no right to pay debt off early (“refinance”). The closest thing that can ...

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Isn't recession is when there's an actual decrease and not just a less rapid growth?
4 votes

NOTE: the question has been modified to refer to a global recession (or I missed the global qualifier). This answer is for a national recession. The answer by @Fizz discusses the global case. I will ...

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Why is an inverted yield curve NOT a good predictor for recessions except in the US?
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4 votes

I’m currently researching this topic, and I have not found any single reference that answers this (... besides my work). I will summarise what I have seen. I would point out that from a research ...

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