© 2019 by Henry Thornton. 

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November 9, 2019

Shocking fires to add to the woes of severe drought in Queensland and New South Wales. Hope the firies, helped if necessary by armed forces, can get it all under control, but it looks like being a long, hot summer.

‘Weak, Risky and Unpopular’ is the headline in the Aus...

November 4, 2019

It has rained in NSW and in some places in decent quantities. Let’s hope there is more to come so the drought is broken. Sky News nicely covered some hilarious behaviour.  The bloke pretending to swim in what looked like a foot of water took the palm for me.

President T...

October 26, 2019

During the Global Crisis of 2007-08, Australian cash interest rates were as low as 3 %.  Now at a time of a slow economy, not yet in dire straits, cash interest rates are near zero, leaving almost no monetary ammunition in case of a real crisis. Worse still, such low i...

October 13, 2019

Can it be true?  Did RBA Chief Dr Phil Lowe train up to illustrate ‘the struggles and inner turmoil of a typical self-funded retiree in the face of the rapid decline in the value of his savings, thanks to the policies of the RBA’.  (Rowan Dean, Weekend AFR, 12-13 Octob...

September 28, 2019

'Rate cut no help' says former Treasurer Peter Costello.  He is supported by former RBA board member, Warwick McKibbin  who adds that the only way further rate cuts would add would be to 'damage confidence'. As a rule, former people rarely enter the contemporary debate...

September 22, 2019

First step in defence of Australia is to make friends with the USA president and its senior politicians. Our Scomo – President Trump’s ‘man of Titanium’ – has done well in his State Dinner and related events in America overnight and will continue to do so in the coming...

September 15, 2019

Everywhere central banks are reducing interest rates.  In some Eurozone nations bond rates are negative, which means (one assumes) that holders of bonds pay dividends to governments for the privilege of owning bonds.  Cash interest rates are near zero, an unprecedented...

September 8, 2019

Stick to ‘tax and spend’ plan says Labor President Wayne Swan. An amazing statement reported on the front page in large print by the Weekend Australian. This seems to Henry a suicide note from the Labor Party, and good luck to them.  The government is not without its p...

August 31, 2019

 It’s been a quiet week.  El Supremo Trump has been quiet, while absorbing China’s suggestion that the trade war should be put into the freezer. Scomo has been to Vietnam and made good friends with our former enemy.  This after facing the Pacific Islanders who were rud...

August 25, 2019

Monetary policy

The world’s central bankers met recently at a place called Jackson’s Hole.  Most sensible people  are worrying about the current rash of interest rate cuts, in many cases to zero. This leaves no room for rate cuts when (as is certain) economies slow and...

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The next financial crisis ... is inevitable

The weekend AFR's article reporting the GFC work to save our financial system was interesting. RBA chief Glenn Steven is reported as saying something like: 'We flooded the system with liquidity'. (An action recommended by Bagehot all those years ago.)

Coincidentally, this week's Economist looks at the global equivalent under the heading 'Has finance been fixed?'

It concludes: 'Policymakers have made the economy safer, but they still have plenty of lessons to learn. And fracturing geopolitics make globalised finance even harder to deal with. A decade after Lehman failed, finance has a worrying amount to fix.'

Deep within the article is a statement I have not heard before.

'The Fed acted as lender of last resort to the world, offering foreigners $1trn of liquidity.

[other sources say total swaps were more like $ 11 trn]   Since then, offshore dollar debts have roughly doubled. In the next crisis, America’s political system is unlikely to let the Fed act as the backstop to this vast system, even after Donald Trump leaves the White House.'

This is a truly scary remark.

Comments welcome. Contact Henry here.



Who is Henry

 Henry Then...

"Henry Thornton (1760-1815) was a banker, M.P., philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His 'Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802)' is an amazing performance. "...it anticipates in some points the analytic developments of a century to come. No other performance of the period will bear comparison with it, though several, among them Ricardo's, met with much greater success at the time as well as later... He was one of those men who see things clearly and who express with unassuming simplicity what they see."

This is the judgment of Joseph Schumpeter, one of the twentieth century's finest economists, in his monumental 'History of Economic Analysis', Allen and Unwin, 1954, p.689.


Henry Now...


Henry Thornton is the nom de plume of a prominent economist. Like his predecessor the modern Henry Thornton has been a banker and an advisor to M.P.s although he is not a politician himself. He is no evangelist but is keenly interested in a wide range of economic, social and political issues... 

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