© 2019 by Henry Thornton. 

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August 18, 2019

Advice for President Xi and Boris Johnson 

You are advised not to crush residents of Hong Kong. The trouble was due to trying to break an agreement when Britain handed back Hong Kong. Such agreements need to be honoured.

My advice is why not try democracy in Hong Kong, i...

August 10, 2019

The US Fed has eased monetary policy, China has cut its exchange rate, global shares have taken a bath, New Zealand cut cash interest rate by 50 basis point, showing its brave attack on its monetary policy, RBA cuts cash rates 2 times .25, followed by a rest this week....

August 5, 2019

The Economist concludes about Boris Johnson: ‘Britain’s new prime minister promises thrills, but is heading for a serious spill’. The venerable mag these days is pretty leftish and lays out several scenarios, any one of which could unhorse him.

A sample includes:

  • To...

July 27, 2019

Happy 80 st birthday, John Howard. Here’s to a long and enjoyable life in the twilight zone that you are now entering.

The Australian yesterday reminded us all that increasing Australia’s productivity is vital if we are not to slip down the global league tables for the...

July 20, 2019

It is great to find a nice article on economics in The Age. Thanks to Shane Wright for pointing out that there is ‘No easy escape on interest rates’. As he says ‘Central banks in Australia and world-wide have fallen into a cheap money trap’. Read on here.

 Harry Houdini...

July 6, 2019


Two rate cuts in quick succession gets cash interest rates to an alltime 1% low, much lower than in the severe recession of 1990/91. The word ‘panic’ is bandied about.

Not much room for further cuts if it turns out Australia is facing a really bad recession. ‘We...

July 2, 2019

Greetings, gentle readers.  After 48 gruelling hours I am safely home again. Ithaca by car, JFK by plane, LA by plane to Sydney, via a 2 hour wait on tarmac in Brisbane, then 1.5 hours circling within sight of Sydney airport, several more hours in the lounge waiting fo...

June 20, 2019

US Economy

The New York Times reported today in a nice article of the current state of play with US monetary policy. ‘WASHINGTON — Federal Reserve officials left interest rates unchanged at their June meeting but opened the door to a future cut if President Trump’s trad...

June 9, 2019

Now we have unambiguous evidence of a slowing economy.  As Labor’s Jim Chambers puts it, three per capita quarters of falling GDP  is the recession we did not perhaps need to have. In the March quarter, GDP (not GDP per capita) rose by only 0.4 %, 0.2 due to gover...

May 20, 2019

Like many other Australians I was stunned at the performance of the Liberal-National government on Saturday. Not entirely surprised, however. Several weeks ago, I said: ‘Federal Election on, 18 May, and the Thornton family is not conducting its regular election party d...

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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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