© 2019 by Henry Thornton. 

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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...

June 26, 2019

‘Investors Are Glum, Even With Stocks at All-Time Highs’ writes Akane Otani in the Wall Street Journal.

This comes from the digital version of the WSJ, which apparently can be available free, though I could not wait for minutes to find out. A complementary article in th...

March 10, 2019

The PM is not amused, but sadly for the rest of us we are in the third income recession since the real 1990/91 recession blighted lives. An income recession is defined as real GDP relative to population, ie GDP relative to population.  In the real recession of  1990/91...

January 19, 2019

Big headline in the Oz yesterday will spook the punters – the government’s label for us ordinary folk. ‘Are we headed towards high noon for democracy?’

Henry Ergas reached back almost 100 years. ‘In 1923, as the Weimar Republic struggled with chaos, the German polymath...

November 17, 2018

Finally, the housing boosters are confronted by realists who say this should be a big downturn.  Also, Henry's lonely position on monetary policy has been supported by none other than Warwick McKibbin, former RBA board member.  And RBA chief Dr Philip Lowe, who said it...

October 29, 2018

Inflation, bloody inflation, October 29

Nice article by David Uren today.  RBA seems a bit obsessive about the definition of 'Inflation'.   Their target is goods and services inflation, actually some elegant variation of CPI inflation.  This is the current fashion among...

October 20, 2018

'The next recession' is the theme of the latest Economist magazine. Today I provide a lean summary but I strongly recommend readers work through the entire supplement. My article last week, written before the Economist arrived, more briefly makes some of the same key p...

October 13, 2018

One of the best forums for discussion of economic policy in Australia is the Economic Outlook conference jointly run by The Oz newspaper and the Melbourne Institute.  Paul Kelly, Editor-at-Large of the Oz always presents a fine overview of issues. Sadly, however, globa...

September 26, 2018

Gender inequality in the news again, 28/9

Gender inequality in the news again, recently on Credlin, today in the OZ, presented in both places by John Slater of the Menzies Research Centre.

'What might McManus make of an industry where top ranking executives are paid in e...

September 8, 2018

Annual rate of growth of over 3 per cent cheers the cockle of the hearts of Australian economists, those who have hearts that is. Result was largely due to strong consumption growth, and most people missed the fact that this growth was accompanied by another fall in ho...

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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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