In a recent speech at Bloomberg’s headquarters in New York, People’s Bank of China Deputy Governor Yi Gang reassured his audience on the level of non-performing loans (NPLs) in the Chinese banking sector.  It had, he said, “pretty much stabilized after a long period of climbing.  That’s a good development in the financial market.” Yi was referring...

“The globalisation of the [Chinese RMB] seems remorseless and unstoppable,” the Economist pronounced in April 2014.  A year later, a research-grant foundation asked me (Benn) to review a proposal to investigate three scenarios for RMB globalization: more, much more, and way more.  I suggested the authors needed to add a fourth one: de-globalization. ...

President Trump and Defense Secretary Mattis are putting unprecedented pressure on European NATO members to boost military spending, threatening to reduce America’s support for the alliance if it is not forthcoming.  Whereas the United States spent 3.6 percent of GDP on defense in 2016, its European allies spent a mere 1.3 percent—well below the 2 percent...

For years, Fed watchers have been getting antsy as unemployment falls toward NAIRU—the Fed’s estimate of the bound below which inflation rises.  But as shown in the graphic above, each time unemployment has threatened to break through NAIRU the Fed has lowered NAIRU rather than raise interest rates.  Why? The answer would appear to be in wage growth. ...

The “law of one price” holds that identical goods should trade for the same price in an efficient market.  But how well does it actually hold internationally? The Economist magazine’s famous Big Mac Index uses the price of McDonald’s Big Macs around the world, expressed in a common currency (U.S. dollars), to measure the extent to which various currencies...

The so-called Exorbitant Privilege of the United States, the power to conjure the world’s primary reserve currency, is reflected in the unique combination of being deeply in debt to the rest of the world (that is, having a massive negative net international investment position, or NIIP) while earning far more income abroad than it pays out in interest...