Saudi oil production rose last month

Saudi production rose last month, meaning demand for their output increased even at the higher prices. They are acting as ‘swing producer’ and let output vary to meet actual demand. By definition, therefore, markets are ‘well supplied’ at their price. To avoid controversy, they deny this policy, but in fact they have no choice as […]

Bank capital NOT a constraint on lending

Here’s the response to Jan’s (Goldman) concern about lost capital constraining lending. Bank capital grows endogenously- it’s not a constraint on lending apart perhaps from the very near term. Banks ‘know’ the cost of capital, and the roe’s they need to make to pay for new capital. For example, if Citi paid 11%, and they […]

Review of Yellen Speech

(from an interoffice email) Karim: Quite a long one, but here goes, with selected excerpts, headings my own. If you don’t want to read the rest, one word describes it, DOVISH…if she was voting next week, she’d vote for 50bps. Warren: Agreed. Though the heightened inflation risks at the end do add some balance. […]

Saudis are Necessarily in Position of Price-Setter

Published November 16, 2007 in the Financial Times From Mr Warren Mosler. Sir, Adrian Binks’ letter “Oil price conspiracy theories get in the way of facts”(November 14) is precisely the response indicated in my letter (November 12); in this case from an energy information service. While Mr Binks’ statements are indeed factual, the institutional structure […]