Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

076: Greg Ip on Foolproofing the Economy and Why Stability is Destabilizing

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076: Greg Ip on Foolproofing the Economy and Why Stability is Destabilizing

Greg Ip is one of the best-known economics journalists in the US.Greg Ip Economic Rockstar

He is currently chief economics commentator of The Wall Street Journal and writes about U.S. and global economic developments and policy each week in the Capital Account column and on Real Time Economics, the Wall Street Journal’s economics blog.

From 2008 to January 2015, he was U.S. Economics Editor of The Economist magazine. Greg is the author of Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe as well as author of The Little Book of Economics: How the Economy Works in the Real World.

“Stability is Destabilising”- Hyman Minsky

Economics:

In this episode, Greg mentions and discusses: junk bonds, capitalism, investment, growth, financial crisis, bank deposits, loans, currency, gold, exchange rates, money market funds, bank run, exchange traded funds, recessions, unintended consequences and the Paradox of Thrift.

Economists:

In this episode, Greg mentions and discusses: Paul Volcker, Hyman Minsky, Gary Gorton, Joseph Schumpeter and John Maynard Keynes.

 

In this episode you will learn:

  • about the theme behind Greg Ip’s latest book Foolproof.

  • when the pursuit of safety lead us into danger?

  • what forest fires have to do with Wall Street.

  • about the relationship between the financial market (and its potential for a crisis) and ecological systems.

  • the way we publicly and privately try to cope with risk and danger and how those choices can create unintended consequences.

  • about the Fallacy of Composition: Things you do that are safe actually end up making other people less safe.
  • what American Football can teach us about the Fallacy of Composition.
  • how making American Football safe with the introduction of helmets has created increased risk taking and more injuries.
  • what past economic and financial crises have in common.
  • how the financial system succeeded too well in making people feel their money was safe.
  • how banking regulations and capital controls introduced after the financial crisis will create risks in other parts of the economy and financial markets.

  • if savings is actually bad for the economy.

  • about Keynes’ Paradox of Thrift and how savings forces others to borrow.

  • whether exchange traded funds (ETFs) will be the next financial catastrophe.
  • about the Peltzman Effect on anti-lock brakes.

  • how Paul Volcker‘s regulation of capital flows caused the growth of shadow banking.

  • how The Great Moderation changed attitudes about debt and how relaxed laws allowed high-risk households to borrow for mortgages.

  • about Gary Gorton of Yale and his explanation for a financial crisis.
  • how being present in danger can remind ourselves of the things that aren’t always safe.
  • whether the finance industry could take the lessons learned about safety and regulation in the airline industry.
  • why the Lehman Brothers collapse surprised many due to the US government indicating to the market that banks and mortgage companies would be bailed out.
  • how German savers were much to blame for the euro crisis than their European counterparts that borrowed.
  • why we continue to build cities near water which can cause devastation in the form of floods and tidal waves.
  • why The Netherlands, with their ‘Room For The River’ programme, is destroying dykes and allowing their lands to flood.
  • why Greg Ip is worried about the situation in China and how the stability that the government is trying to maintain will eventually lead to instability.

“If banks are limited from lending then lending activity will migrate elsewhere. We see this happening at exchange traded funds and other shadowy parts of the financial system. And you worry that risks are starting to grow there.” – Greg IP

“One way to protect ourselves against disaster is to make use of the presence of danger to remind ourselves that things aren’t always safe and to take steps that keep us safe”.  – Greg IP

“What I worry about more is that the pendulum has swung too far against risk taking. And the risks that are been taken are being channeled too far in the direction of financial risk and not real economy risk – people starting new businesses or buying new homes.” – Greg Ip

“What I worry about China is that they have leadership that is worried about political and economic stability.”

Where to Find Greg Ip:

Books:

Other Interesting Links:

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069: Diane Coyle on GDP, Its Shortcomings and Alternative Measures

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069: Diane Coyle on GDP, Its Shortcomings and Alternative Measures

Diane Coyle is Professor of Economics at the University of Manchester and runs the consultancy Enlightenment Economics.diane coyle

Diane is Vice-Chair of the BBC Trust and was a member of the Migration Advisory Committee and a member of the Competition Commission. She is also a visiting research associate at the University of Oxford’s Smith School of Enterprise and the Environment. 

Diane specialises in competition analysis and the economics of new technologies and globalisation.

Diane is the author of several books, including GDP: A Brief But Affectionate History, The Economics of Enough, The Soulful Science, Sex, Drugs and Economics and Paradoxes of Prosperity.

She was previously Economics Editor of The Independent and before that worked at the Treasury and in the private sector as an economist.

Diane has a PhD from Harvard and was awarded the OBE in January 2009.

Using happiness is an excuse for inactivity – Diane Coyle

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Influencers:

Peter Sinclair (University of Birmingham) and Ben Friedman (Harvard).

Economists:

In this interview, Diane mentions: Adam Smith, John Stuart Mill, Sir Charles Bean, Daron Acemoglu, Thomas Piketty, John McMillan, Tim Harford, Peter Sinclair (University of Birmingham) and Ben Friedman (Harvard).

Economics:

In this interview, Diane mentions: GDP, budget deficit, fiscal policy, monetary policy, interest rates, growth, employment, unemployment, Human Development Index, Gross National Happiness Index, happiness, hysteresis, inequality, financial markets, derivatives and leverage.

In this episode you will learn:

  • what is GDP and how it is measured.
  • the complications with understanding the meaning of GDP.
  • the historical origins of GDP and why it is used to measure our economy.
  • the complications in measuring GDP.
  • how GDP data is still collected in such an ‘old-fashioned’ way and the new methods to collecting data.
  • about the uncertainty and margin of error in GDP statistics.
  • why it is wrong to make fiscal policy, monetary policy and interest rate decisions on GDP statistics.
  • what proxy variables were used to measure economic activity before GDP was introduced.
  • why we should re-think the meaning of the economy.
  • why GDP today doesn’t work in its present form and if there is an alternative.
  • how countries can use GDP and GNP measures to portray different economic conditions.
  • the difference between GDP and GNP.
  • the concerning use of ‘administrative statistics’ by countries to falsify economic growth.
  • whether it’s correct to include illegal drug activity and prostitution in measuring GDP.
  • why measuring happiness and well-being should be of little importance when measuring GDP.
  • why Diane is sceptical about the Happiness Index.
  • the reason why economics was coined by Thomas Carlyle as the the ‘dismal science’.
  • who is to blame for the financial crisis of 2007/2008.
  • about the UK’s over-reliance on the financial sector and its role in measuring GDP.
  • about the uncertainty that would exist if the UK withdrew from the EU.
  • the policy factors required to create a sustainable society and a stable government.

 

It’s just so easy now to download data from the internet and run through statistical packages and get some results. And I think a lot of professional economists are guilty of not rethinking about their data enough – Diane Coyle

You cannot think about the economy mechanically – Diane Coyle

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The way we measure GDP now is really closely linked to Keynesian macroeconomic theory and a very famous definition he gave of  what total output in the economy is, that it’s consumer spending, government spending, investment spending and the balance of payments – Diane Coyle

There is no benefit for society in a lot of what happens in the financial markets – Diane Coyle

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Resources:

Favorite Internet Resource:

  • Twitter

If you pick the right people to follow it acts as a brilliant editor of all the interesting information that you might want to know and it’s like having a personalised newspaper – Diane Coyle

Books:

 

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061: Roger Whitney on the Myths to Retirement Planning and the Lazy Mans Method to Saving

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061: Roger Whitney on the Myths to Retirement Planning and the Lazy Mans Method to Saving

Roger Whitney began his career as a Financial Advisor in 1991 and witnessed first-hand the rise and fall of the ‘New roger whitneyEconomy’ and the Dot-com bubble that ended in 2000.

This experience made Roger realise that financial management is about people, not money, and that they are served best by advisors that are fiduciaries to their clients and have the heart of a teacher.

In 2003 Roger left, at the time, the largest private bank in the world and co-founded WWK Wealth Advisors. Today, they are a firm of 14 professionals managing over $200 million in assets.

Roger is a lifelong learner and holds many degrees and certifications. He has a B.A. in International Relations, is a Certified Investment Management Analyst and a Certified Private Wealth Advisor.

Roger also teaches courses on Wealth Management, Retirement Planning and Employee Benefits.

Roger’s blog, The Retirement Answer Man, was recently awarded the 2015 PLUTUS award for the best Retirement focused blog and podcast. You can check it out at rogerwhitney.com as well as on iTunes.

Advice:

“Make sure you make the most of the only life you have. Retirement is part of that but don’t miss where you’re at today” – Roger Whitney

Economics/Finance:

In this interview, Roger mentions: the Permanent Income Hypothesis, retirement, retirement planning, pensions, social security, demographics, baby boomers, capitalism, growth, IRAs, Roth IRAs, 401k, quantitative easing, real estate, cash flow, investment, private placement memorandum and capital rates.

Economists:

In this interview, Roger mentions: Milton Freidman

In this episode you will learn:

  • the problem with budgeting.
  • develop one habit to control your budgeting needs and requirements.
  • lazy man’s method to saving.
  • four myths that could ruin your retirement and how to avoid them.
  • the Permanent Income Hypothesis.
  • how Roger got his cashflow in place when setting up his business.
  • that cutting your cable bill won’t create the opportunity to generate income.
  • the biggest regrets that people have when they retire.
  • the 3 Phases of Retirement.
  • whether we have a pension time bomb or if capitalism will reduce the risks.
  • what are IRAs and Roth IRAs work.
  • the possible scenario for the next generation to fund a bankrupt social security in the US.

Quotes by Roger in Episode 61 0f the Economic Rockstar podcast:

The bigger opportunity is how to generate extra income – Roger Whitney

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“I know quantitative easing. I know how bad all this stuff might be. At the end of the day, we just have to have out own house in order. And if we have our own house in order, we can insulate ourselves from a lot of things. That’s the only way I know how to get through things.” – Roger Whitney

4 Myths that Could Ruin Your Retirement and How to Avoid Them:

  1. Retirement is not a number: How much do I need to save for retirement?
  2. You’re spending is going to be consistent throughout your retirement.
  3. Retirement means not working.
  4. Having a financial plan is enough.

3 Phases of Retirement:

  1. The Go-Go Years
  2. The Slow-Go Years
  3. The No-Go Years

Books:

  • QBQ! the Question Behind the Question: Practicing Personal Accountability at Work and in Life by John G. Miller

  • The How of Happiness: A New Approach to Getting the Life You Want by Sonja Lyubomirsky

Podcasts:

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053: Helena Norberg-Hodge on Localisation, Trade Treaties and the Economics of Happiness

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053: Helena Norberg-Hodge on Localisation, Trade Treaties and the Economics of Happiness

Helena Norberg-Hodge is the founder and director of Local Futures. A pioneer of the ‘new economy’ movement, she has been promoting an economics of personal, social and ecological well-being for more than 30 years.Helena Norberg Hodge

Helena is the producer and co-director of the award-winning documentary The Economics of Happiness, and is the author of Ancient Futures: Learning from Ladakh, described as “an inspirational classic”.

Helena has given public lectures in seven languages, and has appeared in broadcast, print, and online media worldwide.

She was honored with the Right Livelihood Award (or ‘Alternative Nobel Prize’) for her groundbreaking work in Ladakh, and received the 2012 Goi Peace Prize for contributing to “the revitalization of cultural and biological diversity, and the strengthening of local communities and economies worldwide”.

Economics:

In this interview, Helena mentions: localisation, globalisation, deregulation, finance, banking, money, real economy, price, demand, subsidies, tax, business alliances, lobbying, competition, trade treaties, unemployment, poverty, natural environment, growth, climate, energy consumption, comparative advantage and GDP.

Economists:

In this interview, Helena mentions: Alex Tabarrok, Adam Smith, David Riccardo,

In this episode you will learn:

  • how and why Helena decided to advocate for and promote localisation.
  • about Ladakh and how it was removed from the rest of the world.
  • how the global market was very destructive to the local market in Ladakh.
  • how globalisation destroyed the livelihood of farms and local businesses and created unemployment.
  • how the happiness and high self-esteem among the people of Ladakh was destroyed after a decade of economic development.
  • why extreme tensions between buddhists and muslims erupted after living in peace for over 500 years in Ladakh.
  • about Ladakh, where the Dalai Lama is the spiritual head.
  • how Ladakh has become a case study on how a local economy has been quickly affected by globalisation.
  • about the phenomenal work Helena is doing to highlight the changing lives and economy of Ladakh and other regions.
  • about the true meaning of the real economy and how cheap money and speculation is destroying it.
  • why the earth is so precious and must be protected before we see irreversible and horrific damage.
  • about the terrific work being undertaken by Local Futures to highlight the need for economic change to protect our earth.
  • why we need to make the local food market a global initiative.
  • how small towns and villages are taking initiatives to feed their community with fresh, organic foods.
  • how schools are integrating nature into their infrastructure to increase the well-being of staff and pupils.
  • how nature provides profound and important psychological healing benefits.
  • how diversifying and staying local can provide more diversified foods per unit of land and water than the large monocultures.
  • why farmers prefer to work closely with the customer than with large-scale supermarkets.
  • whether small farmers and businesses should create a group to represent the their interests and to lobby governments in much the same way as large companies like Volkswagen and Monsanto.
  • how to make small and local businesses more visible.
  • about Helena’s mantra for resistance and renewal – resisting trade treaties and renewing localisation.
  • about the law that was passed in Sweden to have trade treaties to be discussed in secret.
  • how, under the new trade agreements, multinational corporations can sue governments if they inhibit their profit-making ability of that governments country.
  • whether GDP is a good measure of progress and how Helena interprets its true meaning.

Quotes by Helena on the Economic Rockstar Podcast:

“The EU is essentially an economic union and it’s bringing with it a centralised bureaucracy” – Helena Norberg-Hodge

About Earth Being Our Only Economy:

“The earth is our only economy. There’s nothing we use that doesn’t come from the earth. Nothing, nothing. Every iPad, every shoe, every television. And that economy, the real economy, is diversity. It requires and can only continue to live by respecting the uniqueness of every leaf, of every human being. Everything that lives is unique and is changing from moment to moment.” – Helena Norberg-Hodge

“I describe Nature as the economy, but it’s also our Mother. It’s our spiritual home” – Helena Norberg-Hodge

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“Usually when people talk about the economy, they’re just thinking about paper money. They don’t think about culture and farming as having anything to do with the economy.” – Helena Norberg-Hodge

“The global food economy, from beginning to end, is the biggest contributor to CO2 emissions, and it’s not just because of the factory farming with animals. It’s across the board.” – Helena Norberg-Hodge

About the Stock Market and Cheap Money:

“The market is really young lads sitting in front of computers speculating with huge amounts of money. And they inevitably have to and do favour the giant. They’re betting on the giants ‘horses’ like Monsanto, McDonalds and Walmart. And so this connection between that flood of cheap money created out of thin air, now has become a sort of a ‘blind machinery’ that is eating up the real economy, the earth, extremely rapidly and we’re going to see more horrific examples.” – Helena Norberg-Hodge

Other Quotes:

There is a growing local food market that is going global – Helena Norberg-Hodge

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GDP is an outrageous measure of progress. It is simply a measure of commercialisation – Helena Norberg-Hodge

With Riccardo and the notion of comparative advantage, it sounds good on the surface. But let’s remember it was brought in in a time of slavery – Helena Norberg-Hodge

Where to Find Helena:

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040: Rebecca Harding on Trade Finance and How Delta Economics Can Help Identify Growth Opportunities World-wide

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040: Rebecca Harding on Trade Finance and How Delta Economics Can Help Identify Growth Opportunities World-wide

Dr Rebecca Harding is CEO of Delta Economics, which specialises in the area of Trade Finance. Rebecca is an independent economistRebecca Harding with an extensive background in modelling economic growth, trade, productivity, innovation and enterprise.

Rebecca is the author of nine books and has written over 250 articles on economic issues. She has held senior positions in leading academic, think-tank and corporate organisations, including roles at the London Business School, Deloitte and the Work Foundation.

Rebecca has advised the European Union and regional governments and agencies in the UK and Germany on innovation and enterprise policy.

Rebecca is a Board Member of the Society of Business Economists and a Board Member and Trustee of the German British Forum. In 2013, she was elected as a national representative of the European Movement UK.

Rebecca holds a BA in Economics and German and an MSc and PhD in the economics of Science and Innovation from the University of Sussex and writes on her blog rebeccanomics.com.

How Rebecca First Discovered Economics:

Rebecca was taught economics as a kid by her father who was a sociologist. “An economist who’s taught by a sociologist is quite an unusual thing. He started off with the fundamental principle that economics is wrong because people aren’t rational. So the first lesson in economics I had was my father telling me that the subject was wrong”.

I have a very eclectic background. I was taught by a sociologist. Some of my big influences when I was in university were in geopolitics and international relations. I’ve done a lot of political science and a lot of philosophy as well. And then, of course, I have an economics, mathematics and language background. So I’m a bit weird. I call myself a hybrid.

Find Out:

  • about Dr Harding’s company DeltaEconomics.
  • about the data used by DeltaEconomics and why it has developed its database of statistics.
  • what is Trade Finance and how it has experienced phenomenal growth in recent years.
  • how companies bridge the finance gap between the time they export goods to the time they receive payment.
  • what the challenges are with long-term growth in trade.
  • if there are inherent risks associated with the trade finance market as more sophisticated derivative and credit markets emerge.
  • about the inherent risks that may appear in the derivatives markets for trade finance.
  • if a market collapse could be the outcome of a non-compliant and unregulated trade finance securities market.
  • if could an implosion in trade finance is possible with large defaults in payments due mainly to the development of a derivatives and securities market.
  • if sovereign risk will become prominent if trade finance risk increases.
  • if enough data exists for trade finance to allow it to mature into a fully functioning wholesale and derivatives market.
  • about some risks to the global supply chain.
  • about the pioneers of innovation and productivity in economic theory.
  • how productivity and trade finance could be correlated.

Economics:

In this interview, Rebecca mentions and discusses: trade finance, credit, exports, growth, derivatives, securitisation, risk aversion, sovereign risk, business risk, contagion, commodities, inflation, fiscal policy, monetary policy, foreign direct investment, demographics, innovation and total factor productivity.

Economists:

In this interview, Rebecca mentions and discusses: Joseph Schumpeter, Christopher Freeman, Carlota Perez, J. K. Galbraith and Frances Coppola.

Influencers:

Karl Marx, Christopher Freeman, Carlota Perez, Joseph Schumpeter, J. K. Galbraith,

On Delta Economics:

“For trade data, it’s the best platform in the world – it’s corrected, it’s clean, it’s comprehensive and it covers continents like Africa all on one platform. It gives clients information on what the trading opportunities are” – Rebecca Harding, CEO of Delta Economics.

“We view the world from a trade perspective. Trade is important because it’s how businesses interact with one another.”

Delta Economics – It’s macroeconomic big data! – Rebecca Harding

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What we’ve done is pioneer the way in which big data is used in economics – Rebecca Harding

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What is Trade Finance?

Trade Finance is everything that drives trade itself. From a financial perspective, if you look at the value of world trade, about 80% of that is financed by banks or backed up by big insurance companies or finance through export credit agencies. It’s a huge market and grew very quickly in the from 2000 to 2007. The reason being was due to emerging markets entering into global trade in a very much aggressive way. Banks saw huge opportunities for financing trade.

Essentially, if you are trading with another company in another country, then what you need is some kind of bridging finance between the gap from when you put your goods onto a ship or an aeroplane and when it’s received by the person in the other country and paid for. So what this company needs is some kind of financing gap between those two points. That’s what trade finance is.

By including trade finance data into forecasting, you get much more accurate forecasts as to what’s going to happen to trade. In 2007, there was a tightening of credit available to businesses since the credit in the financial markets of developed countries had locked up. Subsequently, much of the trade finance went to emerging Asia and emerging Latin America and financed huge growth there.

The whole Trade Finance market is largely driven through very large finance houses such as JP Morgan, HSBC, Barclays, Bank of America, Merrill Lynch and BNP Paribas. These very big global banks are the ones that are involved on a day-to-day basis with the trade-receivables, the credit lines, the letters of credit, the open account and the working capital.

What’s also interesting about Trade Finance is that you also have quasi-government agencies and export credit agencies, which are part of the private sector and which are sometimes supported by the public sector. There is also a massive insurance market and legal sector attached to it. With such growth in the Trade Finance market, there is interest now coming from private sector private equity companies who see an opportunity to buy the debt and securitise it and actually use it as an asset class. What Delta Economics also do is it allows the data user to understand trade finance as an asset class. Companies can securitise the debt and trade that securitisation. The derivatives market will be an important component of this.

The Trade Finance market is estimated to be worth $7.4 trillion annually. There are many companies , like Lloyds, who will be putting security behind the money they are backing up.

It was seen as a way of fuelling long-term economic growth through trade.

Data Sources Mentioned in this Episode:

Recommended Books:

Where to Find Rebecca Harding:

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023: Loretta Napoleoni on Financing Terrorism and the Creation of the Islamic State

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023: Loretta Napoleoni on Financing Terrorism and the Creation of the Islamic State

Loretta Napoleoni is an expert on terrorist financing and the IslLoretta Napoleoniamic State. She advises several governments and international organizations on counter-terrorism and money laundering.

As Chairman of the countering terrorism financing group for the Club de Madrid, Loretta brought heads of state from around the world together to create a new strategy for combating the financing of terror networks.

Loretta is a regular media commentator for CNN, Sky and the BBC and advises several banks on strategies to counter the current ongoing crisis. She lectures regularly around the world on economics, terrorism and money laundering.

Loretta is also a columnist and writes about terrorism, money laundering and the economy for several European financial papers including El Pais, The Guardian and Le Monde.

Loretta began her career as an economist, working for several banks and international organizations in Europe and the US. She has a Phd in economics and a Masters of Philosophy in International Relations and one in terrorism.

She is the bestselling author of numerous books including The Islamist Phoenix, Maoanomics, Rogue Economics, Terror Incorporated and Insurgent Iraq.

Her books are translated into 18 languages including Chinese and Arabic.

“I studied economics because I thought that economics was the way to change the world” – Loretta Napoleoni.

Economic Themes:

In this interview, Loretta mentions and discusses: Islamic Finance, gold, barter, quantitative easing, reserve currency, consumerism, the Marshall Plan, labor, wages, sex trade, slavery, demand, profit, trade unions, capitalism and growth.

Economists:

In this interview, Loretta mentions: Adam Smith, David Ricardo, Karl Marx, John Stuart Mills and John Maynard Keynes.

Advice:

The key is to always search for the truth. It is important to listen to the experts because otherwise you get the wrong picture – Loretta Napoleoni.

Find out:

  • about Loretta’s involvement in the feminist revolution in the 1970s in Italy where she was one of the founding members of the Italian Feminist Movement.
  • why she studied economics and the subsequent irony of working for a Russian bank.
  • why Loretta sold her company to do a PhD in terrorism at the London School of Economics.
  • about Loretta’s contact with the Italian Marxist organisation, The Red Brigade.
  • how terrorists fund their activities.
  • who initially sponsored ISIS or the Islamic State initially and how they may regret this.
  • why Jihadi John and others were attracted to the Islamic State.
  • how Saudi Arabia’s sponsor of a war by proxy against the Assad regime in Syria resulted in the creation of IS.
  • about The Caliphate and why IS wants to re-create a modern version of this region.
  • about the functioning economy of the Islamic State.
  • if the Islamic State has a functioning banking system.
  • if the Islamic State is using gold coins, dollars or a bartering system.
  • about the how women are treated in the Islamic State.
  • why Loretta believes that the feminist movement ultimately failed.
  • if the US policy of quantitative easing is making it easier to finance terrorism due to the increase in the money supply.
  • the meaning of the Patriot Act and how every transaction made in US dollars is tracked and traced everywhere in the world.
  • whether the US should stop their foreign policy in the Middle East and North Africa.
  • how the world is being shaped by dark economic forces based on the fantasy world of consumerism.
  • how an increase in the number of democratic countries has resulted in an increase in modern-day slavery.
  • about the sex trade and the fall of the Berlin Wall.
  • how the Chinese are better capitalists than Western countries.
  • how we can learn from the Chinese economy.
  • whether Africa will benefit from the Chinese model of capitalism.
  • why there is a ‘race to the bottom’ in todays economy.
  • why Loretta believes that we need a new theory in economics.
  • about the problem of mathematics in economics.
  • the advice Loretta gives for writing a book.

The Caliphate and Islamic State

The Caliphate is a way to formulate the Muslim political utopia, whereby for centuries, Muslims have dreamt of the creation of a State but have failed. The political reality of their world has been dictatorship, foreign power, colonization or the tribal system.

The Caliphate is the only political expression that the Muslims have produced. The ancient Caliphate was a splendid civilization, very different from the Caliphate of the Islamic State because it was very tolerant. Jews, Christians and Muslims lived together in peace without any problems.

Today, the economy of the Islamic State is a closed economy in which the trading of goods and services is done within the State. There is some degree of smuggling going on. Loretta Napoleoni believes that the rise of the Islamic State is a European problem because of colonialization.

Quantitative Easing, the US Dollar and the Illegal Arms Market

The US can borrow against the stock of dollars in circulation all over the world since the dollar is the reserve currency. What this means is that the US prints more dollars, not only for the demand inside the US but also for the demand outside the US. The illegal arms market is run in dollars. Since this is a market that grows, it therefore needs to be fed an increasing supply of dollars. If the Islamic State is using dollars, then they will benefit indirectly from the printing of money inside the United States.

Slavery and the Link with Consumerism

This economy, this rogue economics, is very much an economy that is driven on one end by consumption, this endless consumption. And to feed this monster of endless consumption, you have to produce at a cheaper level. So you use anything you can.  – Loretta Napoleoni.

The sex trade boomed with the fall of the Berlin Wall. Some women had no alternative but to prostitute themselves to feed their family because of the collapse of the Communist economy.

On economics:

“There is too much maths. Everything is reduced to mathematical models. They want to predict everything with numbers. Economics is a social science so you can’t predict people’s behavior.”

Advice:

“If you want to write a book, you start now and you stop when you finish. You don’t stop in the middle, you don’t do many things. All you do is work, work, work.” – Loretta Napoleoni.

Resources:

Recommended Books:

Where To Find Loretta Napoleoni:

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