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Lars Christensen

Lars Christensen

Lars Christensen is an internationally renowned Danish economist specialised in international economy, Emerging Markets and monetary policy. Lars has over 20 years’ experience in government and banking and is the founder and owner of Markets and Money Advisory and is a Senior Fellow at London’s Adam Smith Institute.

Articles by Lars Christensen

The blog has MOVED to mamoadvisory.com

18 days ago

Markets & Money Advisory’s website is now up and running. You find it here.
If you normally receive mails from The Market Monetarist you in the future instead will receive mails from Markets & Money Advisory instead.
As a general rule we will try to avoid spamming our followers, readers and clients so we will try to only send out the newsletter once a week – unless there is “breaking news” such as key monetary policy announcement or major market moves.
I – Lars Christensen – will continue to blog, but in the future the blogs will be published on Markets & Money Advisory’s website rather than here.
You can sign up for the Markets & Money Advisory newsletter here to receive blog posts, webcasts etc. If you are already signed up for the Market Monetarist mailing list then you can update

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New Markets & Money Advisory website

29 days ago

Today we launch a major expansion of Markets & Money Advisory.
On our new website (see here), you will find a lot more information about what we do – including our speaking, advisory, and research services.

If you’re a loyal reader of The Markets Monetarist blog, don’t despair! It stays as an integral part of our operation – which will continue to focus on monetary policy and global financial markets. The Market Monetarist blog will in the future redirect to the Markets & Money Advisory website.
Make sure to subscribe to our newsletter with the latest blog posts and information about M&M Advisory.
We are today also launching our new monthly flagship publication Global Monetary Conditions Monitor for investors and policy makers alike.
Sincerely,
Lars Christensen

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MTB Cast #3: Inflation worries hitting the markets?

March 22, 2017

Spring has come to Denmark, but a bit of jitters overnight in the global stock markets. Is it inflation fears? See my comments here.
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Reflections on the Fed hike

March 16, 2017

Have a look at my comments on yesterday’s Fed hike.
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And see our “country page” on the Fed, which will also feature in our soon-to-be-published Global Monetary Conditions Monitor. (In PDF here)

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FOMC preview – please hike, but be careful going forward

March 15, 2017

The Federal Reserve is widely expected to hike the Fed funds target rate by 25bp today. The real question is how much more the Fed will deliver going forward.
To get an idea about we are happy to give you a sneak preview on the “country page” for the US monetary policy from our soon to be launched Global Monetary Conditions Monitor (GMCM).
See here (in PDF here):

Just to explain what we are doing in GMCM we do not try to forecast what central bankers will do, but rather we assess or measure monetary conditions. This is a lot less straight forward than people often think. For example the actually level of the key policy rate – in the case of the Fed the Fed funds target rate – on its own says very little about the monetary stance.
Overall, the price level and nominal demand in the

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MTB cast #2: Icelandic currency controls, the Fed and European central bankers

March 14, 2017

So here we go again – another Mountain bike ride and another MTB cast. This time we got three in one.
First on Icelandic currency controls.
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Second, this week’s FOMC meeting.
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Third, are European central bankers overly worried about political risks?
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MTB cast #1: Czech inflation to rise above 3%

March 9, 2017

I have been out on a mountain biking this morning, but I could not help noticing the Czech inflation numbers for February.
So have a look at my first MTB cast where I comment on the Czech inflation numbers.
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If you like this I will continue doing this in the future and please remember to sign up for the Markets & Money Advisory Youtube channel.
See our updated inflation forecast in the graph below. It is based on the latest inflation data and trends as well as our composite indicator for Czech monetary conditions.
If you want to know more on our monetary conditions indicator please contact us by mail: LC@mamoadvisory.com or LR@mamoadvisory.com

Update: The day started with Mountain biking and Czech inflation and ended with an interview with Icelandic TV (RUV TV) about

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Another look at our Global Monetary Conditions Monitor – the case of Hungary

February 28, 2017

Yesterday, we wrote a short post on Israeli monetary policy and linked to one page on Israeli monetary conditions to give an example of how the “country pages” in our – Markets & Money Advisory – new monthly flagship publication Global Monetary Conditions Monitor (GMCM) will look like. We expect to publish the first edition in March – coinciding with the launch of our new website.
So what is the GMCM? Overall one can say it is our attempt to create a measure of monetary conditions for investors and policy makers alike so they can track global monetary developments.
It will not be a forecasting publication as such, but obviously investors can use the publication to make informed decisions on investments as there certainly is no doubt that changes in monetary conditions have a

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Our Global Monetary Conditions Monitor – what we write about Bank of Israel

February 27, 2017

It is hard to be very critical about the conduct of monetary policy in Israel. I have earlier praised the Bank of Israel (BoI) for essentially being an NGDP targetter and when Stanley Fischer was BoI governor nominal GDP basically was kept on a straight line (see here).
And even though Fischer’s successor Karnit Flug initially back in 2014 kept monetary conditions slightly too tight (see here) it now seems like the BoI under Flug’s leadership is back on track.
At least that is what our – Markets & Money Advisory’s – composite indicator for Israeli monetary conditions is showing.
Introducing Global Monetary Conditions Monitor
The indicator will be part of the first edition of our new flagship publication Global Monetary Conditions Monitor (GMCM), which will be published in March and

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Did you book your speaker? Book me

February 22, 2017

Did you book your speaker for this year’s seminar or conference? You might as well book me!
See a sample of my speeches here.
To book me internationally see here.

In Denmark see here.
Or contact me directly: LC@mamoadvisory.com
Recent speaking topics include:
Populism and the global economy and markets
1930s style politics: Monetary policy failure and the emergence of Trump, Le Pen and Brexit
Will the euro survive the German, Dutch and French elections in 2017?
The African growth miracle
China will never be the largest economy in the world
Russia: Between oil prices, lack of reforms and geopolitical uncertainty
The Maghreb economies: A coming miracle or permanent stagnation?
Oil prices, monetary policy and the crisis in the Gulf States economies
Prediction markets – why governments

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Greece’s continued suffering

February 10, 2017

Greece is once again back on the agenda in the European financial markets and we are once again talking about Greek default and even about Grexit. There seems to be no end to the suffering of the Greek economy and the Greek population.
I must say that I have a lot of sympathy with the Greeks – they have terrible policy makers and no matter how many austerity measures are implemented there is no signs of any visible improvement either in public finances or in the overall economic performance.
Hence, the Greek economy has essentially been in decline for nearly nine years and there seems to be no signs of it changing.
To me there is no doubt what the main reason it – it is the monetary strangulation of the Greek economy due to the countries membership of the euro area.
I don’t like to see

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Decision time for the Russian central bank: To cut or not to

February 3, 2017

We will soon be launching our new monthly publication Global Monetary Conditions Monitor (GMCM), which will be available from our new ‘research shop’ when we soon launch Markets & Money Advisory’s new website.
GMCM will be covering 25-30 countries and overall we will differentiate between what we term the Global Monetary Superpowers (Fed, PBoC, ECB, Bank of Japan, Bank of England and SNB) and other central banks.
At the core of the publication will be a composite indicator for monetary conditions in each of the countries in the Monitor.
The indicator is constructed as an weighted average of four sub-indicators – broad money supply growth, nominal GDP growth, exchange rate developments and the key policy rate. Each of these four indicators are compared to what we call a

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When will Trump accuse Denmark of being a ‘currency manipulator’?

January 31, 2017

This is from the Financial Times today:
“Germany is using a “grossly undervalued” euro to exploit the US and its EU partners, Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy. 
 Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties.
In a departure from past US policy, Mr Navarro also called Germany one of the main hurdles to a US trade deal with the EU and declared talks with the bloc over a Transatlantic Trade and Investment Partnership dead.”
I must say

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If anything the Bank of Canada should ease monetary conditions

January 17, 2017
If anything the Bank of Canada should ease monetary conditions

While the Federal Reserve – rightly or wrongly – has initiated a rate hiking cycle it is not given the the central bank in neighboring Canada should follow suit. In fact, according to our our composited indicator for Canada monetary conditions monetary policy is too tight for the the Bank of Canada to hit its 2% inflation over the medium-term.
The Bank of Canada will announce its rate decision on Wednesday and we should stress that our indicator does not say what the BoC will do, but rather what it ought to do to ensure it will hit its 2% inflation over the medium-term (2-3 years).
Four key monetary indicators
In February we – Markets & Money Advisory – will start to publish our Global Monetary Conditions Indicator covering monetary conditions in around 30 countries around the globe.

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We are launching a Youtube channel

January 15, 2017

We – Markets & Money Advisory – will soon be launching a new website. As part of that the blog format will also be “updated” so that not only will it be possible to read blog posts, but we will also put out movies etc.
This will all be available on the website, but we will also be launching a Youtube channel from, which to stream these videos etc.
You can already now go in and check out this Youtube channel. See here and please subscribe.
On the Youtube channel you will already now find old interviews me and presentations I have done. These kind of things will also be added in the future. Furthermore, it is the plan to do a lot more “real-time commentary”, which will be small videos with me commenting on particularly monetary policy events and major market action. We might also in the

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Looking forward to 2017 – plans for M&M Advisory

January 1, 2017

2016 was a busy year for me. It was the second year as my “own man”. I am very happy about how things have developed.
I set out to do three things when I started Markets & Money Advisory back in the summer of 2015.
First, of all I wanted to do a lot of public speaking. I have continued to do that in 2016 and will certainly continue to do that in 2017. So if you want to book me for a speaking engagement anywhere in the world drop me a mail (LC@mamoadvisory.com) or my speaking agent Daniel Rix at Specialist Speakers (Daniel@specialistspeakers.com). In 2016 I spoke a lot about Trump and Brexit – and of course monetary policy and global markets. In 2017 I guess focus will turn to European political uncertainties with elections in France and Germany and surely I will also talk about my

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The end of the Trump rally?

December 6, 2016
The end of the Trump rally?

I generally don’t think I can beat the market, however, right now there is something, which worries me and that is that the “Trump rally” in the US stock market could be about to end.
It seems to me that what US stock market investors are really focusing on is the potential for deregulation and tax cuts (and infrastructure investments). And we might of course get that and deregulation and tax cuts and certainly should be welcomed news both for the US economy and the US stock markets.
But if you get supply side reforms then it will be because of the Republican majority in the House and the Senate (might) want this – not because of Trump. Trump continues to pay lip service to these ideas, but he has certainly not be consistent. There is nothing in Trump’s past that tell us that he is a

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John Allison just endorsed NGDP targeting

November 29, 2016
John Allison just endorsed NGDP targeting

On Monday Donald Trump met with John Allison the former CEO of the BB&T and former CEO of the libertarian think tank The Cato Institute.
It has been suggested that Allison might be in the running to become new US Treasury Secretary.
Allison is widely known to be an staunch advocate of deregulation of the banking sector and in favour of a rule-based monetary policy. Many had taken his support for a rule-based monetary policy to mean that he favours a gold standard.
However, Allison ultimately would like to see a Free Banking system in the US, but also acknowledges that that is not realistic anytime soon. Instead watch what he says on this interview on Fox & Friends.
“We need discipline, we need somekind of rule, I like the Taylor rule, I like some kind of GDP indexing rule…”

There you

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Themes and Scenario for 2017

November 29, 2016
Themes and Scenario for 2017

At Markets & Money Advisory we have tried to think a bit about different themes and scenarios for the global economy and markets in 2017. What is more likely? We don’t know and this is not investment advice, but it might help investors and policy makers to think about risks and opportunities.
I you want to know more about Markets & Money Advisory’s research agenda and research products please contact me Lars Christensen (LC@mamoadvisory.com).

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Stephen Bannon – Nationalist Keynesian

November 20, 2016

This is president-elect Donald Trump’s Senior Counsel Stephen Bannon:
I’m not a white nationalist, I’m a nationalist. I’m an economic nationalist…
…Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement….It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.
Something is seriously wrong with a guy saying “as exciting

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The Trump-Yellen policy mix is the perfect excuse for Trump’s protectionism

November 18, 2016

It is hard to find any good economic arguments for protectionism. Economists have known this at least since Adam Smith wrote the Wealth of Nations in 1776. That, however, has not stopped president-elect Donald Trump putting forward his protectionist agenda.
At the core of Trump’s protectionist thinking is the idea that trade is essentially a zero sum game. Contrary to conventional economic thinking, which sees trade as mutual beneficial Trump talks about trade in terms of winners and losers. This means that Trump essentially has a Mercantilist ideology, where the wealth of a nation can be measured on how much the country exports relative to its imports.
Therefore, we should expect the Trump administration to pay particularly attention to the US trade deficit and if the trade deficit

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We miss you Uncle Milty

November 16, 2016
We miss you Uncle Milty

10 years ago today – I was at a Christmas party with my then employer Danske Bank when we got the sad news. Milton Friedman my big hero had died.

I remember my parents telling me the next day that they had heard the news on TV. My dad had asked my mom whether they should call me about the sad news. Mom told my Dad “No, he is out for a Christmas party lets not ruin his night”. That is good parents – they were thinking of their then 35 year old son’s well-being, but it probably is also telling just how much Friedman meant and still means to me.

Milton Friedman is dearly missed. He would have spoken out against the nonsense central bankers continue to come up with and he would be in the forefront speaking out against Trump’s protectionist nonsense.
Update: My good friend Sam

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Lessons for today: The conflict between Reagan and Volcker

November 15, 2016

This is from the The New York Times on February 17 1982:
President Reagan and the chairman of the Federal Reserve Board, Paul A. Volcker, met Monday to discuss monetary and budget policy, Administration officals confirmed today…
… The official said that the meeting covered a broad range of economic issues, including monetary policy and budget deficits. But, the official said, the main reason for the session was to reinforce the ”personal relationship” between the two men. The two last met in December.
The meeting comes after recent tension between the Fed and the Administration, highlighted by the Administration’s contention that the Fed’s erratic management of the money supply was pushing up interest rates and Mr. Volcker’s response that it is the threat of large budget deficits that

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Donald Trump will replace Janet Yellen with a DOVE in 2018

November 14, 2016

Some have suggested that when Janet Yellen’s term as Federal Reserve chair expires in 2018 then Donald Trump will try to replace her with a more “hawkish” chairman. Some even has suggested that he could try to re-introduce the gold standard and appoint the king of monetary policy rules John Taylor as new Fed chairman.
I, however, believe that is completely wrong. Donald Trump doesn’t care about the Gold Standard (luckily) and certainly he does not care about a rule-based monetary policy.
The fact is that Trump’s entire policy agenda is inflationary. On the supply side his anti-immigration stance will push up US labour cost and this protectionist agenda will push up import prices.
On the demand side his call for underfunded tax cuts and massive government infrastructure investments also

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“Make America Keynesian Again” part 2

November 10, 2016

In yesterday’s blog post I wrote about why I believe it is the combination of Donald Trump’s fiscal stimulus plans (infrastructure investments and tax cuts) combined with the Federal Reserve’s willingness not to (fully) offset this, which has pushed inflation expectations in the bond markets up very significantly since Tuesday.
If the Fed’s inflation target was fully credible fiscal stimulus would be fully offset by the expectations of a tightening of monetary policy to “neutralize” the impact on aggregate demand from fiscal stimulus. This of course is known as the so-called Sumner Critique.
I would normally think that the Sumner Critique would hold and announced fiscal stimulus or fiscal contraction would not impact inflation expectations. This is for example what I argued in 2012 and

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“Make America Keynesian Again”

November 9, 2016

Today I was asked to do an interview with a Danish radio station about Donald Trump and about whether one could say anything positive about him or rather about his economic agenda. I declined to do the interview. I frankly speaking has nothing positive to say about Trump.
To me Donald Trump is an absolutely vile person and and his views on immigration and trade are completely the opposite of mine. However, I have also in the run up to the election in presentations and comments stressed that the presidential election from an overall financial market perspective would not be a big deal and judging from the market reaction today this indeed seems to be the case.
Reading the markets
But what exactly are the markets telling us today about the economic consequences of a Trump presidency

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Belongia and Ireland on the Fed’s Romanace with the Phillips curve

November 7, 2016

There is no doubt that I believe that the Federal Reserve under the leadership of Fed Chair Janet Yellen has kept monetary conditions too tight and I have particularly blamed Yellen’s 1970s style obsession with the Phillips curve for this.
Michael Belongia and Peter Ireland have a very good comment over at Manhattan Institute’s E21 site on exactly this topic. Take a look for yourself here.
PS see some of my earlier posts on Yellen and the Phillips curve here and here.

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Egypt floats the pound – now it is time to implement a rule-based monetary policy framework

November 3, 2016

This morning we got some very good news out of Egypt as this statement was released by the Egyptian central bank:

I have to say I agree with everything in the statement and I think it is the only right thing to do.
The pound almost immediately dropped 48% against the US dollar on the news.  There is no doubt that this in many ways will be unpopular in Egypt and we are likely to see a rather sharp initial spike in Egyptian inflation, which certainly will have short-term negative impact on the purchasing power of many Egyptians.
This is certainly regrettable, but we have to remember what the alternative was. The alternative was to continue the present policy of trying to ‘peg’ the Egyptian pound at a far too strong level and by doing so continuing to tighten monetary conditions.
The

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Swedish monetary conditions are becoming too easy

November 1, 2016

Believe it or not – there is a country in the world where I now believe that monetary policy is becoming (moderately) too easy. Yes, that is correct – I will not always say that monetary policy is too tight. The country I talk about is Sweden. More on that below.
Assessing monetary conditions
I strongly believe that the assessment of the monetary stance of a country should not be based on for example looking at the level of nominal interest rates, but rather on whether or not the country is on track to hitting the central bank’s nominal target in lets say 12-18 months.
A way of assessing that is of course to look at market inflation expectations (if the central bank targets inflation as in the case of Sweden’s Riksbank). If inflation expectations are below (above) the target (for

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