Financial Markets and Economic Performance: A Model for Effective Decision Making

Preface
Acknowledgments
Contents
About the Author
List of Figures
List of Tables
1 Why Finance Matters for Economics: The Story of Financing the Railroad
	The Relationship Between Credit Growth and Economic Growth
		Growth and Debt Finance
	The Global Case for Credit and Growth
	Sector Links—The Links of Finance and the Economy at the Sector Level
		The Specific Issue of Private Credit
		Market Price Framework
	Price Signals in the Linkages Between Markets
	Shifting Benchmarks: What Is an Investor to Do?
		Policy Benchmark: No Single Number But the Result of Many
		A Fixed Dollar? How About Not
		No Simple Benchmarks in a Complex Economic World
	The Challenge of Anchored Benchmarks and Establishing Market Pricing
		Normalization of Interest Rates?
			Commodity Prices
			Equities
			Foreign Exchange Rates
	Silos Four Markets: Seeking Out the Linkages
		Benchmarking Nominal GDP: Growth and Inflation
		Money and Nominal Growth
		Asset Prices and Nominal GDP
	Isolationism Is Not a Viable Approach to Market Interactions
		Three-Dimensional Chess
		Interest Rates and Nominal GDP Growth
		Moving to Another Level
		The Costs and Benefits of Capital and Growth
	Financial Markets: The Economy’s Fraternal Twin
	So, Where Do These Market Observations Take Us?
	Markets in Disequilibrium: Certainly Not Simultaneous Equilibrium in All Four Markets
	Gauging Economic Change: Economic Signals
	A Historical Context for an Effective Decision-Making Process
	A Duality in Frameworks: How We Make Decisions—Not By Economic Numbers Alone
		Framing Bias, Risk, and Uncertainty
		The Anchoring Bias: In the Data and in Policy
	Economic Evolution—Cycles and Structural Breaks
		Fed Balance Sheet—Structural Breaks and an Asymmetric Impact
		Inflation: The Unreachable Star?
		Equity Values Rise as Economic and Profit Growth Slows
	Credit Cycles
		First the Bad News—Well Not All Bad News—Banking
		Consumer Credit: A Threshold Effect?
	Monetary Policy, Decision Making, and Cognitive Bias
		How Long Is Transient?—The View of Inflation in Monetary Policy in 2020
		Modeling Inflation: An Exercise in Ptolemaic Economics?
	Policymaking as a Source of Financial Market Dynamics
		Public Policy and Private Decision Makers
	Administered Versus Market Prices Creates Disequilibrium
		Moving from Points to Process: Where Are We Versus Where We Were
		Movement from a Focus on Points to Process
		Four Cases of Persistent Disequilibrium: What Is to Be Learned?
	Constant Disequilibrium and the Discovery of Neptune
		Interactions and the Role of Expectations
	Identifying Change, Evolution, and Regression to the Mean
		Evolution of the Economy—And Financial Benchmarks
		Non-linearity
		Regression to the Mean? The Past?
		Do Rising Rates Cause (Granger) Recessions?
	Identify Change, Distinguishing Trend and Cycle
		Inflation: Heading to Success Despite the Evidence
		Assume the Ideal Outcome in an Imperfect World
	References
2 The Story of the Original Boom and Bust in Western Finance: The Mississippi Bubble
	Cycles, Trends, and Corrections: Creating a First Impression
		What Generates these Cycles Around the Trend?
	None Come to Pass: Expect a Trend, Get a Cycle
		Trend Growth Despite an Up/Down History
		Inflation: Heading to Success Despite the Evidence
		Assume the Ideal Outcome in an Imperfect World
	Expectations of Mean Reversion: Getting Back to Normal
	Debt Finance
		If Not Normal, Where Are We in the Cycle? Late
		Late Cycle Pricing of High-Yield Credit
		Credit Standards: Move to Tighter Standards
		For Whatever the Reason: A Flatter Yield Curve
	Decision Making and Cognitive Biases
		Benchmark Evolution
	Linkages Between Markets
	Price Adjustment
	Evolution of Irrationality: Expectations Overwhelm the Fundamentals
		Euro Sovereign Debt
	Net Percent of Banks Tightening Credit on Commercial & Industrial (C&I) Loans
	Shifting Investor Motivations: From Income to Capital Gains
		Credit Today, Payments Tomorrow
	The Interactions Between Expectations and Shocks
	Living Life with Negative Static Stability II
		Disruption is Good, Disruption Without Direction is Chaos
	Signals on the Path to Negative Static Stability: The Race to the Bottom
	Assumption of Positive Static Stability Today
	Neutral Static Stability: Stay at New Altitude
	Before You Put that 2019 Outlook to Work—Benchmark for Expectations/Actuals, Dynamism/Change
	“Visiting Grandma’s House at Thanksgiving”: The Price of False Precision
	Three ingredients to Watch for Negative Static Stability
	Mid-Cycle as Misleading Benchmark for Decision Making
		Reality as Unreliable Guide
	Introducing Change and Adding Dynamism to Cycles
		Midnight Strikes: Cinderella Loses a Shoe, Lives to Dance Another Day?
		Yield Curve: Flatter not Inverted
	Finance and Real Economic Growth: Trends and Cycles
	Over the Horizon Radar: On the Other Side of the Recession Mountain
	Where We Are is Not Where We Are Going
		Looking at the Internals of Corporate Finance
	Nature of the World Disequilibrium
		When the Music is Over, Turn Out the Lights—Part I
		Private Markets, Public Policy, Recessions, and Depressions
	Shock to Market Equilibriums—Generating Negative Static Stability
		Overshooting and Irrational Exuberance: Up and Down Excesses
	Monitoring the Cycle: Three Rising Pressure Points
		Fed’s Inflation Target Met
		Shrinking Margin for Error: A Sign of Imbalance in the Equity Market
	Change Information, Change the Framework of Market Interactions
		Real Final Sales: Displacement Downshift
		Inflation: PCE Deflator
		Benchmark Treasury Rates
	References
3 Price Determination in a Multi-Sector Global Economy
	The Story and Motivation for Price Discovery
		The Story of Inflation, Interest Rates and the Dollar in the Administration of Jimmy Carter: Motivation for Price Discovery
		Price Determination Web of Interactions Between Markets
	Growth and Goods Inflation: One-Way Link
	Domestic Demand and the Price of Capital
	Completing the Web: Dollar, Interest Rates, and Inflation
		Prices as Signal
	Time-Series Analysis: Do It Once—With Unrevised Data
		A Framework for Prices in Four Markets
		Price Determination over Both the Short and Long-Run
	Intellectual Challenges to Conventional Views of Market Interactions
	The Challenge of Interest Rate Parity
		Anchoring Bias for Inflation Target: When Actual and Policy Targets Diverge
		For Investors Let’s Start at Naught
		There Are No Prompter Screens at Investment Meetings
		Works in Theory, Works in Practice
		Price Shock from the Supply Side
		Exchange Rate Surprise: The Plaza Accord
		A Focus on Price Cycles: Not Busts
		The Benchmark 10-Year Treasury Rate
		Evolution of Prices: When Slow-And-Steady May Not Win the Race
		The Equity Earnings/Price Ratio: Another Complex Pattern
		Prices and the Economy; The 2020 Experience
		Tracing Through COVID with Market Prices: Exercise in Price Adjustment
		Prices and Economic Data—What Is the Point?
	Price Determination: Cycles, Trends and Playing from a Different Playbook
	Price Discovery: Cycles, Trends in Three Interlinked Markets Part II
	Dollar/Euro Value: Long Cycle or a Downtrend?
		Rate Setting in Global Capital Markets
	Price Determination, Policy Indetermination
		Benchmarking the Light at the End of the Tunnel
		The Disequilibrium World for Price Determination
		Vladimir and Estragon Search for the Perfect Price
		Isolated Actors in Interdependent Markets
		Structural Break
		Decide Today—Discover the Price Tomorrow
		The Element of Surprise: New Information in One Market Alters Price Expectations in Another Market
			On the Exchange Rate Front
			On the Trade Front
			On the Monetary Policy Front
	Searching for the Perfect Price: Life in an Action-Adventure Movie
		Silos Fall in a Financial Windstorm: Reality TV for Investors
		Cross-Silo Lessons from the FOMC’s Non-move
		Lessons from the Chinese Devaluation—2015
		Lessons from Disappointing Growth
	Price Discovery—Our Never-Ending Journey
		Housing—Both Cyclical and Secular Forces
		That Risk-Free Rate—A Benchmark for Investors
		Wages, Productivity and Inflation: Linkage of Factor and Output Markets
		Multiple Markets, Multiple Surprises: A Bumpy Road Ahead?
		Irrational Prices as a Challenge to an Economic Framework
	Short-Run Movements Around a Longer-Run Trend: Would the Real Long-Term Value Stand Up? (A Tell the Truth reference)
		Irrational Prices and an Uncertain Framework: Equities
		What if No Price Is the Right Price?
			Economy at Non-market Prices
	References
4 Credit Allocation and the Role of Interest Rates as the Price of Credit
	Credit Allocation and the Role of the Price of Credit: Housing 2005, Corporate Debt 2020
	A Framework for Credit Allocation
		Price Determination, Policy Indetermination
	Tension in the Yield Curve and the Allocation of Capital Over Time
	Interdependent Markets
		Credit Allocation: The Story Behind the Curtain
		Interdependent Markets as Framework to Examine Credit Allocation
		Timing Issues: Interest Rates as a Video Not a Snapshot
		The Thankless Job for Private Investors and Central Banks
	Interest Rates: Income and Substitution Effects
	Evolving Framework, Fed Balance Sheet, Forces for Inflation
		What Did We Learn about Our Evolving Framework?
		Inflation: What to Say at Our Next Strategy Meeting?
	Introduce Change: When Actuals Do Not Equal Expectations
		A Comparative Look
		Interest Rates and Federal Finance: Role on Non-Price sensitive Buyers
	A New Player Enters the Credit Market: Fed Balance Sheet, and Benchmark Treasury Rates
		Fed’s Balance Sheet Drives Benchmark Treasury Rates
		Yes, the Size of the Balance Sheet Drives the Ten-year Treasury
		Does the Composition of the Balance Sheet Matter?
	Political Outcomes, Expectations, and Long-Term Benchmark Yields
	Multi-factor Determinants of the Yield Curve
	Lessons of 2019: Optimism on Rates, Expectations, and Outcomes
		Inflation: What You Get, What You Expected—Betting on Economic Policy
	Nature of the world disequilibrium credit allocation
		Interest Rates as the Price of Credit: Altered Fundamentals
		Back to Normalization: Administered Rates to Market Rates
		Altered Fundamentals: Altered Market Prices
		Interest Rates: Setting the “Normal” Benchmark
	Central Banks, Administered Rates, and the Purposeful Mispricing of Credit
	Market Interactions in 2018–2019; Principles Matter
		Essay Interrupted; Principles Continue to Matter
		TINA: There Is No Alternative
		Tipping the Bond Market Equilibrium in the Corporate Sector
		Disequilibrium—Fed Can Be Patient but Markets Are Always Moving
	Overcoming Obstacles in Developing an Investment Strategy
	Incomplete and Imperfect Information: Another Aspect of Credit Allocationin the Real Economy
	Domestic Yields in the Global Context
	Exiting Financial Repression Era-Correcting Mispricing No Easy Matter
	References
5 Short-Term Credit: Bridging the Next Few Years
	Story and Motivation
		Why Am I Reading This?
		Barings Bank and the Louisiana Purchase Credit Availability on the Upside
		Credit Shortage on the Downside: 1990–1991
		Supply and Demand for Short-Term Credit
	Between the Lip and the Cup: The Evolution of Credit Demand
	Between the Lip and the Cup: The Evolution of Credit Supply
		Short-Term Credit: Just in Time Finance
		Evolution of Short-Term Credit Markets
	Introduce Change: Dynamism as the True Character of Credit Markets—Not a Move from One Equilibrium to Another
		Cyclical Pattern of Bank Lending
			Short-Term Credit: Both a Supply and Demand Story
		Focusing on Commercial & Industrial Loans as Cyclical Barometer
		The Bank Credit Cycle: Mean-Reverting but the Credit Cycle Remains
		The Cyclical Character of Credit Remains After 2009
		Profits: Actual and Expected Part of Cyclical Demand
	Credit Per-Covid Shutdowns: How Did It Look?
		A More Resilient Financial System—The Fed
		Senior Loan Office Opinion Survey—Demand and Supply Sides of the Credit Market
		FDIC: Quality Standards for the Banking System Itself
		Delinquencies on the Decline: Welcome Sign
	Short-Term Credit: Aftermath
		Noncurrent Loan Rates: Paint It Black
		Charge-Off Rates—High & Dry
		The Special Situations File: Banking and the 1990 Recession
			Decision-Making as an Essential Ingredient: Evidence of Intellectual Bias in the Credit Cycle
		5a. Aftershock
			Stimulus to Action: Whatever the Intentions, Action, and Inaction, Have Their Impacts
		Yes, the Size of the Balance Sheet Drives the Ten-Year and Alters Credit Allocations
		Fed’s Dual Mandate and Credit Allocation
		The Great Recession and the Fed Funds Rate’s Effectiveness
		Yes, This Time Is Different for the Fed Funds Rate
		Credit Allocation
	References
6 Capital Markets: Financing Business Over the Long Term
	Financing the Credit Cycle—What’s Behind the Demand and Supply of Bonds
	A Framework for the Market for Long-term Finance: Supply and Demand
	Supply of Bonds
	Longer-Term Fixed Income Credit: Framework for Analysis
	Short-Term Debt and Interest Rates: Linking Quantity and Price
	Corporate Leverage: Debt-to-Equity Ratio
	Debt and Equity: Trends, Spikes, and the Leverage Issue
	Back to Basics Once More: Supply and Demand in the Bond Market as Engines for a Procyclical Behavior of Bonds: Recent Evidence
	Linkages and the Bond Market: Pretzel Logic
	Finance for the Long Term: The Multiple Forces in Corporate Bond Markets
		Die Another Day
	Expectations and Cognitive Biases: Rebounds in Credit
	Low Costs to Finance
	Incentive to Finance: Capital Spending Plans Out Run Internal Funds
	Business Loans, Cash, Debt, and Equity: Financial Options
	A Look Back at the Early 1990s and the Channels of Influence
		Too Much of a Good Thing?
		Creating Disequilibrium: Cycles, Trends, and Structural Breaks in Credit Pricing and Availability
	Interaction of the Real Economy and Finance
	Demand for Credit: ProCyclical
	Suppliers for Credit: Who is Buying?
		Benchmarking Corporate Benchmarks and Corporate Leverage
		Interest Coverage: Cyclical Patterns Subject to Exogenous Shocks
	Short-Term Versus Long-Term Debt and the Funds Rate
	Dealing with Disequilibrium: The Age Before 2020
		Linkages from Balance Sheet to Real Economic Activity
	Putting the Financing Gap to Work
	One Last Driving Factor of Corporate Finance: From the Inside
	Interest Rates and Corporate Financing
		Market Incentives and the Sources of Corporate Funds
	Short-term, Long-term Debt: Secular Change for the Manufacturing Sector
	Interest Coverage Ratio and GDP: Who is in Charge? Growth
		Distinguishing Trend and Cycle in Nonfinancial Corporate Finance
		Falling Share of Short-Term Debt
	Corporate Bonds Rise as AA Rates Decline
	Bank Loans as Debt Finance: Smaller Share Since 1980s
		Shocks: The Perennial Change in Public Policy
		What About Bond Rating Agencies and Credit Default Derivatives?
	References
7 Dynamics of Corporate Finance: What Motivates Change?
	Lessons from a Prior Cycle
	Putting Corporate Debt into Perspective
		Internal Dynamics of Corporate Finance
		Looking Behind the Veil of Corporate Debt
	Interest Coverage Ratio and GDP: Who is in Charge? Growth
		Causality: From Equity Markets to Credit Markets
		Corporate Leverage: A Note on the Influence of Changes in Corporate Benchmark Yields
	Introducing Change: The Role of Inflation and High Yield Spreads
	Forged in Fire: Indicators of Tensile Strength in the Nonfinancial Corporate Asset Market
	Once Again, the Importance of Cognitive Bias Recognition Not Just Number Following
		The Character of Manufacturing Finance Leading Into 2018
	Profits, Growth, and the Economic Cycle
		Sector Linkages
		Evolution of Growth and Interest Coverage
		Recognizing Evolution in Financial Benchmarks
		First Half of 2018: Prelude to Covid Shutdowns and Recession
	References
8 Evolution of Household Finances
	On the Road to Irrationality: Housing Finance in the 2000s
	Two Sides to the Household Balance Sheet
		Evolution of the Balance Sheet
			Importance in Understanding Household Behavior
			Evolution of Both Sides of the Balance Sheet
			Liabilities: Growth Rates also Change
			Net Result: Trends and Structural Breaks—Not Constant
	Assets/Liabilities and Structural Breaks
		Households: Both a Consumption/Saving and Portfolio Decision
	Life Cycle Behavior—More Than Just a Cyclical Pattern
		Credit Cycle: Short-Term View
			Demand and Supply of Credit Over the Economic Cycle
	Consumer Short-Term Credit: Another Exercise in Pro-Cyclical Behavior
	A Closer Look: Cycles in Credit, Economics, and Auto Finance
	Monitoring the Cyclical Patterns of Ratios: Debt Service and Financial Obligations
		From the Income Statement: Debt Service Ratio
	Financial Obligations Ratio
	The Consumer Debt Issue Post WWII and into the 1980s: Interplay of Markets
		Household Balance Sheet 1970s
	Exogenous Shock: Home Prices Can Decline
		Volatility Is the Character of the Housing Market
		Evaluating Credit Pressures Amid Unpredictability
		Animal Spirits and Economic Cycles: Explaining Abrupt Behavior
	The Household Balance Sheet—not a Partial Score
		Focus on the Household Balance Sheet—Not Just Debt
		2019 Before 2020 Shutdowns: Looking at the Balance Sheet
			Household Credit: Another Look at the Supply and Demand
			Consumer Credit: The Federal Reserve Bank of New York—Quarterly Survey
	Secular Change in Household Debt
	What to Watch for—Delinquency Rates in the Covid-19 Shutdown Era
	Consumer Finance: An Evolving Economic State
	References
9 Capital Flows: The Dollar and Global Capital Allocation
	Global Capital Flows: Credit Allocation Across Borders and the Associated Exchange Rates
		Optimism on the Dollar: An Economic Driver and Rider Both
		The Linkages Between the Four Economic Sectors
		After Accounting for Growth: Dollar and Interest Rates
			Stronger Growth Drives Multiple Factors
	For Decision Makers: Getting Beyond the Headlines
	Capital Flows, Interest Rates, and Asset Prices
		Capital Flows and Equity Markets
			Top Holders of U.S. Treasuries: Finance Asian Style
	Capital Flows: A Brief History of Variability
	Capital Flows and Market Prices
	Interdependence, Spillover, and Repercussion Effects
	Linkages
	Evolution of Capital Flows and Exchange Rates
	Sourcing Capital on a Global Scale
		Sourcing Capital on the Global Scale
	Three Sources of Disturbance in a Market in Constant Disequilibrium
		Igniting the Fire on the Domestic Front
		Exogenous Increase in Export Demand: A War-Time Tradition
		Shifting Preferences: Buy local—The Patriotic Pocketbook
		Thinking Beyond Step One
	Dollar as a Price: Global Allocation of Resources
		Failure at a Distance: The Many Linkages in Exchange Rates
	Balance of Payments: Growth, the Exchange Rate, and Interest Rates
	Failure at a Distance—Again
	Linkages in a Non-Recursive Economy
		Decision Making in a Non-Recursive Global Economy
		Domestic Policy in a Global Capital Market
		What About Fed Easing in an Era of Perceived Economic Strength?
		But There Is a Bigger World Out There
		What Difference Would Monetary Easing Make—Let Us Ask Lord Kelvin
	Disequilibrium in the Four Sectors of the Market Prices: Exchange Rates, Interest Rates, and the Expected Return on Capital
		What About Expectations?
		Reviewing Past Cycles: All Else Is not Equal for Capital Flows
	Spillover Effects and the Canadian Experience: Exogenous Increase in Export Demand
	The United States: Endogenous Increase in Fiscal Expansion and Dollar Appreciation
	The United States: Endogenous Increase in Monetary Policy Restraint
	The U.S. Experience in 2014–2019: Above Average Global Growth and Interest Rates
	Disequilibrium in Europe: The Case of Below Global Growth and Rates
		When the Tide Goes Out
		Cotton Bonds: Gone with the Wind
		The Euro: If at First You Do Not Succeed—Quit
	Shocks in the Commodity Markets: A Long and Dismal History—Brazilian Coffee
	Commodity Shocks, Corn Laws, and Post-Napoleonic Europe
	Shocks in the World of Imperfect Capital Mobility
	References
10 Profits: Rewards and Incentives in an Economic System to Allocate Capital
	The Story of Profits in the Wilderness: the Colonies Get Their Start
		Profits: Engine of Enterprise
		Profits, Growth, and Their Symbiotic Relationship
		Profits: Overlooked Contribution to Growth and Lower Rates
		Profits and Raising Capital Funds: One Input to the Economic System
		Exposure to Global Economy: Linkages as Another Part of the System
	Linkages
		Profit Margins: Top-Line Growth and a Mid-Cycle Peak
			Shrinking Margin for Error
		The Globalization of Opportunity: Profits Earned Abroad
		Is There Value in the “Profits Recession?” More Guidelines, Not Rules
		Role of Profits in a Four Sector Economic Framework
		Profits as Return to Entrepreneurs and Risk-takers
	Role of Profits in the Economy
	Statistical Character of Corporate Profit Growth
	Examining the Behavior of Profit Fundamentals in the 2010 expansion
	The Why and How of Cyclical Variation for Profits
	The Cyclical Character of Corporate Profits Opens Up the Opportunity to Identify Three Pressure Points in the Cycle
		Three Rising Pressure Points for Investors
		Fed’s Inflation Target and Expectations for Market Interest Rates
		Room to Move
	Cyclical Dynamic: Economic Accelerator and Financial Outcomes
	Profit Growth: What about Late in the Economic Expansion?
		Tension on the Profit Margin Front: Current Policy Proposals
	Profit Margins and Public Policy: The Equity Market Correction in 1999
	Change in Investor Behavior: Expectations: From Income to Capital Gains Again
	References
11 Equity Finance: Financing Innovation and Long-Term Household Wealth
	Dutch Joint Stock Company: A Combination of Funds to Promote Trade
	The Equity Market—And Its CoConspirators
	So, Galileo What Do You See?
	Money, Interest Rates, and the Missing Invited Guests
	OK Mr. Kepler, with These Observations What Are Your Laws?
	Yet, There is One Final Twist to the Story
	Galileo, Kepler, and Isaac Newton
	Equity Markets and Their Role in an Economy: The Efficient Allocation of Capital
		Equity Allocation
	Equity Market: The Returns and Cost of Capital
	The Equity Island—With Bridges Attached
	What Are the Details Behind the CAPE Ratio?
	Three Factors Driving Corporate Profit Growth and Equity Prices
		Profit Margins
		Corporate Taxes and Capital Spending: Not So Clear a Story
		Unit Labor Costs
		Interest Paid
		Expectations, Equity Prices and Earnings
		Income and Capital Gains
		Best Laid Plans: Expectations and Surprises
	Financial Benchmarks and the Economy: Nominal GDP, Interest Rates, and Equity Valuations
		Benchmarking Resource Allocation: Altering the Capital Stock of a Company
		Tax Policy and Capital Adjustments
		Recognizing Change in Financial Asset Markets
	Evolution of the Cost of Capital Over the Business Cycle
	The Earnings-Price Ratio: Another Non-Mean Reverting Series
	Economic Policy, the Cost of Capital, and Economic Growth
		Evolution of the Cost and Returns to Capital Over the Economic Cycle
		Cost of Capital: Many Routes to the Same Target
		Returns to Capital: Variability Over the Cycle, Financial Returns Are not Mean Reverting
		Interest Rates, the Dollar and, Yes, the Yield Curve
	Shocks on the Upside: Excessive Risk Premiums on the Advent of Structural Change
	References
12 Sovereign Finance: When Economic Growth and Sovereign Debt Are a Mismatch
	Historical Curiosity or Shot Across the Bow?
	Keynes—Economic Consequences of the Peace
	Something Has to Give, Something Will Give
	In the Short Run All Appears Calm
	Dynamic Process of Stimulus, Change, and Market Interactions
	The Greek Marathon—of Financial Crisis and Reform
	The Sovereign Bond Market—Another Playground in the Credit Market
	A Framework for Analysis
	USD/Euro Budget Deficits and Growth: The Benefit of Exorbitant Privilege
	Far, not so Good
		Pricing Federal Debt in a Four Sector Framework
	Sovereign Debt Finance: The Assumption of Unlimited Demand—Until It is Not!
		The Dynamic Effect: Expectations Altered
		Growth Matters: Rising Interest Rates, Diminished Growth Expectations
			What is the Character of Economic Factors and Sovereign Debt?
			Changes and Dynamic Character of Sovereign Finance and the Economy
			Debt Monetization
			The Impact of Growth, Interest Rates, and Inflation: A Change in the Pattern
	Pricing Character of Sovereign Debt
		Flatter Sovereign Yield Curve in the 2010 Expansion—Why?
	Future Imperfect Uncertainty-Questions from the Road
		History: Germany, Dawes and Young as U.S. Precedent?
		Disequilibrium: How Quickly the Outlook Changes
			A Sense of Complacency
		Shock: Putting the 1980s Deficit Shock in Perspective
	Capital Flows: Interest Rates and Treasury Finance
		Expectations Revisited
		All Else is not Equal for Capital Flows
		Outlier or Warning Signal? August 2011
		The United States as Net Debtor and the Specter of John Law
		Finance Via Fiat Money
	References
Conclusion
Index