RP’s Diary
A few encouraging signs
China's challenge is good news
Thank you for visiting my site. I am taking a sabbatical to research a new project so will not update my website for the next few months. Suffice to say that nothing governments or central banks have done since the crisis has changed the analysis or policy recommendations I offered in The Money Trap…
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Does the ‘reserve’ dollar harm America?
The flawed international monetary system is to blame for the crisis
For many years Lewis E. Lehrman and John D. Mueller have been calling attention to what they call the “reserve-currency curse.” Since some politicians and economists have recently insisted that the dollar’s official role as the world’s reserve currency is instead a great blessing, it is welcome that they have recently revisited the issue…
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Why we remain in the debt trap
Hervé Hannoun gave an important speech last week (see link below). This is my own paraphrase of it.
Total non-financial debt had risen substantially over the last 15 years. Public finances are not yet under control. Debt is excessive and poses a serious risk in a number of countries. What are the main risks? First, there is a risk of debt deflation – a situation in which the attempt to repay debt…
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Haldane , Rajan on the future of central banking
The real battle for the future of finance will be fought after the next crisis
In his contribution to Central Banking’s 25th anniversary issue, Andrew Haldane, chief economist of the Bank of England, describes the “giant steps” that central banks have taken to “reinvent” themselves post crisis. These have involved innovations not only in monetary policies and in market operations but also the development of macro-prudential policies. Central bankers…
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G20 fails to act
CEOs of banks that rigged markets must go
People know we haven’t cracked the problem. Anaemic, faltering growth has brought a sense of greater security and well-being only to those in work or those with assets like shares and city property that have floated up on the rising tide of central bank liquidity. Since 2007 vast disparities of wealth have become even…
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Now for the next leg of the “financial crisis”
Central bankers know they may be laying the ground for it. An alternative approach is needed.
In effect, this is the money trap in operation – again. Central banks are in a quandary. Unless they return to “normal” levels of interest rates quite soon, the current model of capitalism, which depends on market-determined long-term rates, cannot function. If they do, however, raise interest rates any time soon, with debt leverage still…
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Failure to grasp the implications of global finance
That's why the future of the world economy is balanced in a knife edge.
It could go either way – towards “sauve qui peut” nationalism, withdrawal from international cooperation, a turning away from globalisation; or towards a remaking of the international system and regulatory apparatus in an effort to harness the benefits of globalisation for citizens. It could depend on chance events. The downing of a…
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The importance of getting money right
The lifechances of seven billion people are shaped by global money
The experience people have of the world, their life chances, what they learn, how they live, where they live, indeed their entire social and personal lives are shaped by monetary relationships, the monetary economy and thus to the world monetary system to an extent completely unprecedented in history. This means getting money wrong will have…
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Nation states fight to keep control over money
Policies remain resolutely national - which is why they are failing
The major international efforts after the crisis has focussed on action by each state to increase fiscal and monetary stimulus so as to move as close as it dare to full employment. In bank regulation, also, the emphasis has been on national measures, as in Dodd-Frank and similar measures in Japan and the…
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Globalisation – a poisoned chalice
Globalisation will triumph but bring many new problems with it
Against such a backdrop, financial globalisation appears to be a weak force. Yet it exists. It exists in many senses. Nations may raise capital controls – though surprisingly few actually have done. But there are ways round them. People’s desire to connect to the major centres of finance where the opportunities and investment chances…
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