Tag Archives: banking
Money, civilisation and their discontents
The usual way to destroy the social value of money is through inflation, and that has indeed been the fate of most fiat currencies. Yet there are other ways to reduce the quality of money and thus its ability to support a civilisation. Money becomes less useful, for example, when the objects you can spend…
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Between Debt and the Devil: A Review
According to Adair Turner, Britain’s former chief financial regulator, the global financial crisis had one big cause: bad ideas. These are ideas that Turner disapproves of. The key proposition of his new book is simply stated: “banking systems left to themselves are bound to produce too much of the wrong sort of debt, instability and…
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‘The Money Trap’ now
The book argued that the crisis was the joint product of inflation targeting, irresponsible banking and a weak international monetary system. The book tried to show how these were inter-related: First, inflation targeting, which had been a valuable tool in combatting 1970s inflation, had by the 2000s outlived its usefulness as a guide and discipline for…
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Haldane , Rajan on the future of central banking
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
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”
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
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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Why real investment is so sluggish
Low real interest rates would normally be expected to stimulate capital investment by lowering the cost of finance for companies – large and small. Yet real investment remains sluggish in nearly all developed economies. Some blame austerity measures taken to control fiscal deficits. Others blame the rise in precautionary savings by the private sector…
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What major monetary and banking reforms are needed?
The global financial crisis should be seen as a symptom of the lack of fit between three pieces of the jigsaw of modern finance – national or regional monies, innovative financial markets and a globalized financial system. It provided both an encouragement and a warning – an encouragement to search for alternatives…
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2. For and against reform
What are the forces favouring reform – and those obstructing it? Natural development: There is a natural tendency for a dominant currency to emerge as the de facto global currency. The US dollar has served that purpose and inertia keeps it in the leading place. But It is in the interests of the US…
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