Tag Archives: central banking
So what’s up?
Apart from the nomination of Janet Yellen ( a lovely, motherly person) to lead the Fed, what has happened since we departed for our summer/autumn long vacation? As always, the view one takes depends on your perspective. Are you the driver of a car negotiating tricky twists and turns, looking for traffic coming at…
» Continue Reading
Central bankers should prepare for a new world
Central bankers are still trying to rescue their monetary policy models with some additional twists such as forward guidance, but not engaging in the fundamental re-think needed. (If you need better authority than I for this assertion, please do read Bill White in the Dallas Fed series here). Paul Tucker tells us that the new…
» Continue Reading
Where have all the safe assets gone?
While it has already become a cliché to say that there is no such thing as a risk-free asset, policy makers and market participants are only just beginning to recognise what a major shift this is. If we are to get back to anything like the traaditional financial system, renewing the supply of such…
» Continue Reading
Which anchor for money?
The supply of money needs to be limited or ‘anchored’ to prevent excessive supply reducing its value. At present money is supposed to be limited by central banks following inflation targeting models. However, this paradigm has lost traction under the strain of the crisis. In effect we have returned to a discretionary monetary policy,…
» Continue Reading
The epiphany of central banking
Having listened to the three witches, and acted accordingly, only to be betrayed ‘in depest consequence’, our hero ‘Macbeth’ reaches his ascendancy, which marks the start of his downfall. He has a moment of realisation… Have central banks also reached an epiphany? Central banks have been instructed to keep their eyes not only on…
» Continue Reading
Sleeepwalking to destruction
I do not suppose that central bankers like to be compared to witches, but for my money the best account of how the financial crisis came about is in Macbeth. Banquo warns Macbeth to be wary of the witches’ implied promises: And oftentimes, to win us to our harm, The instruments of darkness tell us…
» Continue Reading
Central banks into equities
When I first proposed that central banks might hold a basket of diversified equities on the assets side of their balance sheets, it was an unheard-of notion. My friends advised me to take it out. “People will think you’re crazy”, they said. Now it turns out that that is exactly what a growing number of…
» Continue Reading
Fred Bergsten calls for monetary reform
Fred Bergsten of the Peterson Institute is the “enfant terrible” of US international monetary and economic debate. Fending off the passing years, it is a role he has played with great panache for the best part of half a century. Always at the centre of things, always provocative, frequently infuriating, he has, as head of the…
» Continue Reading
How central banks undermine the market economy
The risks and dangers for the global economy are like hidden reefs for a ship – invisible but deadly. It is quite possible, for example, that expansionary US monetary policy can cause an asset boom in China so large that its collapse would bring the Chinese economy down with it – and thus throw the…
» Continue Reading
Is “The Money Trap” too radical?
The most common response I have had to the proposals made in my book for a new banking system and global monetary reform is that they are too radical, too ambitious, and won’t happen. When I ask such critics (who are usually of a friendly disposition) what are they suggesting, they usually reply that slow…
» Continue Reading