Tag Archives: central banks
How to control those central bankers
Last Tuesday I went along to the Adam Smith Institute to listen to Brendan Brown launch his new book, “The Global Curse of the Federal Reserve”. Brendan picked out three channels through which central banks’ ultra-low interest rate polices can trigger asset price inflation (followed invariably by a crash): Central bank pegging of…
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Why Asia did not cause the financial crises
New attempts are being made to resuscitate the “savings glut” hypothesis of the origins of the great financial collapse and recession and the eurozone’s agony. This hypothesis is wrong. What matters is not saving but financing. Countries running current account surpluses do not finance those running current account deficits.The deficits are financed…
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Christine Lagarde gets it wrong
“The financial system can work if each of its members follow the right principles for their economy” M Lagarde has had a successful year at the Fund but this statement at the G20 meeting in Moscow yesterday shows the Fund has not learnt the key lesson of the economic disaster. The mistaken…
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The G30 plays blind man’s bluff
Watching governments, central bankers and economists explore the remaining ruins of the old pre-2007 economic structure is like watching children playing a game of blind man’s bluff. Being blindfolded, they cannot see what is around them, and are compelled to rely on their other senses. Much amusement is to be had for the onlookers,…
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The turning point for gold – now what?
Following my last post on gold, I got several comments: for and against. One said that the real reason gold has come back over the past 10 years is that central banks have stopped selling and started buying again. Indeed! Net gold purchases by central banks in 2012 were 534 tonnes –…
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The Fed at 100
The Federal Reserve Act was signed into law by President Wilson on December 23 1913. Its purposes were “To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.”…
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Gordon Brown on stubborn national politics
Gordon Brown is far from being my favourite politician. As economic Czar of Britain’s Labour government from 1997 to 2007 he started well – struggling hard and long to establish fiscal credibility – only to throw it all away. He then spent a miserable three years as prime minister to 2010 trying to contain the…
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Regulation at a dead end
Last week Charles Goodhart uttered what I called his cry of despair (See RP’s Diary 13/01/13); now it is BOE’s Andy Haldane’s turn. Goodhart has realised that we are running out of monetary policy models – rules or frameworks like inflation targeting (IT) by which central banks steer interest rate policies. He warns of…
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Goodhart’s cry of despair
Five years after the international banking system fell into the arms of the central banks and governments, there is still a paralysing uncertainty about the extent and cost of regulation, the viability of banking models and the monetary policy regime. More about financial regulation and banking models in future columns. Now let us look…
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Please, don’t fall in love with NGDPLT
The Fed, the Bank of Japan and the Bank of England are said to be moving to adopt an acronym as the next love of their life – NGDPLT. The notion that monetary policy should aim to ensure steady growth in domestic output, measured in current prices, was first put forward during the…
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