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Tag Archives: global financial system

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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Bury inflation targets and get a real monetary framework

    To wean central banks from inflation targeting you’ll have to snatch it from them by force; they are clutching it ever more tightly to their breasts. But they must bid it a tearful goodbye. The big question is what will replace it. Mark Carney has said that: “Flexible inflation targeting is the most successful…
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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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Is real reform within our grasp?

Not many central bankers or regulators are willing or able to think deeply about the nature of money and the implications of the collapse of trust in banking.  Two exceptions are Mervyn King and Peter Praet. This post is about them and other thinkers worth attending to.   King’s views are well known and he…
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Memories of Professor James Buchanan

I first came across James Buchanan through his long-term collaborator and colleague, Professor Gordon Tullock. It must have been in 1972 or 1973. Gordon and I met by accident in Frankfurt, where I was interviewing the then president of the Bundesbank for The Banker, of which I was then editor. We had one of those…
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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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