Monetary Policy
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“Fed Will Hold Interest Rates – And Inflation Will Rise”
“Early this year, it was our belief (and forecast) that the Federal Reserve would start lifting interest rates from their current level of near zero by mid-year 2010. Our view has been that 0% interest rates are too low, that the economy would be (and is) in recovery, and that inflationary pressures would continue to…
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“Financial Regulation Bill Will Hurt Main Street”
“The U.S. Congress should be forced to take the same oath that doctors take to “first do no harm.” Because more often than not, under the guise of “fixing” a problem, Washington makes things much, much worse for hard-working middle-class families and small businesses. That’s precisely the problem with the financial regulation bill that’s before…
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“The Great Chinese Inflation”
“Inflations have undermined the cultural and economic fabric of society, bringing social chaos and revolution. One example is the Great Chinese Inflation of the 1930s and 1940s. Indeed, the destruction of the Chinese monetary system during this period helped Mao Zedong’s communist movement triumph on the Chinese mainland in 1949. In the nineteenth and early…
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Inflation Destroys Savings
“Everything that is done by a government against the purchasing power of the monetary unit is, under present conditions, done against the middle classes and the working classes of the population. Only these people don’t know it. And this is the tragedy. The tragedy is that the unions and all these people are supporting a…
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The Return of British Stagflation?
The UK inflation rate jumped to 3.7 percent last month, way above the Bank of England’s 2 percent target. This comes as a surprise to both the monetary policymakers of the BoE and to the newly formed coalition government. The Bank’s Governor Mervyn King explains this sudden rise in consumer prices in a letter to…
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“Roberts on the Crises”
“Russ Roberts, host of EconTalk, discusses his paper, “Gambling with Other People’s Money: How Perverted Incentives Created the Financial Crisis.” Roberts reflects on the past eighteen months of podcasts on the crisis, and then turns to his own take, a narrative that emphasizes the role of government rescues of creditors and the incentives this created…
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“The Great 18-Year Real Estate Cycle”
“On January 3rd, US Federal Reserve Chairman Ben S. Bernanke delivered a major speech at the annual meeting of the American Economic Association. In his formal paper, “Monetary Policy and the Housing Bubble,” Chairman Bernanke argues that the Fed’s monetary policy was not responsible for the U.S. housing bubble. He claims that faulty regulation was…
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Stephen Roach Calls for a New Monetary Policy Regime
Stephen Roach, Chief Economist of Morgan Stanley, have been a critic of the Fed for many years. In a Financial Times op-ed he makes the case for exiting the current monetary policy regime once and for all: “it is high time to banish the moral hazard of macro policy – the false sense of security…
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“Venezuela’s Monetary Mayhem”
“Anchoring the currency to the dollar and thus outsourcing monetary policy to the U.S. Federal Reserve had been a success, but special interests and politicians could not bear that it robbed them of power. Venezuela is another place where the politicians see no reason why the state’s appetite for grabbing private-sector wealth should be constrained.…
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Fed Monetary Dissident Thomas Hoenig
Thomas Hoenig, a voting member of the Fed’s interest rate decision body, the Federal Open Market Committee (FOMC), has on several occasions expressed concerns about the direction of U.S. monetary policy. During the last year, he has been a lone voice of dissent at FOMC meetings. This weekend’s Wall Street Journal features an interview with…
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Shining a Light on the Fed
Much has been made recently of the plan to audit the Fed (here, here and here). It is a very interesting idea. Given the amount of money ($2 trillion) the Fed sent out in bailout loans, it makes sense that the taxpayers who funded it want to know where the money went. Given the Fed’s…
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Will Congress ever reform the Fed?
“This week’s Senate floor votes on the powers of the Federal Reserve caught my attention. Despite Congress’s bipartisan lashing of the Fed for its performance before and after the financial crisis of 2008, the Fed this week defeated two challenges to its autonomy as a central bank. Granted, Congress’s pummeling of the Fed (recall Bernanke’s…