monetary policy

Will the Brits go negative?

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A little over a year ago, I argued that the Federal Reserve should consider charging banks for the privilege of holding their reserves.  The reasoning for this is straightforward: charging interest on banks (instead of paying interest, as the Fed now does) will encourage banks to come up with more profitable uses for their money, … Read more

Wanted: Central Banker

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A couple of weeks ago, the Economist magazine ran an unusual “help wanted” ad.  The Governor of the Bank of England, Sir Mervyn King, will retire in June and the British government is looking for a replacement. On the one hand, it might seem like a great job.  The Governor receives a salary of £300,000, … Read more

A Blatant Misuse of History

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Writing nearly 40 years ago, historian Ernest R. May warned of the dangers of misusing history for policy purposes.  May was primarily concerned that policy makers drew the wrong lessons from the past. In their opinion piece in yesterday’s Wall Street Journal, Glenn Hubbard, dean of Columbia Business School and an advisor to Mitt Romney, … Read more

Ben Bernanke is a much better economist than John Taylor

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Writing in Thursday’s Wall Street Journal, John Taylor takes the Federal Reserve to task for its “interventionist” behavior. Taylor’s main complaint with the Fed’s conduct of monetary policy is that it is unstable and unpredictable (verging on the whimsical!).  He argues that this stems in part from the Fed’s mandate to pursue low unemployment in … Read more