Banking's Past, Present, and Future
Since the outbreak of the subprime meltdown, the Federal Reserve has shown itself ready, willing, and able to adopt unconventional monetary policies in order to reverse the downturn ushered in by the financial crisis. Recent Fed innovations have included quantitative easing in order to inject more money into the economy, intervention in the debt market … Read more
Winston Churchill said that democracy is the worst form of government except all those other forms that have been tried. The financial crisis has tested Churchill’s assertion. In Greece, the austerity measures imposed on the country by the EU and the ensuing domestic unrest led Prime Minister George Papandreou to call for a referendum to … Read more
British clothing retailer Simon Wolfson (known to his friends in the House of Lords as Baron Wolfson of Aspley Guise) announced several days ago the establishment of the Wolfson Economics Prize (read the press release here). The prize, worth a cool £250,000 (about $400,000)–second only to the Nobel Prize in Economics, in terms of … Read more
Texas Governor and Republican presidential candidate Rick Perry, “…brought the Fed directly into the campaign debate Monday night by saying it would be ‘almost … treasonous’ for the central bank to play politics by expanding the money supply. “‘If this guy prints more money between now and the election,’ Mr. Perry said in Cedar Rapids … Read more
Writing in the Wall Street Journal, Seth Lipsky argues that we need fewer economists and more constitutional scholars at the Federal Reserve. Lipsky’s column was inspired by Sen. Richard Shelby’s (R-AL) move to block the nomination of Peter Diamond, an MIT professor and 2010 winner of the Nobel prize in Economics, to the Board of … Read more
In a very entertaining piece in this weekend’s Wall Street Journal, Joe Queenen gripes about how economists measure inflation. He starts by lamenting the high cost of everything from gas, to bagels, to coffee. “You can imagine my surprise,” he continues, “when the latest economic data came out and we were told that inflation wasn’t … Read more
Representative Barney Frank (D-MA) has introduced a measure that would change the membership of the Federal Open Market Committee (FOMC), the group within the Federal Reserve that sets short-term interest rates by intervening in the federal funds market. The FOMC currently consists of the seven members of the Board of Governors of the Federal Reserve … Read more
The Wall Street Journal has demonstrated nostalgia for the gold standard by publishing two pro-gold standard opinion pieces this week. Both are long on nostalgia and short on analytical content. On Tuesday, long-time gold enthusiast Lewis Lehrman made his pitch, arguing that a return to the gold standard was necessary to restore fiscal balance. I … Read more
The 600-plus page report of the US Financial Crisis Inquiry Commission should make for interesting reading for those with the patience to read it. It would be useful to wade into the argument between the Commission, which argues that the crisis was “avoidable” and the Financial Times, which argues that it was not. Maybe later. … Read more
Writing in the Financial Times, World Bank President Robert Zoellick argues for greater economic coordination among the G20 nations. It was not clear from his op-ed exactly how coordinated a system he envisions. On the one hand, he calls for a monetary system to succeed Bretton Woods, implying a system of fixed exchange rates (and … Read more