Much has changed in the institutional organization of money markets since Fall 2012 when INET filmed my course “Economics of Money and Banking”, but what strikes me most is how well the fundamental analytical structure has held up. The two ideas that I identify as central to the “money view”—the importance of the daily settlement […]
A 2017-end post with this title might be thought to focus on bitcoin, and I will indeed have something to say about that, but in my view the bitcoin bubble is mostly a symptom of deeper trends that need to be uncovered first. Today money is global, so we can start pulling the string anywhere […]
You can title your conference whatever you want, but the actual content will depend on the speaker list. The convenors of the Jackson Hole Economic Symposium apparently hoped to generate discussion about “Designing Resilient Monetary Policy Frameworks for the Future”. Having read all the papers, I can report that only one of them really engages […]
On 13 September the BIS released its latest Quarterly Review placing emerging market vulnerabilities at centre stage. On 17 September, the FOMC voted against raising its target policy rate, citing near-term headwinds for the US coming from abroad. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further […]
The Office of Financial Research is out with a new “Reference Guide to U.S. Repo and Securities Lending Markets” which collects together in one place most of what is known, and draws some attention to how much is not known, about this key bit of monetary infrastructure. Kudos to the authors for treating repo and […]
In a followup from their much-discussed (by me here) May memo, Pozsar and Sweeney predict “A Turbulent Exit” when the Fed begins to raise rates. FT Alphaville and Bloomberg both appreciate the importance of the memo, but focus attention on the exchange rate dimension, and so miss the main point. Let’s walk through the argument […]
Goldman Sachs takes “A Look at Liquidity”, and tells us what they see. Suffice it to say that different people see different things, depending on their vantage point, like the proverbial blind men touching the elephant. Let’s see if we can construct a picture of the animal as a whole from the snapshots provided. What […]
The recently released PwC “Global Financial Markets Liquidity Study”, sounds a warning. Financial regulation, while perhaps well-intentioned, has gone too far. Banks may be safer but markets are more fragile. At the moment, this fragility is masked by the massive liquidity operations of world central banks. But it will soon be revealed as, led by the Fed, […]
Does this sound familiar? Falling commodity prices, unsustainable official debts, crashing stock markets, pullback in global lending by dominant megabanks, misaligned currencies, plus a healthy dose of political dysfunction. These are the ingredients, according to Charles Kindleberger, that made for world depression in 1929-1939. “My contention is that the difficulty lay in considerable latent instability […]
The official report on events of October 15, 2014, is now public and it makes fascinating reading. Most news accounts of the report have taken its bland no-smoking-gun conclusion at face value, but if you actually read the report a rather clear picture emerges, along with some rather obvious unanswered questions. Bloomberg has the best […]