What follows is a Foreword I wrote for the Japanese translation of New Lombard Street, coming out later this year: The Global Financial Crisis (GFC) of 2007-2009 served as the first real stress test of the global financial system we had been building over the preceding decades. I refer here to the market-based credit system […]
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 […]
A History of Macroeconomics, by Michel De Vroey. Cambridge University Press, 2016. De Vroey’s book reads like a travelogue recounting his life journey as a macroeconomist, and his considered response to key texts he encountered along the way. Always thoughtful and penetrating, he stimulates this reader to reflect anew on how we got to where […]
In his recent paper, “A Lost Century in Economics: Three Theories of banking and the conclusive evidence”, Richard Werner argues that the old “credit creation theory” of money is true (empirically “accurate”), while both the newer “fractional reserve theory” and the presently dominant “debt intermediation theory” are false. For him, this matters mainly because the […]
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 […]
The Fed has announced plans to raise rates in the imminent future, but the market does not believe it. Why not? Conventional wisdom appears to be that the Fed will chicken out, just as it did during the so-called Taper Tantrum. The Fed has signaled its appreciation that “liftoff” will involve increased volatility, and has […]