Friday , December 13 2019
Home / Frank Fuhrig

Frank Fuhrig



Articles by Frank Fuhrig

From Stagflation to Quantitative Easing: The History of the Cato Institute’s Monetary Conference

November 12, 2019

The US economy was still in the shadow of stagflation as the market-oriented Cato Institute held its first monetary conference in January 1983.
The economists, journalists, and other policy wonks at that first Washington meeting could never have foreseen the dawn of a nearly 25-year “great moderation” of steady growth with low inflation.
“In fact, we had an inflation rate peaking pretty much in about 1980, 13 percent or so,” Cato economist Jim Dorn, founding director of the conference, recalled on a recent episode of the Macro Musings podcast. “The federal funds rate, nominal federal funds rate, was almost 19 percent at one point. Mortgage rates were very high.”
The 2007-09 crisis, though, was similar in severity to the 1981-82 recession, in which US unemployment hit a post-World War II

Read More »

Allan Meltzer Book Grew from Podcast Episode

October 22, 2019

The seeds of a newly published book memorializing eminent economist Allan Meltzer sprouted from the Mercatus Center’s Macro Musings podcast.
Titled Reflections on Allan H. Meltzer’s Contributions to Monetary Economics and Public Policy, the book contains eleven essays on the work and influence of one of the leading monetary economists of the 20th century. The book was edited by David Beckworth, senior research fellow at the Mercatus Center at George Mason University, and host of Macro Musings.
The interview that inspired this new book was recorded in November 2016.
“Allan Meltzer agreed, graciously, to join me for a podcast in front of a live audience, and this was just about six months before he passed away,” Beckworth said. “Honestly, I wasn’t sure how it was going to unfold and happen,

Read More »

US-China "Phase 1" Pact: Trade War Turning Point, or Just Getting Our Hopes Up?

October 14, 2019

The US and China have agreed in principle on a preliminary trade pact.
After a White House meeting Friday with Chinese Vice Premier Liu He, President Donald Trump called it a "very substantial phase one deal." Details were scant, but China promised to buy at least $40 billion dollars in agricultural products, while Trump froze another tranche of tariffs that were due to take effect next week on a large swath of Chinese exports.
Mercatus Center trade economist Christine McDaniel called the announcement "good news" amid what has been an escalating tariff war between Washington and Beijing:
"We will wait to see if it sticks, and how soon ‘phase two’ will start. But at least there is a pause on more tariffs, and there are signals that each side may be willing to come to the table to move

Read More »

Facts About Nominal GDP Level Targeting

October 1, 2019

The Federal Reserve is conducting a rare review of its monetary policy framework. In February, the Fed launched an ongoing listening tour with events nationwide. The central bank’s policy-making Federal Open Market Committee is slated in the first half of 2020 to report its findings on the strategy, tools and communications methods to best meet the Fed’s statutory dual mandate of maximum employment and price stability.
In the event of a major reform to the Fed’s policy framework, one option that has gained momentum in the economic community is nominal GDP (NGDP) level targeting, sometimes synonymously known as nominal income targeting.
Among monetary policy experts, Mercatus Center senior research fellow David Beckworth, host of the Macro Musings podcast, is a leading advocate for NGDP

Read More »

Key to Financial Stability is Higher Capital Requirements, Policy Analyst Argues

September 24, 2019

There is no substitute for adequate capital requirements to maintain stability in the financial system, policy analyst Gregg Gelzinis argues on the latest episode of the Macro Musings podcast.
“The more capital you have, the less I think you need to rely on other regulations, whether they be liquidity requirements or risk management standards or single-counterparty credit limits, stress-testing, living wills,” says Gelzinis, who works on financial institutions, financial markets, consumer finance policy and other financial regulation issues at the Center for American Progress. “But it’s a balance, so the higher you go in terms of capital, then the more comfortable I am in, if not completely eliminating, then winding down the stringency of some of those other rules.”
The Financial CHOICE

Read More »

Soumaya Keynes Says Trump Trade Tweets Have Unleashed "Bigger Uncertainty" Beyond Tariffs

September 18, 2019

The current trade wars are hardly the first or even the worst bout of protectionism in US history, but the current political environment is posing unprecedented challenges for businesses, Soumaya Keynes, US economics editor for The Economist, says in the latest edition of the Macro Musings podcast.
“Donald Trump, I think, poses a more systemic threat, in that you’re at the whim of his Twitter feed, essentially,” she says. “He’s shown willingness to use tariffs as a lever against anything, and that is tough for businesses to deal with.”
So far, Trump has slapped or threatened import taxes of up to 30 percent on all Chinese-made goods, plus levies against steel and aluminum from most countries.
“If you look at the actual dollar amount of the tariffs, they’re just not that big.” But Keynes

Read More »

Soumaya Keynes Says Trump Trade Tweets Have Unleashed "Bigger Uncertainty" Beyond Tariffs

September 18, 2019

The current trade wars are hardly the first or even the worst bout of protectionism in US history, but the current political environment is posing unprecedented challenges for businesses, Soumaya Keynes, US economics editor for The Economist, says in the latest edition of the Macro Musings podcast.
“Donald Trump, I think, poses a more systemic threat, in that you’re at the whim of his Twitter feed, essentially,” she says. “He’s shown willingness to use tariffs as a lever against anything, and that is tough for businesses to deal with.”
So far, Trump has slapped or threatened import taxes of up to 30 percent on all Chinese-made goods, plus levies against steel and aluminum from most countries.
“If you look at the actual dollar amount of the tariffs, they’re just not that big.” But Keynes

Read More »

Pressuring the Fed Is No Surefire Electoral Solution, Says Economic Historian

September 3, 2019

President Donald Trump’s unabashed lobbying for the Federal Reserve to loosen monetary policy is unprecedented only in his use of social media to demand rate cuts and label his handpicked chairman as an “enemy.”
Many presidents have yearned for a warmer financial climate, and some have exerted real pressure on the Fed, albeit through less public channels than Twitter. Founded in 1914, the central bank’s role in the economy was still developing when the Great Crash hit in 1929, and then-president Herbert Hoover was keen for a more active, accommodating Fed, according to economic historian Judge Glock.
As the Depression deepened, Hoover embraced the theory that the Fed should orchestrate a decline in long-term interest rates to spur growth, but then-Federal Reserve chief Roy Young was

Read More »

"Enormous" Pressure in Next Recession for Wider QE Purchases, Former FOMC Voter Predicts

August 26, 2019

One of the Federal Reserve’s strongest post-crisis internal critics continues to worry about the long-term repercussions of the US central bank’s bond-buying.
Thomas Hoenig, who was a 20-year participant in meetings of the rate-setting Federal Open Market Committee (FOMC) and rotating voter in monetary policy decisions as president of the Federal Reserve Bank of Kansas City from 1991-2011, says in Monday’s edition of the “Macro Musings” podcast that so-called quantitative easing distorted returns to capital, benefitting asset holders over wage earners.
The Fed bought more than $3 trillion in US debt and other federally-backed bonds from 2008 to 2014, soaking up safe-haven investments in hopes of forcing money into the private economy to stimulate growth. Hoenig said that one of his

Read More »

Safe Asset Supply Failing to Meet Demand, Economist Crowe Says

August 19, 2019

The global imbalance between fast-growing emerging markets and more sluggish advanced economies is a key reason for extremely low and even negative yields on safe assets, British economist Chris Crowe argues on Monday’s edition of the Macro Musings podcast.
Crowe, head of economic and flow research at London-based hedge fund Capula Investment Management LLP, estimated that total available safe assets peaked around 70 percent of global gross domestic product in 2009-10 and are now only equivalent to about 45 percent of the world economy.
“As demand has increased with the growth of the global economy, the net supply of those safe assets has not kept up,” he said.
Even with sovereign debt-to-GDP ratios elevated in some economies, including the United States, yields on government paper remain

Read More »