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Tag Archives: Monetary Policy

Janet “There Won’t Be Another Financial Crisis in Our Lifetime” Yellen Worried About Another Crisis

Remember back when Janet Yellen was heading up the Federal Reserve and she claimed there won’t be another financial crisis “in our lifetime?” You don’t have to think back too far. It was just about 18 months ago. Tuesday, June 27, 2017, to be precise. But now that Yellen has vacated the Eccles building and taken up residence at the Brookings Institute, she’s changed her tune. In fact, she’s singing an entirely different song.During a talk at the City University New York, this week, Yellen...

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Some Links

In the Wall Street Journal, Richard Epstein critically reviews Tim Wu’s new book on antitrust policy. A slice: As to the first, the protection [through antitrust enforcement] of the small businessman comes at a high price. It forces consumers to do business with small firms that may well have a local geographical monopoly, which would be undercut by a larger firm offering better goods at lower prices. Today the entry of such a competitor often comes from online merchants, like Amazon,...

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Monetary policy effectiveness: Regimes and instruments

The Mercatus Center has a new working paper by Hylton Hollander and Lars Christensen.  Here’s the abstract: The monetary authority’s choice of operating procedure has significant implications for the role of monetary aggregates and interest rate policy on the business cycle. Using a dynamic general equilibrium model, we show that the type of endogenous monetary regime, together with the interaction between money supply and demand, captures well the actual behavior of...

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Should the Fed purchase Treasuries only?

George Selgin has an interesting post discussing the question of whether the Fed should buy only Treasury securities, or a cross section of marketable securities.  This issue came up at a recent Cato money conference, where Joe Gagnon suggested the Fed might want its balance sheet to include a relatively comprehensive portfolio of public and private sector assets.  George has advocated a similar policy, but also quoted Marvin Goodfriend favoring a “Treasuries only”...

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The dog that isn’t barking

The most revealing comments are often those that seem obviously appropriate, but no one ever makes. In this post, I’ll discuss one such example, the economic profession’s strange reluctance to come to grips with the failure of Bush’s 2008 stimulus package. It’s not that people don’t recognize that the stimulus failed, rather that they are unable or unwilling to admit to the reason why it failed. Readers of the blog know that I have an extremely low opinion of modern...

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Some thoughts on Powell’s speech

The stock market rose strongly after Jay Powell seemed to adopt a slightly more dovish tone in a speech today: The Federal Reserve chairman declared US interest rates are closing in on “neutral” levels, triggering a stock market rally as investors interpreted the comments as a signal the central bank is preparing to slow down its rate-rising programme. While he defended the Fed’s recent gradual rate hikes, Jay Powell said the central bank will be watching new economic...

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Extremism in the defense of subsidized liberty is a (conservative) vice

I’ve recently done posts on America’s financial system as well as its health care system.  I view both systems as borderline disasters, and more particularly socialist disasters.  In my previous post, I lamented that the taxpayer now assumed so much risk from bank deposits that banks were encouraged to take excessive risks, leading to occasional financial crises. In the post on health care, I discussed how the US government spent even more than European governments,...

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Some Links

My intrepid Mercatus Center colleague Veronique de Rugy and my friend Deroy Murdock appeared today with Douglas Holtz-Eakin on Charles Payne’s show to discuss the cronyist policies that led to Amazon selecting Arlington, VA, and Queens, NY, for its new headquarters. George Selgin’s new book – Floored! – on how the Fed worsened the 2008 financial crisis is out. Buy it and read it! Tom Firey worries – understandably – that Trump will endorse an increase in the national minimum wage. A...

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Peter Schiff: Jobs Are Another Bubble About to Burst

October jobs numbers came out on Friday and everybody was all giddy about healthy growth. But in his most recent podcast, Peter Schiff said jobs are just another bubble about to burst.According to the Labor Department, the US economy added another 250,000 jobs in October. The unemployment rate held steady at 3.7%. Earnings took their biggest leap since 2009, rising 3.1% year-on-year.Peter noted that everybody considered this a really good report, but we’re working off a...

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I don’t find “monetary disequilibrium” to be a useful concept

I’ve been doing some reading on the subject of “monetary disequilibrium”, and have trouble seeing how it’s a useful concept. Here I’ll try to explain why. Warning, this stuff is really confusing (at least to me.) Suppose there is a bumper crop of wheat. Does this create disequilibrium in the wheat market? In the absence of price controls the answer would seem to be no. The price of wheat declines rapidly, insuring that quantity supplied continues to be equal to...

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