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Tag Archives: seignorage

There is no magic wand

A recent essay by Yanis Varoufakis illustrates a frequent problem with media discussion of central bank policies: Central bankers once had a single policy lever: interest rates. Actually, the policy lever was open market operations; interest rates were one of the variables affected by those operations.  A tight money policy might raise interest rates if the liquidity effect dominated or it might reduce interest rates if the Fisher effect dominated.  Changing interest...

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