Category Monetary policy
Bond vigilante attack = bursting the bond bubble = target NGDP
The title says it all. There's not much to add. "Bond vigilante attack" is just another name for "bursting the bond bubble". And loosening monetary policy would do that.
Waiting for the bond vigilantes
Paul Krugman is right if he is talking about a small attack by the bond vigilantes. It's a good thing, because it increases Aggregate Demand, which is what the US economy needs. But too much of a good thing will be a bad thing. A large attack by the bond vigilantes would be a bad […]
Forward guidance, borrowing degrees of freedom, and the inflation target horizon
This is something I do not understand very well. I'm writing this to try to help me think about it more clearly. Eight times a year, at each Fixed Announcement Date, the Bank of Canada does two things: it announces a target for the overnight rate until the next FAD; it provides some "forward guidance" […]
Medium of Account vs Medium of Exchange
Money has two defining functions: it is the medium of account (all prices are quoted in terms of money); it is the medium of exchange (all other goods are only bought or sold for money). ("Store of value" is not a defining function of money, because my canoe is a store of value too.) Scott […]
Liquidity-Velocity Multipliers, Menger, Money, and Financial Crises.
This is a Sunday morning [evening – I hesitated] post, about some ideas I'm playing around with, trying to get my head straight. I'm just throwing it out there, and wondering if it has enough empirical "oomph" to fly. I don't think there's anything original here. "It's all in Menger". But Menger didn't draw a […]
Trashing balance sheets and observational equivalence of fundamental and bubble money
Four years ago (and again two years ago) I argued it might be good policy for central banks to (conditionally) trash their own balance sheets. Now this idea is in the news. See Ralph Musgrave for links. The recent blogosphere debate over whether money is or is not a bubble must have sounded like angels […]
Liquidity, bubbles/ponzis/chain letters, and money
I might as well join in the fun. Along with Steve Williamson, Noah Smith, Karl Smith, Paul Krugman, David Glasner, and Steve again. [Update: and Brad DeLong and JP Koning. And David Andolfatto.] Some assets are more liquid than others (they have lower transactions costs of buying and selling). More liquid assets will have a […]
You can’t estimate Optimal Currency Areas that way
The better the Bank of Canada is doing its job, the more it will appear that the Bank of Canada should be broken in two. The worse the ECB does its job, the more it will appear that the Eurozone is an Optimal Currency Area. If central banks were even slightly more competent than random […]
The burden of the (bad monetary policy) on future generations
You can try to kill zombie ideas. Or you can try to reframe them. I'm fed up with killing the "The national debt is not a burden on future generations because they will inherit (sic) the bonds as well as the debt so they will owe it to themselves" zombie. I already killed it a […]
Simple thoughts on NGDP = RGDP x P
There have been several recent posts in the blogospere arguing about the interpretation of graphs (for several countries, but you can see Canada's here) which show a big fall in NGDP (relative to trend) at the beginning of the 2008 recession. (The latest from Ryan Avent here; Tyler Cowen's collection of links here.) Here are […]
Worthwhile Canadian Initiative 
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