Category Monetary policy
Where’s the put?
People used to talk about a Greenspan put. It was a put on stocks. Now there's a Bernanke put, but it's a put on bonds. More precisely, it's a put on US government bonds, not on all bonds. Greece doesn't have its own central bank, and there isn't much of a Trichet put on Greek […]
What’s wrong with New Keynesian macroeconomics — an MM perspective
There are many things right with New Keynesian macroeconomics. It is a very good synthesis of many strands in Monetarist, Keynesian, and New Classical macroeconomics. But this post is not about what's right with New Keynesian macroeconomics. There are also many things wrong with current New Keynesian macroeconomics. New Keynesian macroeconomists are aware of many […]
The Euro, “less competitive countries”, and the neutrality of money
I'm not a great defender of the Euro. I think it was a mistake. But there's one argument against the Euro that I'm not happy with. It goes something like this: "Some of the Eurozone countries are just permanently less productive than others. The less productive countries just can't compete if they all share a […]
The Excess (constrained) Demand for Money
I noticed something a bit strange about the responses to my last post. For the last couple of years I have been writing lots posts saying (in various different ways) that recessions are always and everywhere a monetary phenomena. That Keynesian models do not make any sense except in a monetary exchange economy (which is […]
A response to Paul Krugman
Paul Krugman has a lot in common with quasi-monetarists like me. [Update: I'm going to re-emphasise this. On reading Paul's post, it is now much clearer to me than it was in the past that there is a helluva lot in common between Paul Krugman and quasi-monetarism. So many economists just don't get the central […]
Fences, Walls, Pillars and Banking
A government report out of the United Kingdom recommended that UK banks should “ring-fence” their retail banking divisions to protect them from riskier investment banking arms. The Independent Commission on Banking (ICB) calls for these changes to be implemented starting in 2019.
Currency, interest, and redeemability
What makes a central bank special? The Bank of Canada can borrow and lend. So can the Bank of Montreal. So can I. Nothing special there. The Bank of Canada can set any rate of interest it likes when it lends. So can the Bank of Montreal. So can I. Nothing special there. "If you […]
Good and bad currency wars
Canadian Finance Minister Jim Flaherty is concerned that Switzerland's actions to depreciate the Swiss Franc against the Euro could lead to a currency war. But currency wars don't have to be bad; they could be good. It depends on how they are fought. If fought the right way, an invisible hand may lead to a […]
A shotgun wedding for the United States of the Euro?
"Ummm, you know that Free Trade Agreement we signed with the US and Mexico, a while back? And you know we said NAFTA was just a free trade agreement — nothing more? Ummm, well, it turns out we were wrong. Because of NAFTA, if Canada, Mexico, and the US don't now join together into one […]
2 into 17 won’t go
Hans-Olaf Henkel (H/T Larry Willmore) suggests splitting the Eurozone seventeen into two. He wants Germany, Austria, Finland, and the Netherlands to leave the Euro and create their own new common currency. The remaining countries would keep the Euro. I don't think this would work. (But I agree a lot with the other things he says). […]
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