Monetary Policy

Thursday, May 5th, 2011
"F.A. Hayek said that his biggest regret in a lifetime of writing was that he never wrote a book-length refutation of Keynesian economics. He seriously doubted that Keynesian style planning would ever captivate governments, so he focused on different things.
Wednesday, May 4th, 2011
Over on the Coordination Problem blog, a number of scholars in the field of monetary theory are having an interesting discussion on the topic of Hayek and deflationary spirals. I am providing the link.
Wednesday, May 4th, 2011
"First, the question is not whether the Federal Reserve should raise its target inflation rate above 2% per year. The question is whether the Federal Reserve should raise its target inflation rate to 2% per year.
Wednesday, May 4th, 2011
"The side affect of all of the money supply and low interest rates is that commodity prices continue to rise, which is hitting the middle class rather hard. And with consumers making up 70% of the economy, this is a real drag on real economic growth.
Wednesday, May 4th, 2011

"US Representative Barney Frank introduced a bill yesterday that would block the heads of Federal Reserve regional banks in Boston and elsewhere from voting when they serve on the Fed’s interest-rate-setting panel in Washington.

Thursday, April 28th, 2011
The idea of money neutrality is a cornerstone in formal monetary theory. It is not free, however, of some controversy. If there are changes in money supply, why will the economy converge to the same equilibrium and not to a different one?
Wednesday, April 27th, 2011
"When Federal Reserve Chairman Ben Bernanke makes his debut press conference Wednesday, his every word will be parsed for signs of where he hopes to take U.S. monetary policy.
Tuesday, April 26th, 2011
"No man in America is a match for House Budget Committee Chairman Paul Ryan on the federal budget. No congressman in my lifetime has been more determined to cut government spending. No one is better informed for the task he has set himself.
Monday, April 25th, 2011
Rejecting any serious cuts to government spending, President Obama stated recently, "Nothing is easier than solving a problem on the backs of people who are poor, for people who are powerless and don't have lobbyists or don't have clout."
Thursday, April 21st, 2011
"Previous statements about exits by Fed officials simply listed the tools that could be used in an exit strategy, but did not actually put forth an exit strategy. In contrast, President Plosser describes a specific strategy.
Wednesday, April 20th, 2011
"Gold rose above $1,500 an ounce to a record in New York and London as a weaker dollar and concern about debt and faster inflation spurred demand for an alternative investment. Silver reached a 31-year high.
Wednesday, April 20th, 2011
The Conclusion: The native inhabitants of Shell Island were living under growing pressure. For generations they had lived quiet lives tending their coconut trees, weaving their straw hats, and perfecting their massage techniques. With the arrival of the Outsiders, however, things had changed…
Wednesday, April 20th, 2011
"In fact, there's a big difference between the three scenarios before the Fed. One option would be to keep QE2 going after June, continuing to grow the Fed's balance sheet. The second option would be to kill QE2, but keep QE1.5 intact, leaving the size of the Fed's balance sheet unchanged.
Wednesday, April 20th, 2011
"The economics profession not only failed to predict the recent financial crisis, but has been struggling in its aftermath to reach a consensus on the cause(s) of the crisis.
Friday, April 8th, 2011
"The devaluation of the British pound from $2.80 to $2.40 is not only another declaration of the bankruptcy by Great Britain; it is another revelation of the bankruptcy of the international money system concocted at Bretton Woods, N.H., in 1944."
Thursday, April 7th, 2011
The Greenspan-Bernanke explanation on the cause of the financial bubble rests on the theory of the saving glut.
Wednesday, April 6th, 2011
"The Federal Reserve shows few signs of easing its aggressive efforts to stimulate growth before the middle of the year, according to the minutes of the most recent meeting of the central bank’s policy making committee.
Monday, April 4th, 2011
"Most central banks chose to ignore commodity prices, like food and oil, because (1) they are overly volatile and (2) a central bank can’t take any countervailing action.
Wednesday, March 30th, 2011
"The benefit of maintaining price stability in the eurozone as a whole, and thereby keeping the inflation risk low, becomes even greater in times of crisis. At the height of the financial crisis, the ECB lowered interest rates aggressively in the face of downside risks to price stability.