Sound Banking

Friday, April 28th, 2017

When people refer to the national debt, they almost always mean the debt owed by our government. But there are actually two important types of debt in the American economy: government debt, and private debt owed by households and businesses.

Tuesday, April 25th, 2017

Many economists have argued that government mortgage programs and low interest rates policies caused the 2008 financial crisis. We maintain that government deposits insurance, provided in the United States by the Federal Deposit Insurance Corporation (or FDIC), may have also been a contributing factor. By failing to price risk fairly, the FDIC encourages banks to increase their risk-taking activities.

Friday, April 14th, 2017

The level and growth of a nation’s private debt, more than public debt, predicts the worst recessions.

Tuesday, April 11th, 2017

The Bipartisan Budget Act of 2015 suspended the debt ceiling through mid-March of this year. On March 16, the debt ceiling was raised to the current level. When the debt ceiling is reached, the Treasury will not be able to issue more debt to borrow new funds from the public. Instead, the Treasury must take extraordinary measures to raise cash. Extraordinary measures are policies that temporarily lower the national debt by reducing the Treasury securities held by government agencies—known as intragovernmental debt.

Thursday, March 30th, 2017

Ongoing federal budget deficits have required the U.S. Treasury to issue substantial amounts of debt to finance government spending. The Treasury has been able to easily issue debt since the federal government enjoys the highest credit rating, which lowers the interest rate that creditors demand. Historically low interest rates in general have further helped limit interest expense.

Friday, February 17th, 2017

Throughout its history, AIER has pointed out the dangers of excessive amounts of both private and public debt.

Tuesday, May 26th, 2015

Facing the Facts

How the federal government collects and spends money has changed substantially over the years. Policy decisions made many years ago influence federal outlays today in important ways. Because of changes in the structure of the budget, the annual appropriations process is constrained, and therefore, is a less powerful tool for addressing fiscal challenges than it used to be. 

Sunday, December 16th, 2012

As an economic crisis manager, Leszek Balcerowicz has few peers. When communism fell in Europe, he pioneered "shock therapy" to slay hyperinflation and build a free market.

Monday, November 26th, 2012

We need more inflation. That's the message of stock markets.

Tuesday, October 30th, 2012

Although first published in 1960, the book is every bit as readable and valid today as it was then.

Wednesday, October 24th, 2012

A new gold standard is crucial. The disasters that the Federal Reserve and other central banks are inflicting on us with their funny-money policies are enormous and underappreciated.

Tuesday, October 23rd, 2012

Allison is nothing if not an expert on banking and finance, and having witnessed up close the 2008 financial crack-up that rendered so much of his competition insolvent, he’s written an essential book on the causes of a financial crisis that he unapologetically concludes was born by government error.

Friday, October 19th, 2012

The next phase in my (now our, as I’ve taken on a colleague) project of thinking through Dan Klein’s Knowledge and Coordination is to see how his ideas might be used to help describe business cycle theories and demonstrate commonalities they share.

Wednesday, October 17th, 2012

As I noted not long ago, I find myself in serious disagreement with a portion of the end-the-Fed movement. This is the segment of the movement whose complaints are that the Federal Reserve is “privately owned,” that the Fed does not inflate enough, that interest payments are unjust or inherently unpayable all at once, etc.

Monday, October 15th, 2012
This summer Roger Bootle won Lord Wolfson's £250,000 prize for the best advice for a country leaving the European Monetary Union (one may assume that this advice is aimed at Greece).