The Fed’s Institutional Design

by Gerald P. O’Driscoll, Jr.[1] I have been reading Central Bank Governance & Oversight Reform, edited by John H. Cochrane and John B. Taylor. It is a conference volume of unusually high quality with all the discussions of presentations included. I plan to write more about the book later, but to highlight one chapter here. … Continue reading The Fed’s Institutional Design

The Return of Inflationism?

by Mario Rizzo The Fed has become desperate, not because the American economy is currently falling apart, but because the economy has stubbornly failed to respond well to the policies of the “best and the brightest.” And now, as if to welcome the impending chairmanship of Janet Yellen, stories are surfacing in various places about … Continue reading The Return of Inflationism?

The Euro: a Step Toward the Gold Standard?

by Andreas Hoffmann (University of Leipzig) In a recent piece Jesus Huerta de Soto (2012) argues that the euro is a proxy for the gold standard. He draws several analogies between the euro and the classical gold standard (1880-1912). Like when "going on gold" European governments gave up monetary sovereignty by introducing the euro. Like … Continue reading The Euro: a Step Toward the Gold Standard?

Krugman Redistribution or Ponzi Scheme

by Chidem Kurdas A nice thing about Paul Krugman, he does not mince his words. Thus his new book, End This Depression Now!, repeats as boldly as possible the central point he’s repeatedly made in his New York Times columns and blogs for years. Namely, governments have to spend a lot more. They have to … Continue reading Krugman Redistribution or Ponzi Scheme

M. Friedman Goes to Washington

by Chidem Kurdas Early in his career, long before he became a Nobel prizewinner and the household name for free market economist, Milton Friedman worked for the US Treasury. The following anecdote is from his 1998 memoir with his wife Rose, Two Lucky People.  This revealing example of how public officials operate illustrates, in Friedman’s words, … Continue reading M. Friedman Goes to Washington

No Way to Escape for the Swiss National Bank

by Andreas Hoffmann and Gunther Schnabl It came as a surprise to many: the Swiss National Bank announced an exchange rate target. Accordingly, the Swiss franc will be held above the level of 1.20 francs per euro. Switzerland gives up a part of its sovereignty, when the ECB makes bad press in buying trash-rated euro … Continue reading No Way to Escape for the Swiss National Bank

Stark quits ECB

by Andreas Hoffmann This is good news for inflationists. I am shocked that Jürgen Stark quit his job at the European Central Bank. Usually it is a good thing when central bankers quit their job - or at least it does not make a difference. But Jürgen Stark is known as an inflation hawk. Jürgen Stark - … Continue reading Stark quits ECB

Does one size fit all?

by Andreas Hoffmann In a recent article in the WSJ, David Wessel sees a “fundamental problem” in the euro zone's one-size-fits-all policy. We know from Mundell (1961) that a one-size-fits-all monetary policy cannot guarantee low inflation and unemployment in all members of a heterogeneous currency area, given e.g. labor markets are not fully flexible as … Continue reading Does one size fit all?