Beware of Financial Repression

by Andreas Hoffmann Government debt levels in many advanced economies, especially in Southern Europe, in the US and in Japan, have reached peacetime records. People are worried and rightly so: C. Reinhart and K. Rogoff have provided evidence that elevated debt-to-GDP ratios may contribute to stagnation or even debt crises. As austerity policies are unpopular … Continue reading Beware of Financial Repression

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 Blanchard Danger

by Roger Koppl Oliver Blanchard tells us “Where Danger Lurks”  in the macro-finance world. The big theme is nonlinearity, which is a profoundly conservative move: DSGE modeling is just fine and we don’t need to rethink it at all. We just need to add in some nonlinearities. Blanchard does not tell how to calibrate a … Continue reading The Blanchard Danger

Zimbabwean Currencies: Condoms, Sweets and Paper Money

by Alexander Czombera* If there is one single law in economics then it is that markets tend to equilibrium. Or, to align this with Grove’s law  (“Technology will always win. You can delay technology by legal interference, but technology will flow around legal barriers”), the free market will find its ways, whether in white, grey … Continue reading Zimbabwean Currencies: Condoms, Sweets and Paper Money

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?

Easy Money, Slow Growth

by Jerry O’Driscoll In today’s Wall Street Journal, John Taylor explains why the U.S. recovery has been tepid while money growth has been very rapid. The recovery has set records for its weak pace, while money growth has set records for its rapidity. Taylor supplies some of the numbers. Taylor continues an argument he made … Continue reading Easy Money, Slow Growth