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

Hayek Lecture by Taylor

John Taylor received the Manhattan Institute’s 2012 Hayek prize for his book, First Principles: Five Keys to Restoring America's Prosperity.  In the lecture he gave for the occasion, Professor Taylor argued for rules-based policies—-that would be a real reform. The video of the lecture is on the Manhattan Institute site.   It was also published in … Continue reading Hayek Lecture by Taylor

DeLong, Friedman and Maximal Government

by Chidem Kurdas The case made for minimal government by Milton and Rose Friedman in their 1979 book, Free to Choose, has been debunked,  according to Berkeley professor Brad DeLong.  Basically, he avers that the Friedman program has been tried and failed. As a commentary on Friedman, this is outrageously misleading. But Mr. DeLong  provides … Continue reading DeLong, Friedman and Maximal Government

Policy Makers and Irrational Exuberance

by Chidem Kurdas Robert Shiller says the speculative bubble in real estate was driven by “a contagion of optimism” that pushed up prices and expectations in a feed-back loop. This epidemic apparently engulfed regulators as well.  “Government policy makers breathed in the same optimism, which no doubt encouraged them to be lax on regulatory restraint,” … Continue reading Policy Makers and Irrational Exuberance

Taylor, Krugman and Quantitative Easing

by Chidem Kurdas In two substantial New York Review of Books articles, Paul Krugman and Robin Wells offer their views on various explanations of the property bubble and ways to get out of the slump.  On the latter front, they advocate aggressive deficit spending by the federal government and  quantitative easing by the Federal Reserve— … Continue reading Taylor, Krugman and Quantitative Easing

Rewarding the Punch Provider

by Chidem Kurdas   After causing a debacle by flooding the system with oodles of easy money, the Federal Reserve is to morph into the enforcer of  systemic prudence. We’re told that Treasury secretary Tim Geithner wants to create a single systemic risk regulator to oversee the whole financial system and the Fed will probably … Continue reading Rewarding the Punch Provider

Taylor Rule and Fed Witches’ Brew

By Chidem Kurdas Bubble, bubble, toil and trouble—that’s an apt metaphor for the Federal Reserve policies meticulously dissected by Stanford professor John Taylor, in the Wall Street Journal and other places.  He shows that the Fed set the financial crisis in motion and then made it worse. Relative to the pattern that held since 1987 … Continue reading Taylor Rule and Fed Witches’ Brew