What would Charlie have made of Brexit? Charles P. Kindleberger’s very last book-length effort was the slim volume titled Centralization versus Pluralism, a historical examination of political-economic struggles and swings within some leading nations (1996). In his frame, the historical struggles and swings he recounts-in the Dutch Republic, Germany, France, Britain, Canada, The United States, Japan and China-were all driven
Read more“I wouldn’t start from here,” the BIS never says explicitly in its recent Annual Report, but nevertheless it goes on to paint a rather comprehensive and compelling picture of a possible future toward which they think we should be trying to head, and of the present dysfunctional economic policies that are daily making it harder to achieve that possible future.
Read more[Remarks at Jack Treynor Memorial, MIT Chapel, June 19, 2016] “Jack has never been easy,” wrote Charles D. Ellis in 1981 as Jack stepped down from his position as editor of the Financial Analysts Journal which he had held since 1969. In Jack’s own departing words in the same issue of the FAJ, he described a “guerilla war” between black
Read moreToday global money is largely private credit money, the issue of a profit-seeking bank that promises ultimate payment in public money which is the issue of some state, quite possibly a different state from the one where the bank is chartered and does its business. Global money is also largely dollar-denominated, even when the ultimate users of that money lie
Read moreA History of Macroeconomics, by Michel De Vroey. Cambridge University Press, 2016. De Vroey’s book reads like a travelogue recounting his life journey as a macroeconomist, and his considered response to key texts he encountered along the way. Always thoughtful and penetrating, he stimulates this reader to reflect anew on how we got to where we are today, and what
Read moreIn retrospect, it is easy to see why most observers didn’t see the crisis coming. The crisis was a stress test of shadow banking, “money market funding of capital market lending”. In most universities, including mine, monetary economics and financial economics are separate fields with their own specialized language and faculty, and the regulatory apparatus is similarly bifurcated. But the
Read morePeter Conti-Brown, The Power and Independence of the Federal Reserve (Princeton 2016) A powerful meme has taken possession of popular, and even professional, understanding of the role of the Fed. To wit, political forces (specifically the US President) are supposedly always pushing for excessive expansion, and the role of the Fed (specifically the Fed Chair) is to resist that pressure.
Read moreIn the immediate aftermath of the global financial crisis, most people thought that shadow banking was all in the past, and good riddance! Today, however, it is becoming clear that shadow banking is also in our future, even centrally so. The crisis was just one step toward that future, revealing weakness in order to force necessary restructuring. Of course the
Read moreA lot of people have speculated about what would happen when the Fed raised rates, and almost all of them have been surprised. One of them is Zoltan Pozsar, who boldly went on record with the view that corporate cash pools of various kinds would shift out of bank deposits into government-only mutual funds, which would invest the funds in
Read moreIn his recent paper, “A Lost Century in Economics: Three Theories of banking and the conclusive evidence”, Richard Werner argues that the old “credit creation theory” of money is true (empirically “accurate”), while both the newer “fractional reserve theory” and the presently dominant “debt intermediation theory” are false. For him, this matters mainly because the false theories are guiding current
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