Does this sound familiar? Falling commodity prices, unsustainable official debts, crashing stock markets, pullback in global lending by dominant megabanks, misaligned currencies, plus a healthy dose of political dysfunction. These are the ingredients, according to Charles Kindleberger, that made for world depression in 1929-1939. “My contention is that the difficulty lay in considerable latent instability in the system and the
Read moreIn the last few weeks, the ECB has been drawing on its liquidity swap line with the Fed, first $308 million for a week, then $658 million for a week, and last week back down to $358 million. What’s that about? It’s not such a large amount. Bank of Japan borrowed more in the past, $810 million in March and
Read moreThe long run balance of the U.S. Social Security system has improved, but almost all of the improvement comes from improved methods and data. That’s the sharp pencil part, explained in Section IV.B.6, pages 74-79, of the recently released 2015 Social Security Trustees Report. Put another way, Social Security is in better shape than we thought last year not because
Read moreThe official report on events of October 15, 2014, is now public and it makes fascinating reading. Most news accounts of the report have taken its bland no-smoking-gun conclusion at face value, but if you actually read the report a rather clear picture emerges, along with some rather obvious unanswered questions. Bloomberg has the best account, but there is more
Read moreI recently tweeted: “Receivership is better than Grexit for Greece, hence Tsipras; but worse for Europe, hence Schauble.” That’s the headline. Here is the explication. On Greece, I have been trying to understand how rational people (on both sides) wound up with such an unworkable solution. It seems to me that in the end Tsipras made a calculation that Grexit
Read moreA summary of the 3rd annual joint conference of the People’s Bank of China and the International Monetary Fund offers a snapshot of the state of debate. So-called “renminbi internationalization” has been official policy since 2009. By the end of this year, expect to see the launch of a new “China International Payments System” to facilitate use of RMB as a
Read moreThe 85th Annual Report of the BIS is not perhaps the obvious first choice for beach-reading on a holiday weekend, but having read through its 119 pages, the core message reminds me of nothing so much as the most memorable line of the 40-year-old summer blockbuster “Jaws”: “You’re going to need a bigger boat.” Notwithstanding everything that has been done since
Read moreGary Cohn, president and COO of Goldman Sachs, weighs in with his doubts about the wisdom of the current regulatory push to move as much as possible of security trading onto clearinghouse platforms. (See article in FT here, and podcast here.) Now Moody’s asks for industry feedback on clearinghouse risk, and CFTC Commissioner Bowen reiterates call for “public directors and
Read moreNow comes a symposium of five articles, published in the AEA outreach Journal of Economics Perspectives, several of which read clearly as a kind of apologia pro vita sua for the actions of the authors themselves. The idea seems to be that, if only readers could be made to understand the conditions under which the authors were operating, they would
Read moreAs regular readers know, I emphasize two central functions of monetary systems: payments and market-making. These are the foundation pillars of what I call the “money view”. In my teaching, I have come to appreciate a variety of barriers that people bring with them to the study of money, and to appreciate the necessity of bringing these barriers up to
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