Olivier Blanchard: Monetary Policy Will Never Be the Same. Yves here.
Even when Blanchard takes pains to characterize his remarks as personal, they can at least be assumed to have a solid following at the IMF. His effort to summarize findings from a recent IMF conference, the one that garnered a great deal of attention due to Larry Summer’s remarks on secular stagnation, can also be seen as a statement of what I call leading edge conventional wisdom among mainstream economists. What caught my eye was his defense of budgetary orthodoxy, in his “fiscal house in order” aside at the top, and his more encouraging defense of higher levels of inflation, which would be consistent with a stronger pro-employment monetary stance. By Olivier Blanchard, Chief Economist, IMF. Originally posted at href=” Two weeks ago, the IMF organized a major research conference, in honour of Stanley Fischer, on lessons from the crisis. One, having your macro house in order pays off when there is an (external) crisis.
Finally, turning to capital flows.
Helicopter_Money_Final1. Helleiner. Trickle-down monetary policy has failed to spread the riches. Wp_658.pdf. Economics of Money and Banking, Part One. Terminal demographics. About a week ago, I argued that the Great Inflation of the 1970s was largely a demographic phenomenon.
That claim has provoked a lot of debate and rebuttal, in the comment sections of several posts here, and elsewhere in the blogosphere. See Kevin Erdman, Edward Lambert [1, 2, 3], Marcus Nunes [1, 2], Steve Roth [1,2], Mike Sax, Karl Smith [1, 2, 3], Evan Soltas, and Scott Sumner [1, 2], as well as a related post by Tyler Cowen. I love the first post by Karl Smith. My title would have been, “Arthur Burns, Genius.”
These will be my last words on the subject for a while, though of course they needn’t be yours. I don’t dispute that monetary contraction could have prevented the inflation of the 1970s. I’ve had a wonderful nemesis and helper the last few days in commenter Mark Sadowski, who challenged me to provide evidence for a demographic effect on inflation in international data. Sadowski is not much impressed by my demographic view of the Great Inflation. And follows up Let’s simplify.
IR451 Politics of Money in the World Economy. To sort. The political economy of international capital flows... Former President of the Central Bank of Belgium on Why the Money System is a Taboo Topic. Central Banking.. IFIs... The Historic Inversion In Shadow Banking Is Now Complete. Back in June, we wrote an article titled "On The Verge Of A Historic Inversion In Shadow Banking" in which we showed that for the first time since December 1995, the total "shadow liabilities" in the United States - the deposit-free funding instruments that serve as credit to those unregulated institutions that are financial banks in all but name (i.e., they perform maturity, credit and liquidity transformations) - were on the verge of being once more eclipsed by traditional bank funding liabilities.
As of Thursday, this inversion is now a fact, with Shadow Bank liabilities representing less in notional than traditional liabilities. In other words, in Q3 total shadow liabilities, using the Zoltan Poszar definition, and excluding hedge fund repo-funded, collateral-chain explicit leverage, declined to $14.8 trillion, a drop of $104 billion in the quarter. ... And the shadow deleveraging on a consolidated quarterly basis in all its glory: On the Manipulation of Currencies. Mitt Romney is promising to declare China a currency manipulator on “day one” of his new administration.
Why? Ostensibly, because Mr. Romney, like so many others, believes that the Chinese are somehow interfering with the foreign-exchange markets and holding the exchange rate of their currency (confusingly called both the yuan and the remnibi) below its “true” value. But the other day, Mary Anastasia O’Grady, a member of the editorial board of the avidly pro-Romeny Wall Street Journal, wrote an op-ed piece (“Ben Bernanke: Currency Manipulator” ) charging that Bernanke is no less a currency manipulator than those nasty Chinese Communists. Why? So, is what Mr. Well, obviously it is not. But perhaps this is too narrow a view of what Mr. So it’s all very confusing.