Tag Archives: central banking

The secular bull market in U.S. Treasury bonds has once again resumed in full force, probably driven by short-covering. Meanwhile, risk markets are in disarray. The main question for markets is predicting when these trends will be broken. Since I do not give market forecasts, I will keep this article short, as I will just outline what I think what needs to be kept in mind.... Bond EconomicsBreaking Market TrendsBrian Romanchuk

One of the enduring myths that mainstream macroeconomists and the politicians that rely on their lies to depoliticise their own unpopular actions continue to propagate is that of ‘central bank independence’. This is the claim that macroeconomic policy making improved in the ‘neoliberal’ era following the emergence of Monetarism because monetary policy was firmly in the hands of technocratic bankers who were not part of the political cycle. As such, they could make decisions based on...

One topic of research that keeps popping up is the question of what the central bank objective function should be. In simpler terms, what is the target of the central bank? (At present, most central banks have an inflation target, possibly with secondary objectives.) This is a preoccupation of many "conventional" economists -- those in the neoclassical tradition, as well as those that are somewhat out of the mainstream (e.g., Market Monetarists are pushing for a Nominal Gross Domestic...

Interview with Ms Christine Lagarde, President of the European Central Bank, in "Challenges" magazine, conducted by Mr Pierre-Henri de Menthon and Ms Sabine Syfuss-Arnaud, and published on 8 January 2020. BISChristine Lagarde: Interview in "Challenges" magazine

Repo.Credit SuisseGlobal Money Notes #26 Countdown to QE4? Zoltan Pozsar

The economics of money is back in the limelight. Even five years ago, I cannot imagine that a lecture on money and the payment system could have been a subject for an event like today’s. Theoretically speaking, money is a social convention. People accept money in the expectation that everyone else will do the same. According to this bare-bones definition, anything could serve as money provided that everyone, as it were, buys in. In economic parlance, this equilibrium analysis gives rise to...

No mention of MMT though, and a reliance on central banks to combine fiscal policy with monetary policy under the rubric of "helicopter money," a term that Milton Friedman coined. They still can't pry loose from his influence, apparently.  Democracy? Meh. Go with technocracy that the elite control.AxiosMainstream economists are getting radical Dion Rabouin

Makes the same point as the MMT economists do. The way the government chooses to book its accounts is irrelevant to its financial position as the currency issuer instead of being a currency user. The reality remains the same even though the institutional arrangements may look different.The CornerA technical view of helicopter money and the monetisation of debt Hans-Jörg Naumer | Allianz

Last Friday (October 4, 2019), a group of former central bank governors and/or officials in Europe, issued a statement damming the conduct of the European Central Bank. You can read the full text at Bloomberg – Memorandum on ECB Monetary Policy by Issing, Stark, Schlesinger. The timing of the intervention is interesting given the change of boss at the ECB is imminent. As I explain in what follows, the Memorandum should be disregarded. Its central contentions are mostly correct but the...

Joe Weisenthal has been causing a stir on Twitter discussing "yield bugs": people who have an ideological belief that bond yields out to be positive. This Bloomberg opinion piece discusses this, as well as some other comments on negative yields coming to the United States. I have not followed that debate too closely, as I initially assumed that there was not a whole lot of people who believed that bond yields ought to be positive. This is because bond yields are essentially determined by...