Tag Archives: Monetary Policy

This is the first of two posts on the current crisis by Professor Massimo Amato, of Bocconi University, Milan. Well before the health emergency is over, the coronavirus crisis has already begun to produce devastating effects on the economy. This happens not only because the only accepted strategy, that of a lockdown, involves a strong slowdown in economic activity, but because the exposure of the economic system to expectations is such that the medium-term effects are so...

Excellent summary of monetary versus fiscal.  Bond Economics Yes, It's Not $1.5 Trillion Of Spending Brian 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...

Quite a good piece that pushes the MMT view without naming it.Progressive Economy ForumThe Monetarist fantasy is overRobert Skidelsky | Crossbench peer and Emeritus Professor of Political Economy at Warwick University

One of the pieces of pseudo-science that floats around in popular discussion of bonds is the belief that bond investors are deadly afraid of inflation. In particular, bonds "lose money" every time the Consumer Price Index rises -- which is most months, in most developed countries. As far as I can tell, this is the legacy of some Economics 101 textbook story that has been passed on from "expert" to "expert" over the decades. The correct answer is that nominal yields largely reflect the...

The Fed's interventions in the repo market are attracting considerable comment. A lot of people seem to think the Fed has embarked on another QE program without Congressional approval. And the usual suspects are complaining that the Fed is pumping up stock prices and debasing the dollar.  Stocks are indeed heading for the moon - though so is the dollar, which rather undermines those who think it is being debauched. But the Fed's interventions in the repo markets have nothing to do with stock...

The Fed's interventions in the repo market are attracting considerable comment. A lot of people seem to think the Fed has embarked on another QE program without Congressional approval. And the usual suspects are complaining that the Fed is pumping up stock prices and debasing the dollar.  Stocks are indeed heading for the moon - though so is the dollar, which rather undermines those who think it is being debauched. But the Fed's interventions in the repo markets have nothing to do with stock...

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...

Although there are various attempts to downplay rate expectations as an explanation for bond yields. the reality is that they dominate any other attempt to generate a fair value estimate by using "fundamental data". (Since we cannot hope to explain every last wiggle of bond yields without having a largely content-free model, we need to look at fair value estimates.) The reasoning is rather straightforward: so long as the risk free curve slope is related to the state of the economy, bond...

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