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Banking

How we got into the money trap – and how to get out

Why the world needs a new kind of money

The world took time to get into the money trap. But with one bound it can be free. Since the 1970s governments have tried various approaches to the challenges of managing money. In the 1970s, they put full employment top. They used monetary policies to expand demand, taking risks with inflation. The results included high…
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Since the crisis, what has happened?

Why we remain in The Money Trap

12 points: 1. Central bankers, who were by and large not responsible for supervision pre-crisis , immediately sought to pin the blame for it on regulators, diverting attention from monetary policies – stoking the credit boom, failing to sound the alarm for what they were responsible for, which often included a duty to monitor the…
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Gold, money, the 1980s and now

When did the culture of ‘money mania’ start? When did people first set out to grab as much money as possible at whatever cost?  When did the momentum for credit creation —paper money calling for more money — become unstoppable? Let us contrast the past 30 years with the years 1880-1910. Under the classical gold…
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The real reasons for low real rates

The lowest interest rates in history are failing to spur sustained recovery. Rather, low real rates mirror financial and structural weaknesses Economists cannot agree on the causes of these low real rates. They discuss various hypotheses. Central banks have held policy rates low for years – have these ultra low nominal rates reduced real rates,…
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Globalization: a warning from Brexit

Britain is the latest victim of the money trap

  “Yesterday’s vote speaks to the ongoing changes and challenges that are raised by globalization,” President Obama said yesterday in his first comment on the UK referendum. He is right. The “Out” vote should be viewed as part of the geo-political fallout of the financial crisis and the failure of governments and bodies such as…
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Brexit shows need for new rules on money

The vote for Brexit is about much more than the UK and Europe.

The vote for Brexit is about much more than the UK and Europe. It shows that new rules to guide the process of globalization are needed. The policies followed since the financial crisis have two major errors. First there is a failure to diagnose the true causes of the crisis. Second, governments have failed to…
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Mervyn King’s alarmist warning

Former governor questions US debt service commitment

According to the World Gold Council, Mervyn King, former governor of the Bank of England, believes that in certain circumstances China’s assets in the US could be “annulled”. Mervyn King’s alarmist warning is  made in an interview, entitled “Present perilous, future imperfect” that appears in the June issue of Gold Investor,  a WGC publication.  After pointing…
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The Money Trap revisited

What is the money trap? How can we get out of it? Let me try to reformulate the thesis of my book in the light of recent developments. Since the 1970s we have been in a period of transition to a new paradigm of monetary policy. Governments have tried various approaches to the challenges of…
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Status quo or needed reforms?

Interests barring change Powerful interests benefit from the existence of the money trap. These interests include the state and the monied elite. They benefit, at least in the short to medium term, from official manipulation of money under the present (IT plus CBI)  regime – the state from cheap finance, the monied elite from the…
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Stop activist monetary policies now

Central banks should focus on banking not money

  Central banks confront the kind of scenario outlined in The Money Trap. In the book, I anticipated a world of generalised deflation, with zero nominal rates on risk-free assets.  At the time of publication, in 2012, this seemed unlikely, to say the least. But it is materialising. The challenge now is to seize the…
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