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RP’s Diary

Is Europe falling apart?

The geo-political fallout from the financial crisis continues

The triumph of the UKIP (United Kingdom Independence Party) and the National Front in France in the recent European elections is part of the continuing geo-political fallout from the global financial crisis – and above all from governments’ failure to manage it. The next could be  Scotland’s departure from the UK and the UK’s departure…
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The moral responsibility of central bankers

Don't be afraid to speak out

    In The Money Trap, I argue that that the international monetary anti-system (to borrow Jacques de Larosiere’s phrase)  makes it very difficult for central bankers to deliver financial and monetary stability in the long run.   I often wonder how many central bankers privately agree with this analysis but don’t dare to say…
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Beware crony capitalism

New pressures on central banks and the Fed

  As central banks come closer to the commercial sector, exercising powers such as the granting and withdrawal of licenses, and become more involved in decisions determining the livelihood of individuals, there must be a growing risk of “crony capitalism” at best and outright corruption at worst.   Corruption can take many forms – many…
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Rueff remembered

A great French monetary thinker recalled by a modern German central banker

  Thinking about monetary and economic nationalism reminds one of the French economist Jacques Rueff (1898-1978). He strongly opposed economic fragmentation, nationalism and protectionism. He saw a good monetary system as a unifying force.   Shall we blame him for the euro? He did say, back in 1949,  that money would lead European integration: “L’Europe…
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Which way for gold?

Gold remains the litmus test of central banks' cedibility

On Friday I was at a gold conference at Bloomberg’s glitzy London office at Finsbury Square when news came through of the fine imposed by Uk regulators on a senior trader at Barclays for manipulating the price of gold and on Barclays for lack of internal controls: “What, Barclays again?”, said one participant, referring to…
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Why read Piketty?

Picking holes in the blockbuster

Can anybody give me a good reason to read “Capital in the 21st Century” by Thomas Piketty rather than, for example, Das Kapital by Karl Marx? At least Karl has a theory of financial crisis. Here is a roundup of comments by economists I know: Allan Meltzer points out that Piketty leaves out migration.  For…
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Geoffrey Ingham and “The Money Trap”

My gloss on his ideas - and what they mean for mine

  Two key aspects or functions of money: 1. As a convenient medium of exchange – can be anything; but that’s not enough, as exchange rates between multiple media of exchange would be variable and result in anarchy 2. As a unit of account – this is primary, as Keynes taught – and explains why…
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1. The case for a global monetary standard

All major economies remain stuck in The Money Trap. The way out is to adopt a new monetary standard, the Ikon

 Introduction To be in the trap means two things: The international monetary anti-system: Governments are in the trap when they act in the belief that if they get monetary, regulatory and fiscal policy “just right” for their own economies,  they can achieve their aims – full employment, growth, stability – without paying attention to the…
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2. For and against reform

We should start building a consensus on world money

What are the forces favouring reform – and those obstructing it?   Natural development: There is a natural tendency for a dominant currency to emerge as the de facto global currency. The US dollar has served that purpose and inertia keeps it in the leading place. But It is in the interests of the US…
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3. New models for banking and international money

Concluding this three-part article

    We need radical new models of international money as well as global banking and finance. The underlying purposes are to re-connect finance with the real world and to put individual responsibility and risk-bearing capacity back at the centre of the system. There is an important role for governments, which must agree and set…
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