Tag Archives: central banks
We remain stuck in a bad money trap: why?
The media support soft money Ten years after publication of my book, and on both sides of the Atlantic, national economies are still in the grip of the bad money trap. How depressing. How debilitating. Asset prices are sky high. Wages are sinking in real terms. All because of bad money policies that I analysed…
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The capture of money
Money is a near-universal social institution. It evolved to support human cooperation and to control and coordinate the life of humankind. Like other core institutions, such as marriage and language, the forms that money takes may differ widely. The values and norms governing money’s use, and the practices associated with it, also vary widely. For…
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10-Year retrospective: Lesson 5
5. Banking can only be reformed from within This is another unavoidable lesson. Banking has not been reformed by actions taken by the state, central banks or regulators since the crisis. Indeed they have set back the prospects for improvement. There were two main strands in the policy response to the crisis. One was monetary…
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10-Year retrospective: Lesson 3
Gradually, inch by painful inch, the central bankers are losing their clothes – the comforting ideology that has enveloped them like a warm garment for more than a generation. This is the ideology, or “regime”, of central bank independence and inflation targeting (CBI+IT). Oh, how shy they are! Look how they hold onto any scraps!…
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Do central banks rely too much on economists?
If economics is likened to a religion it is easy to see how it may be viewed as dangerous. It may blind its devotees to the claims of competing world-views. If economists arrogantly claim that their special insight gives them the right to prescribe policy, it may provide spurious legitimacy for harmful actions. It may lead…
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Since the crisis, what has happened?
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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Are the chances of real reform improving?
In The Money Trap, I argue that our problems result from the way in which we have applied a particular concept of money – the state theory of money. This dominated government policy in the 20th century. As Keynes said, all modern money is state money – it is seen as a creature of…
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Mad money: parallels with the 1970s
The current debate about monetary policies reminds me of the 1970s. Keynesian policies as then understood involved adjusting the fiscal “stance” of policy to ensure sufficient, but not excessive, effective demand. But these policies no longer had “traction”. The world was changing in ways that economists at the time struggled to understand. Money was becoming…
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Wolf of the City
Martin Wolf’s recent radio programme – “How Low can Rates Go?” – described and illustrated the dilemmas facing monetary policy-makers. Nine years from the start of the great financial crisis, Wolf reported, economies had still not returned to “normal”. Capitalism was perceived by many to be failing to deliver; globalisation a con trick. The political…
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