Banking
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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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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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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Recycling the rewards of equity finance
How vested interests bar financial reform
There is an urgent need to reintegrate society with its productive side through broadening share ownership. This is the theme of a new book, “Debtonator”. (Elliott and Thompson, £9.99), by Andrew McNally, an experienced institutional investor. In a lively account, McNally shows how equity finance benefits society, companies and individuals. Equity should form the basis…
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According to Adair Turner, Britain’s former chief financial regulator, the global financial crisis had one big cause: bad ideas. These are ideas that Turner disapproves of. The key proposition of his new book is simply stated: “banking systems left to themselves are bound to produce too much of the wrong sort of debt, instability and…
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A few encouraging signs
China's challenge is good news
Thank you for visiting my site. I am taking a sabbatical to research a new project so will not update my website for the next few months. Suffice to say that nothing governments or central banks have done since the crisis has changed the analysis or policy recommendations I offered in The Money Trap…
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Haldane , Rajan on the future of central banking
The real battle for the future of finance will be fought after the next crisis
In his contribution to Central Banking’s 25th anniversary issue, Andrew Haldane, chief economist of the Bank of England, describes the “giant steps” that central banks have taken to “reinvent” themselves post crisis. These have involved innovations not only in monetary policies and in market operations but also the development of macro-prudential policies. Central bankers…
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