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Does the ‘reserve’ dollar harm America?

The flawed international monetary system is to blame for the crisis

  For many years  Lewis E. Lehrman and John D. Mueller have been calling attention to what they call the “reserve-currency curse.” Since some politicians and economists have recently insisted that the dollar’s official role as the world’s reserve currency is instead a great blessing, it is welcome that they have recently revisited the issue…
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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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Golden opinions

Policy-makers can learn from the long history of monetary gold

  The attributes of gold usually cited as making it useful as money are summed up by the World Gold Council as follows:   “Gold’s scarcity, the fact that it does not corrode or tarnish, its malleability and status across civilisations have made it eminently suitable as a form of money.”   There is more…
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How vulnerable is the dollar?

There are parallels with the decline of the pound sterling

  There is no point dreaming about a new monetary order when the dollar remains dominant and is here to stay. At least, for all practical purposes.   That is the bottom line of most commentaries on proposals to reform the international monetary system, such as that advanced in The Money Trap.   Indeed, the…
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Debating the nature of money

At the conclusion of a recent star-studded IMF conference, chief economist Olivier Blanchard argued that we may need negative real interest rates for a long time. Here is the passage in full: “Now let me now turn to monetary policy, and touch on three issues: the implications of the liquidity trap, the provision of liquidity,…
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Which anchor for money?

Notes on talk to the Santa Colomba meeting

    The supply of money needs to be limited or ‘anchored’ to prevent excessive supply reducing its value. At present money is supposed to be limited by central banks following inflation targeting models. However, this paradigm has lost traction under the strain of the crisis. In effect we have returned to a discretionary monetary policy,…
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Lord Lawson aims at the wrong target

Governments’ failure to manage the global financial crisis is having profound political and geo-political consequences – all of them adverse. Fuelled by political desperation to boost demand, national monetary policies are becoming steadily more aggressive – not so much “beggar my neighbour” as “sauve qui peut”. Financial repression is ongoing. As we all know, once…
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Gold, credit and the Ikon: Three kinds of money

Give us the money we deserve!

What are the differences between a commodity money, credit money and the Ikon – currency of the future ? Using the gold standard as an example of the first, where the price of gold was fixed and money was convertible into it on demand at that price, gold and sure claims on gold were money….
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The “G20/IMF Communique”

After intensive discussions over recent weeks the heads of state and governments of the G20 couldn't agree on a statement. So they asked me to write it for them.

  Nearly six years after the outbreak of the worst financial crisis in history, prospects for a full economic recovery remain elusive. Unemployment remains at very high levels, and standards of living for many people in developed countries are likely to fall over the first two decades of this century. Meanwhile, emerging markets remain vulnerable…
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