Official Money

The so-called international  monetary non-system has four serious weaknesses. They are as follows: first, the absence of incentives to governments to correct global payments imbalances; secondly, the system’s dependence on one national currency, the US dollar, to serve as the major international reserve currency; thirdly, a dysfunctional financial sector and, fourthly, the systemic liability to…
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Under present arrangements, finance too often acts as a malevolent force, rewarding private sectional interests at the expense of the public interest. This is because the globalisation of markets has run ahead of our power to control them. Properly harnessed, global finance could be, again, an enormously powerful force for good. Designing such a harness…
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  Apart from the nomination of Janet Yellen  ( a lovely, motherly person) to lead the Fed, what has happened since we departed for our summer/autumn long vacation? As always, the view one takes depends on your perspective. Are you the driver of a car negotiating tricky twists and turns, looking for traffic coming at…
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Central bankers are still trying to rescue their monetary policy models with some additional twists such as forward guidance, but not engaging in the fundamental re-think needed. (If you need better authority than I for this assertion, please do read Bill White in the Dallas Fed series here). Paul Tucker tells us that the new…
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  Three major failures contributed to the global financial car crash • There was a failure of banking and bankers – imprudence and irresponsibility, tinged with instances of criminal behaviour, insider trading, mis-selling, deceit and fraud; • There was a failure of central bankers – they were seduced into assuming the self-stabilising properties of markets,…
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    Why is the effort to reform the global financial system failing? The previous posts in this series reviewed the failure to reform central banking. This final column looks at the fading prospects for a meaningful reform of commercial banking and then examines the ‘scapegoats’ used by  governments. We show how the three major players…
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Having listened to the three witches, and acted accordingly, only to be betrayed ‘in depest consequence’, our hero ‘Macbeth’ reaches his ascendancy, which marks the start of  his downfall. He has a moment of realisation… Have central banks also reached an epiphany?   Central banks have been instructed to keep their eyes not only on…
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I do not suppose that central bankers like to be compared to witches, but for my money the best account of how the financial crisis came about is in Macbeth. Banquo warns Macbeth to be wary of the witches’ implied promises: And oftentimes, to win us to our harm, The instruments of darkness tell us…
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Fred Bergsten of the Peterson Institute is the “enfant terrible” of US international monetary and economic debate. Fending off the passing years, it is a role he has played with great panache for the best part of half a century. Always at the centre of things, always provocative, frequently infuriating, he has, as head of the…
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The risks and dangers for the global economy are like hidden reefs for a ship – invisible but deadly. It is quite possible, for example, that expansionary US monetary policy can cause an asset boom in China so large that its collapse would bring the Chinese economy down with it – and thus throw the…
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