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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Why real investment is so sluggish
Business leaders and entrepeneurs fear another crash
Low real interest rates would normally be expected to stimulate capital investment by lowering the cost of finance for companies – large and small. Yet real investment remains sluggish in nearly all developed economies. Some blame austerity measures taken to control fiscal deficits. Others blame the rise in precautionary savings by the private sector…
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What major monetary and banking reforms are needed?
Enough deceit!
The global financial crisis should be seen as a symptom of the lack of fit between three pieces of the jigsaw of modern finance – national or regional monies, innovative financial markets and a globalized financial system. It provided both an encouragement and a warning – an encouragement to search for alternatives…
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Geoffrey Ingham on Money
Why the debate on the nature of money matters
As the debate about the future of finance has yet to yield consensus on the way forward for policy, so more radical solutions are being openly discussed and advocated. This has stimulated a spreading debate on the very nature of money and banking. Geoffrey Ingham, a Life Fellow of Christ’s College, Cambridge, has brought the…
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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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