Caveat: I should mention to begin with that this critique is based on Lord Turner’s paper on “Escaping the Debt Addiction”; one paper cannot cover every area and he has (I understand) written a soon-to-be-published book that will presumably range more widely. The approach in this paper can be compared with that developed…
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The bare bones of a new policy regime
It should comprises two elements - a new international monetary system and a new banking system
As argued in the post “Regime Uncertainty Undermines Confidence”, only a new policy regime, not changes to individual policy areas (such as regulatory policy) will reduce the existential angst that is crippling business and over-shadowing the recovery. New money….. It should establish a global currency standard. The standard should be sufficiently attractive that countries…
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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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Prospects for 2014
Are central bankers dancing to the markets' tune?
Markets and banks are kept afloat not so much by past QE but by the expectation that central banks will double up on it if markets should collapse again. Have asset prices become de facto the new monetary standard? From a longer-term perspective, and contrary to conventional wisdom, this could be a move…
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Let new model banks thrive
….and decently bury the old
In this week’s FT Money (25/26 January) , Merryn Somerset Webb, editor-in-chief, has some interesting remarks on banking. She points out that customers have new, and often better, ways to borrow than “via the traditional fleecing machines with their pricey real estate and unreliable IT systems”. There are new entrants to the market,…
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Eurozone makes progress
The eurozone can make a rules-based monetary system succeed
The eurozone is widely viewed as a failure, held together only for political reasons. This, it is said, has been proved by the financial crisis and the failure to manage the debt problems of governments in southern Europe. At least, that is the dominant view among the Anglo-Saxons; one searches far and…
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German power needs global fetters
Berlin should lead Europe in calling for a better monetary system
One side-effect of the comic opera that is the Hollande presidency of France is to knock it out, at least temporarily, as a serious counterpart to German strength in Europe. That is a coming challenge for the whole international community, not just for the European Community. Germany is always portrayed as the…
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Bernanke’s lost opportunity
Nobody was better placed to do R & D on a better system; more's the pity he blew it
Given that he was at the heart of monetary policy making before, during and after the biggest monetary disaster of all time, Ben Bernanke should be mightily pleased with the reviews he has been getting as he leaves office as Fed chairman. All but a disgruntled minority give him full marks for leading…
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Yellen – hawk, dove or owl?
Janet Yellen appointed Chair of the Federal Reserve
Heard on the Street: “With the economy picking up, Yellen may taper faster than you think. She may turn out to be a hawk in dove’s clothing”. “No way. Janet’s a dove – a dove dressed in dove’s clothing”. “You are both mistaken. She is an owl. But, as Hegel said, the owls…
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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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