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There is a still-popular framework in some monetary circles (including parts of the Alt-M crowd) that fiat-money central banks are statist-inflationist redoubts, despite the last 35 years of global disinflation and then deflation, along with falling interest rates. The track record of the last few decades suggests that major fiat-money central banks are actually disinflationist and
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Back in Autumn last year I was concerned  by the negative trend in Swiss NGDP during 3Q 2015. In January 2015 the new head of the Swiss National Bank broke the fixed ceiling on the currency vs the Euro that had prevented appreciation and a consequent monetary tightening. The ceiling had been so credible that
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The woeful record of independent fiat-money central banks and inflation targets is one of nearly universal economic asphyxiation. Everywhere on the globe where a central bank has an IT, one sees inflation below targets, deflation and anemic growth. Right to it: The Reserve Bank of Australia has an inflation target of 2% to 3%, but
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To many, the economy is strong enough to sustain a jolt of higher rates. Richmond´s Jeff Lacker is a case in point: The U.S. economy appears strong enough to warrant significantly higher interest rates, Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday. Lacker, who is not a voting member of the U.S. central
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In “Years of Fed Missteps Fueled Disillusion with the Economy and Washington”, Jon Hilsenrath gives his contribution to the “Great Unraveling” series. He starts off writing: In the past decade Federal Reserve officials have been flummoxed by a housing bubble that cratered the financial system, a long stretch of slow growth they failed to foresee and
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Stephen King (not the popular author) but HSBC’s senior economic adviser, elaborates on Larry Summers´ comments on San Francisco Fed president John Williams´ letter. King´s conclusion, however, in effect disparages the idea of NGDP Targeting. Maybe he doesn´t understand the concept: In these circumstances, the entire monetary policy framework is up for grabs. Shibboleths will
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We were rightly excited by John Williams letter from San Francisco on Monday as we had already detected stirrings. We and many others were also equally right to wonder what was going on when JW reverted to type on Thursday. The JW-induced downward move in the USD Index stuck. The move down was against all major currencies but specifically against
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For example: Indeed, Alex Tabarrok, an economist at George Mason University, argues that it’s “crazy” to believe that a lack of demand explains the slow recovery. “The time period in which monetary policy would have been effective is long over,” he says. Once an economy reaches full employment, he argues, there’s no way for increased
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One of Scott Sumner’s great contributions to economics (blogging) has been his oft-repeated mantra of “not reasoning from a price change”. Probably its most familiarusage  is related to the oil price, although there are many, many more. The oil price case The 2014 collapse in oil prices was heralded by many financial types and economists as
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