What have the economists ever done for us?

Artículo de Andy Haldane

"One strain of this virus is an old one. Cycles in money and bank credit are familiar from centuries past. And yet, for perhaps a generation, the symptoms of this old virus were left untreated. That neglect allowed the infection to spread from the financial system to the real economy, with near-fatal consequences for both.

In many ways, this was an odd disease to have contracted. The symptoms should have been all too obvious from history. The interplay of bank money and credit and the wider economy has been pivotal to the mandate of central banks for centuries. For at least a century, that was recognised in the design of public policy frameworks. The management of bank money and credit was a clear public policy prerequisite for maintaining broader macroeconomic and social stability.

 Two developments – one academic, one policy-related – appear to have been responsible for this surprising memory loss. The first was the emergence of micro-founded dynamic stochastic general equilibrium (DGSE) models in economics. Because these models were built on real-business-cycle foundations, financial factors (asset prices, money and credit) played distinctly second fiddle, if they played a role at all.

 The second was an accompaying neglect for aggregate money and credit conditions in the construction of public policy frameworks. Inflation targeting assumed primacy as a monetary policy framework, with little role for commercial banks' balance sheets as either an end or an intermediate objective. And regulation of financial firms was in many cases taken out of the hands of central banks and delegated to separate supervisory agencies with an institution-specific, non-monetary focus.

...


Second, it underlines the importance of reinstating money, credit and banking in the core curriculum, as well as refocusing on models of the interplay between economic and financial systems. These are areas that also fell out of fashion during the pre-crisis boom.

Third, the crisis showed that institutions really matter, be it commercial banks or central banks, when making sense of crises, their genesis and aftermath. They too were conveniently, but irresponsibly, airbrushed out of workhorse models. They now needed to be repainted back in."

Simon Wen-Lewis comenta

Sobre la crisis en Francia

Ambrose Evans-Pritchard

"The whole economic structure of France is an anachronism in a Chinese world and a German currency union."

Inflation in what and for whom?

Aca

Críticas a James Bullard, que dice que la política de la Fed no ha fallado desde 2008

Aca

Debates sobre NGDP

Tyler Cowen los reseña

Parábola de Bill Woolsey: The empire of NGDP. Más

Nick Rowe: Simple thoughts on NGDP = RGDP x P

NGDP inthe long run and economic plasticity

David Glasner

Manufacturing NGDP?

The long decline of labor

Felix Salmon y FT Alphaville

Comentario a Felix Salmon

Why I agonize about the zero bound

Tim Duy

Is there really excess money demand after all these years?

David Beckworth

Resumen de la posición de Beckworth. Comentario de Matthew Klein

Bernanke's little depression

David Beckworth sobre la columna de Ambrose Evans-Pritchard

"To be clear, the Market Monetarist's view is not that the Fed deliberately caused the Little Depression, but rather that the Fed failed to fully respond to a number of developments over the past four years that significantly raised the demand for money: the U.S. collapse in 2008-2009, the Eurozone Crisis of 2010-present, and the debt ceiling crisis of 2011.  We don't see these events dramatically changing the productive capacity of the U.S. economy over this time, but we do see them increasing the demand for money and other safe assets because of the economic uncertainty they created. The Fed could have met this spike in demand for liquidity by better managing expectations about future nominal income. The Fed's failure to do so amounts to what we call a passive tightening."

Fedspeak NGDP portfolio

Aca

Endogenous vs exogenous money

Aca

The fallacy of exogenous money - Jens Weidmann edition

Daniel Kuehn

Deposit flight form Europe's banks eroding common currency

Aca. Màs, de Yves Smith

A case for zero lower bound denial

Nick Rowe

Three different ways expectations matter. And the ZLB

Debate sobre 'Debt' de David Graeber

Aca. Respuesta a JW Mason

The money confusion

The deep magic of money and the deeper magic of the supply side

Macro de corto y largo plazo

Fractional reserve banking debate in the blogosphere

Aca

Keynes sobre la banca

Aca

"[The banks] stand between the real borrower and the real lender. They have given their guarantee to the real lender; and this guarantee is only good if the money value of the asset belonging to the real borrower is worth the money which has been advanced on it."

The end of China's easy growth

Ambrose Evans-Pritchard

China's broken growth model

QE3

Felix Salmon describe la medida. Y aca

Anàlisis de Cullen Roche, Scott Sumner, otro de Sumner, otro, The Economist, otro de The Economist, otro, Paul Krugman, David Glasner, Cullen Roche, James Hamilton, Paul Krugman, comentario de Cullen Roche a Krugman, Bill Woolsey. Otra vez The Economist

Resumen

Yves Smith dice que los QEs no han bajado las tasas de prestamo

Seeking Alpha

George Selgin sobre la victoria de los 'market monetarists'. Scott Sumner comenta. Scott Sumner sobre las raìces de los 'market monetarists'.

Great Tips-pectations

Discurso de Charles Evans de la Fed de Chicago

A flaw in the QE expectational transmission mechanism?

INET

QE3 and the Fed's shaping of global monetary policy

Reacciones de Scott Sumner, David Andolfatto y David Glasner a James Bullard

The Economist sobre el nuevo consenso dentro de la Fed

Tim Duy y Brad DeLong vs John Taylor y Phil Gramm

Trickle-down central banking

Sobre la polìtica reciente de la Fed

Yo tenìa razòn!! Si la Fed compra bonos està agravando el problema de escasez de ellos

David Laidler sobre la Gran Depresión y la Gran Recesión

'Two crises, two ideas and one question'

David Glasner comenta

Is the Fed really causing the sustained drop in interest rates?

Aca

"...this story falls apart because it ignores the fact that the term structure of the natural interest rate--the interest rate driven by the fundamentals of the economy--is being compressed too.  That is, given the weakened state of the economy the demand for credit is down, desired savings is up, and interest rates are falling as a result."

"To believe the Fed is directly responsible for the low interest rates, one must believe it is capable of pushing the yield on the 10-year treasury from just above 5% to about 1.5% over a 5-year period.  That gives the Fed way too much credit. ...
One can say, however, the Fed has failed to sufficiently respond to the heightened money demand created by these shocks and therefore has failed to stabilize aggregate nominal spending. This failure to act has allowed an economic slump to materialize which in turn has temporarily pulled down the natural interest rate. So, indirectly the Fed has been harming savers, investors, and financial intermediaries, just not in the way most observers believe."

Where do equity returns come from?

Aca

When central bankers debunk mainstream monetary theory

Aca

Sobre flexibilidad de los salarios

Jordi Gali

Does the Fed understand the solvency constraint?

Aca

Quantitative easing, brazilian style

Interesante

Interest rates, New Keynesians and Market Monetarists

Aca

Do OMOs “work” at the zero bound? That’s the wrong question

Scott Sumner. Màs

Daniel Kuehn critica a Sumner

How Clinton's budget destroyed the American economy

Aca

Brad DeLong sobre Wicksell

Aca

Paul Krugman comenta

The Economist sobre el paper de White

La fàbula de las canicas y la maestra

Aca

Ahora creo que todos hemos aprendido la lección. Todos debemos vivir dentro de nuestras posibilidades en nuestra vida particular. Sin embargo, los que en una economía tienen el poder único y absoluto de crear el medio de intercambio de bienes y servicios, tienen la obligación de asegurar que siempre haya un suministro suficiente de canicas para que todos podamos jugar.

Y todos aprendieron la lección y todos supieron que en un sistema monetario fiduiciario el dinero no tiene valor intrínseco y que aquel que lo genera siempre puede y DEBE crear todos aquellos papelitos necesarios para garantizar que cualquier niño que haga su trabajo pueda salir de clase a jugar con su amigo Walter, y para que puedan dormir con sus familias después de haber hecho bien su trabajo.

Tyler Cowen sobre el patròn oro

Unas reflexiones

The limits of Minsky’s financial instability hypothesis as an explanation of the crisis

Aca

Empleo mal direccionado: The implications of Paul Baran

Parte II. Parte III