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monetary policy

ECB Luminale

In Europe 31st March 2016

Helicopter money: too complex to be deployed any time soon

Citi | ECB Executive Board member Benoit Coeuré gave an interview to Politico on March 23, published on 30 March and featuring on the ECB’s website. Mr. Coeuré begins by explaining that the package announced on March 10 was “very potent, both in intensity and sheer volume”. On the subject of monetary policy tools at the ECB’s disposal, Mr. Coeuré notes that “negative interest rates are not our main instrument, they just support our overall policy. And looking ahead, we’re not short of instruments – our choice is quite large. We will be able to deal with adverse situations if necessary”.

china industry

World economy 22nd February 2016

The Only Solution: US, EU Help For China

In one year, China has used up $ 676 billion of its reserves, which had reached a total of $4 trillion. It could let the remimbi fall and restore monetary autonomy in order to lower rates and boost an economy which is in recession. But this only serves to worsen the volume of debt in dollars, which of course erodes the status it seeks for its currency. The only solution: EU, US help for China.

reserveFed

World economy 15th February 2016

As Always, The Fed Is Just An Innocent Bystander!

Marcus Nunes | Ms. Yellen also said that she did not think the Fed, by raising rates in December, had contributed significantly to the latest round of economic problems. When Senator Dean Heller, Republican of Nevada, asked Ms. Yellen whether the Fed had caused stock prices to fall, she responded, “I don’t think it’s mainly our policy.”

BankCanada

World economy 11th February 2016

The Magic Trick of Inflation Targeting

Francesco Saraceno | FT Alphaville‘s Matthew Klein goes back to the issue of financial stability and monetary policy. A recent speech of Bank of Canada’s Timothy Lane is the occasion for Klein to reassess monetary policy before the crisis, when policy makers (in particular he refers to Ben Bernanke, but the Fed chair was in good company) dismissed fears of asset price bubbles, thus failing recognize, and to counter, the buildup of the crisis.

Debt defaltion copia

Markets 5th February 2016

The Loop Of Debt Deflation

Monetary policy is not equipped to control the real economy and the financial economy at the same time. Its aim is to moderate the fluctuations in real variables, GDP, employment and prices. But this destabilises the financial market, fuels speculation and increases household and corporate debt with the banks.

Fed ReserveTC

World economy 1st February 2016

The Fed Shows Class Bias ?

Benjamin Cole via Historinhas | In general, the “class glass” is a poor lens for analyzing U.S. politics and macroeconomic policies.  To be sure, the nation has interest-group politics in spades, and groups are often well-financed.

julius sen

Interviews 21st January 2016

“There Are Loose Monetary Policies With Tighter Fiscal Policies”

Julius Sen, Academic Director at the London School of Economics thinks that “we have a flexible model. The market knows it and plays with it, forcing looser monetary policies and tight fiscal policies with the stability pact in Europe and the ‘sequester’ in the US.  Sen claims that “there will be debt reliefs in some eurozone countries.”

EU bonita

In Europe 19th January 2016

The Quest For Discretionary Fiscal Policy

Francesco Saraceno | The EMU policy debate in the past few months kept revolving around monetary policy. Just this morning I read a Financial Times report on the never ending struggle between hawks and doves within the ECB. I am all for continued monetary stimulus. It cannot hurt. But there is only so much monetary policy can do in a liquidity trap. I said it many times in the past (I am in very good company, by the way), and nothing so far proved me wrong.

ECB 1

World economy 9th December 2015

The Communications “Conundrum”

Does central banks’ “communication” matter? Some analysts believe it does. Therefore, Draghi may now have to work to repair his reputation as “Super Mario”.