Benn Steil and Dinah Walker explain why the Fed's massive holdings of mortgage-backed securities (MBS) are distorting its thinking about the conduct of monetary policy going forward.They propose a novel plan to rectify this, in which the Fed swaps its MBS with the Treasury in return for Treasury securities, which the Fed can sell as part of a normal "exit" from monetary stimulus.
Benn Steil's Wall Street Journal Europe op-ed, co-authored with Dinah Walker, argues that the Bank of England is getting "Libored"—that is, misled and manipulated—by the banks benefiting from its Funding for Lending Scheme. The Fed, which has shown interest in the scheme, should beware.
Benn Steil's column in Dow Jones' Financial News, co-authored with Dinah Walker, analyzes Mitt Romney's budget math. Without questioning the candidate's assumptions on growth or available sources of revenue, they estimate a roughly $1 trillion annual budget gap.
Benn Steil's Wall Street Journal op-ed, co-authored with Dinah Walker, shows that the Fed has effectively been targeting "risk on, risk off"—prodding investors into and out of risky financial assets—for over a decade now. He derives a rule that predicts the Fed's behavior since 2000 even better than the "Taylor Rule" did from 1987 to 1999.
Benn Steil's column in Dow Jones' Financial News, co-authored with Dinah Walker, provides new evidence highlighting the endemic flaws in LIBOR as both a benchmark for setting market lending rates and a central-bank metric for judging policy effectiveness.
The future of military spending will likely feature prominently in the upcoming presidential election. President Obama proposes bringing military spending down to 2000 levels (3.7 percent of GDP), while Governor Romney has proposed setting a floor for core defense spending at 4 percent of GDP. The attached chart book on trends in U.S. and global defense spending from CFR's Maurice R. Greenberg Center for Geoeconomic Studies sets this debate in historical and global context.
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