Benn Steil and Dinah Walker explain the market massacre following Ben Bernanke's press conference on June 19. Bernanke's repeated statements that a key tool of current Fed policy, asset purchases, would be "calibrated" to employment data, each month's publication of which can imply a major shift in the unemployment trend line, suggests that Fed tightening could begin as early as the middle of next year—nearly a year and half earlier than the Fed had suggested in its pledge statement last fall.
The global economic downturn is hardly over, and without a more dramatic set of actions, the United States is likely to suffer another major crisis in the years ahead. A new book by Alan Blinder may be the best general volume on the recession to date, but it paints an overly optimistic portrait of the current situation.
Central bankers have always carried a mystique far beyond justification, whether they are cast as malicious, incomprehensible, or all-powerful. Neil Irwin's new book on monetary policy during the financial crisis should dispel these myths once and for all.
"Austerity has failed. It turned a nascent recovery into stagnation. That imposes huge and unnecessary costs, not just in the short run, but also in the long term: the costs of investments unmade, of businesses not started, of skills atrophied, and of hopes destroyed."
Benn Steil's op-ed for Paul Solman's PBS The Business Desk site looks critically at calls for "a new Bretton Woods." He argues that many of the critical precepts behind the 1944 American Bretton Woods blueprint were overturned by the Truman Administration a mere three years later, and that the operation of the Bretton Woods monetary system was far briefer and more troubled than is typically reckoned.
The prospective challenge of containing inflation, buttressing a collapsed housing market, and normalizing the Federal Reserve's bloated balance sheet has created an "exit strategy" dilemma for Chairman Ben Bernanke. CFR Director of International Economics Benn Steil urges the Federal Reserve to swap mortgage-backed securities with the U.S. Treasury in exchange for Treasury securities, which the Fed can then sell as part of a normal process of monetary tightening.
CFR Director of International Economics Benn Steil urges the Federal Reserve to swap mortgage-backed securities with the U.S. Treasury in exchange for Treasury securities, which the Fed can then sell as part of a normal process of monetary tightening as a solution for the prospective challenge of containing inflation, buttressing a collapsed housing market, and normalizing its bloated balance sheet.
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.
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Campbell evaluates the implications of the Boko Haram insurgency and recommends that the United States support Nigerian efforts to address the drivers of Boko Haram, such as poverty and corruption, and to foster stronger ties with Nigerian civil society.
Koblentz argues that the United States should work with other nuclear-armed states to manage threats to nuclear stability in the near term and establish processes for multilateral arms control efforts over the longer term.
The authors argue that it is essential to begin working now to expand and establish rules and norms governing armed drones, thereby creating standards of behavior that other countries will be more likely to follow.
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