Monetary Policy


The Cult of the Expert—and How It Collapsed

Author: Sebastian Mallaby
The Guardian

Sebastian Mallaby uses the framework of central bank power to examine the rise and recent decline of the cult of the expert. He concludes that, ironically, experts need to play the political game if they hope to maintain their legitimacy; and that a healthy democracy is well served by a mix of public accountability and technocratic independence. 

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'The Curse of Cash'

Speaker: Kenneth S. Rogoff
Presider: Matthew Bishop

Kenneth Rogoff discusses the 'Curse of Cash,' his new book about phasing out most paper money to fight crime and tax evasion—and to battle financial crises by tapping the power of negative interest rates.

See more in Global; Monetary Policy; Transnational Crime

Foreign Affairs Article

The Fed's Unconventional Monetary Policy

Author: Martin S. Feldstein

Now, almost a decade after the Great Recession hit, the story of its origins and course has become familiar. It began in December 2007, soon after the U.S. housing bubble burst, triggering the widespread collapse of the U.S. financial system. Credit dried up, as banks lost confidence in the value of their assets and stopped lending to one another.

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Why Is Paul Krugman Still Calling for Fiscal Stimulus?

Author: Benn Steil
Weekly Standard

Benn Steil’s latest op-ed in The Weekly Standard examines Paul Krugman’s continuing calls for fiscal stimulus, as well as his defense of government wage intervention and mercantilism.  These have all been grounded in the assertion that the United States is in a “liquidity trap,” in which monetary policy is ineffective.  Steil explains why the theory of liquidity traps is logically inapplicable when the central bank’s policy rate is positive, as it has been in the United States since December, and concludes that it operates as a fig leaf behind which to advocate policies with less scientific rationales.

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The Trump-Sanders China Syndrome

Authors: Benn Steil and Emma Smith
Wall Street Journal

Benn Steil’s op-ed in the March 30 edition of the Wall Street Journal, co-authored with Emma Smith, looks at presidential campaign charges that China is engaged in “currency manipulation” to boost net exports.  They show that the aims of China’s pegged exchange rate regime have varied over the past two decades, and have not always been mercantilist. In recent months, with capital flowing out of China at a prodigious rate, its interventions have been to keep its currency up—not down.  Launching a trade war with China over currency management, as Donald Trump and Bernie Sanders intend, would therefore be nonsensical—as well as damaging to U.S. interests.

See more in China; United States; Monetary Policy; Elections