Which Fed monetary policy ‘normalization?’
Should policies centered on more broadly defined money supply replace central bankers’ traditional preoccupation with interest and inflation rates? Is there a way to tame overregulation in the financial sector while making it more stable, more durable and more squarely based on entrepreneurial responsibility? Such changes may be possible – if a regulatory paradigm shift takes place.
Janet Yellen considers her last act
Janet Yellen has done what was needed to leave behind fond memories of her term as Fed chief. She waited until the U.S. economy showed vigorous signs of recovery before announcing a soft-landing solution from the excessive liquidity inherited from Ben Bernanke. In part, this was a conscious choice to do what markets expected. But it may have been governed more by a long-term pessimism about the outlook for the economy.
Opinion: Confusing statements on money and trade
Janet Yellen is not worried about another global financial crisis. Mario Draghi and even Warren Buffet bemoan “inequality.” But no one seems to be taking seriously the problems artificially cheap money is causing to the global economy. With such a fragile global financial situation, free trade could be a big help – but protectionism is on the rise. Could the upcoming G20 meeting bring substantive progress on that count?
The danger of Trump’s tax plans
U.S. President Donald Trump’s proposed tax breaks for the middle class are either negligible or unsustainable, and probably both. Americans should expect a continuing public deficit and a rise in public debt. This will not be an immediate problem for the economy, but it will create growing structural imbalances. Putting the budget in order should be President Trump’s priority. The question is whether he has the vision and leadership qualities to do it.
Global Outlook 2017: Scenarios for the economy
The world economy in 2017 will be defined by four variables: growth, oil prices, inflation and interest rates. Political events could also play an important role, especially a possible rapprochement between the United States and Russia and general elections in France. The potentially fateful impact of the latter on the European Union would be amplified by an Italian crisis.
QE has failed. What comes next?
Eurozone economies have been subjected to expansionary monetary policy for almost five years, and the easy-money approach has failed to jump-start demand and ignite growth. As central bankers begin to face this reality, they may have to choose between shoring up government indebtedness and letting banks go bust, or giving bankers a chance to operate and letting governments default. Which will they choose?
Clueless central banks
Despite quantitative easing, forward-guidance and negative interest rates, global GDP growth has not taken off. Avoiding the business cycle should not be the priority of central banks or governments. Creating conditions that allow businesses and individuals to deal with the cycle, should.
Cheap money policy does not fool citizens
Central bankers and a sizeable group among western economists and political leaders believe that low to negative interest rates are encouraging consumption and economic growth. The policy has not been working, however, because citizens rightly distrust it and appreciate the importance of savings.
Schauble-Draghi clash more about politics than monetary policy
In an unusual turn of events, German Finance Minister Wolfgang Schauble leveled sharp criticism at European Central Bank President Mario Draghi. At first blush the dustup seems solely to concern monetary policy. However, a closer look shows that there are bigger domestic and international political forces at play. Germany may be positioning itself as the main proponent for greater centralization within the European Union.
With India ready for takeoff, Modi pauses over launch button
After his first 18 months in office, during which India’s economic prospects have brightened considerably, 2016 gives Prime Minister Narendra Modi a last window of opportunity for radical new policy initiatives. If he decides on a bold course, it would depart from the incremental approach that has characterized Mr. Modi’s term thus far. ...