My latest Macro Musings podcast is with Michael Bordo. Michael is a Professor of Economics at Rutgers University and a distinguished visiting fellow at the Hoover Institution at Stanford University. He has been a visiting scholar at numerous central banks and is a research associate of the National Bureau of Economic Research. Michael has published widely in the field of monetary economics and monetary history. Michael joined me to talk about both recent and historical cases in monetary economics.
We began by reviewing the Great Recession and what contributed to it. Among other things, we address whether growing inequality contributed to the recession. We also considered the evidence for the claim that recessions caused by financial crises necessarily lead to slow recoveries. The discussion then turned to Canada and why it did not have a banking crisis during the Great Recession and why its contraction was far milder than the one in the United States.
Michael has also studied the history of fiscal unions. Specifically, he has looked at the history of fiscal union in Argentina, Brazil, Canada, Germany, and the United States and what that means for the future of the Eurozone. The prognosis is not good.
We closed out the show by talking about the historical record of deflation, rules-based monetary policy, and the use of inflation as a solution to excessive public debt. It was great conversation throughout.
You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.
Related Links
Michael Bordo's Homepage
I enjoyed this episode, but the history of branch banking needs to be clarified a bit. Full interstate banking came about with Riegle-Neal in 1994, not Gramm-Leach-Bliley. There is a fairly extensive literature on the impact of R-N on bank profits, deposits, asset quality, etc. Also, there were many interstate compacts prior to R-N that allowed reciprocal branch banking. It is certainly not the case that there were no interstate branches prior to 1994. Furthermore, a single holding company could own bank subsidiaries in multiple states, effectively serving as interstate branching (albeit with restrictions and limitations). However, it is true that branching limitations and unit banking lingered on far longer in US history than one might first assume.
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