tag:blogger.com,1999:blog-5713178645208582139.post8043954767796584932..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: The Fed Gets Schooled Again on Central Banking: the Swiss National Bank EditionDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5713178645208582139.post-30431833605378406572011-09-10T16:13:38.861-05:002011-09-10T16:13:38.861-05:00"Now we can only hope that the ECB and the Fe..."Now we can only hope that the ECB and the Fed learn a bit..."<br /><br />Not going to happen. That's it has been as obvious for going on years now that policy in both Europe and the US (+Japan) has been too tight, what this should give us is a very stong "signal" (or we could just say "proof") that the Fed and ECB are, in fact, led by incompetent men. <br /><br Doug Campbell https://www.blogger.com/profile/11028049845008665877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-4714556452602160012011-09-09T02:24:09.736-05:002011-09-09T02:24:09.736-05:00There are certainly SOME parallels between what th...There are certainly SOME parallels between what the Swiss are doing and Prof Beckworth’s NGDP ideas, but I don’t think the parallels are quite as close as the Prof. suggests.<br /><br />The MAIN objective of NGDP targeting in the US is to optimise the level of demand from US consumers and businesses, with little regard for the rest of the world. In contrast, Switzerland’s main concern is (or Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-55250994606801327502011-09-08T13:52:28.645-05:002011-09-08T13:52:28.645-05:00I'm an undergrad econ major so this may seem l...I'm an undergrad econ major so this may seem like a simplistic question but,<br />Why couldn't the Fed drop its rate to 0.10% like the BOJapan? I'm guessing that the effect would be hyper-minimal.The Big Gnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-58771193695006230992011-09-06T17:13:10.926-05:002011-09-06T17:13:10.926-05:00David Pearson,
Eichengreen's global coordinat...David Pearson,<br /><br />Eichengreen's global coordinated monetary stimulus, if done, would largely leave exchange rates and trade flows the same as he notes in the end of his piece. Thus, the point is not to stimulate external demand for domestically produced goods. The idea is to stimulate domestic demand for domestic goods. The real exchange would remain unchanged, but all countries David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-70584723652105919022011-09-06T15:51:34.460-05:002011-09-06T15:51:34.460-05:00David,
Good point. Svensson is not a monetarist ...David, <br /><br />Good point. Svensson is not a monetarist and in his world it is not about increasing the money supply, but purely about inflation/deflation expectations as I see it. So no, he would probably not have the exact same view as Eichengreen (or myself). That said, I generally think he would argue that a global "currency war" would "work".Lars Christensenhttps://www.blogger.com/profile/08409946182659964026noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-74906431666325114522011-09-06T15:36:25.680-05:002011-09-06T15:36:25.680-05:00Lars,
Contrast the effect of a real depreciation ...Lars,<br /><br />Contrast the effect of a real depreciation of a currency against Eichengreen's global, coordinated QE. Would Svensson describe that QE as "foolproof"?David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-53785741869922407582011-09-06T15:05:04.639-05:002011-09-06T15:05:04.639-05:00Excellent commentary.Excellent commentary.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-69934042298452350732011-09-06T14:32:42.294-05:002011-09-06T14:32:42.294-05:00David,
I think the perspective is that we should ...David,<br /><br />I think the perspective is that we should not be afraid of a second currency war. Currency wars are not trade wars. Rather they are not actually wars - they are zero sum games in a deflationary world. But ultimately each country should conduct monetary policy in their own national interest, but one country's can have huge impact on other countries monetary policy. Equally Lars Christensenhttps://www.blogger.com/profile/08409946182659964026noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-32057681832100925342011-09-06T14:16:55.515-05:002011-09-06T14:16:55.515-05:00Lars,
Thanks. Eichengreen says CB's should b...Lars,<br /><br />Thanks. Eichengreen says CB's should buy each other's currencies, amounting to global QE. That QE could just end up in ER's, just as the first few rounds did. <br /><br />When global CB's exited the gold standard, they removed a key constraint on all future money growth. This had the effect of reversing the effects of the gold standard on real interest rates (David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-64053194992645594112011-09-06T13:19:06.610-05:002011-09-06T13:19:06.610-05:00David Pearson, Barry Eichengreen is answering that...David Pearson, Barry Eichengreen is answering that question here: http://www.guardian.co.uk/commentisfree/2009/mar/17/g20-globalrecessionLars Christensenhttps://www.blogger.com/profile/08409946182659964026noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-85420124133932651282011-09-06T13:11:47.776-05:002011-09-06T13:11:47.776-05:00Joao,
In the 30's those economies devalued ag...Joao,<br /><br />In the 30's those economies devalued against gold. Today, how would a serial global deval work? The ECB would target 1.6 EUR/USD, but the Fed would target 1.0 EUR/USD. Perhaps every central bank would agree to purchasing the others' currency? Why wouldn't the purchases just end up in foreign banks' ER's?David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-60328894412602397782011-09-06T11:42:15.538-05:002011-09-06T11:42:15.538-05:00rjs
You get massive world monetary stimulus, just ...rjs<br />You get massive world monetary stimulus, just as if all the countries had dropped out of the gold standard at the same time in the early 1930s. Eventually they all did, but the ones to drop out first recovered sooner.João Marcushttps://www.blogger.com/profile/13658264244033012660noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-53662281231549644212011-09-06T11:36:30.252-05:002011-09-06T11:36:30.252-05:00speculation is that japan will follow suit...
wha...speculation is that japan will follow suit...<br /><br />what happens if all central banks resolve to "buy foreign currency in unlimited quantities"?rjshttps://www.blogger.com/profile/15681812432224138582noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-74413108601830390172011-09-06T11:07:58.457-05:002011-09-06T11:07:58.457-05:00David
The "dunking" analogy got me think...David<br />The "dunking" analogy got me thinking that just as small men - Churchill, Napoleon, Hitler, for example - left their mark, small countries are more "fearless"!<br />I also did a post on the topic (and so has David Glasner). Pity Scott is "sipping italian wine"!<br />http://thefaintofheart.wordpress.com/2011/09/06/the-%E2%80%9Cwilliam-tell-strategy%E2%80%João Marcushttps://www.blogger.com/profile/13658264244033012660noreply@blogger.com