Guest Contribution: “Fifty Years of Floating”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. 


This month marks the 50th anniversary of the date, in March 1973, when the dollar, yen, deutschemark, pound, and other major currencies went untethered, their relative values to be determined thenceforth by foreign exchange markets rather than by governments.  The abandonment of the Bretton Woods system of fixed exchange rates was generally viewed as a policy failure. The movement from fixed to flexible exchange rates, however, was probably inevitable, a natural long-term process.

  1. The Bretton Woods system

The post-war international monetary system that was designed at Bretton Woods, NH, in 1944, was one component of the postwar international order.  This order, which also included successive rounds of negotiations to liberalize trade, delivered unprecedented decades of peace and prosperity.

It is tempting to believe that the Bretton Woods system lasted for almost 30 years, coinciding with the period of rapid global economic growth that the French call Les Trente Glorieuses.  But, in a sense, the system only reigned for one year.

It did not really get under way until 1958, when Western European countries had grown strong enough that they were able to restore convertibility of their currencies into dollars (by eliminating exchange controls for current account transactions).  It was the very next year, 1959, that total dollar liabilities to foreigners surpassed the value of gold reserves held by US authorities.  Yale Professor Robert Triffin realized the importance of this signal; correctly diagnosed the problem inherent in the dollar-based system; and foresaw its eventual long-term breakdown.  According to the Triffin dilemma, if the rest of the world was to continue to earn enough US dollars, the de facto reserve currency, to keep their economies humming, eventually investors would lose confidence in the dollar. As it happened, the rise in dollar liabilities was accelerated after 1965 by the inflationary US fiscal and monetary expansion of the Vietnam War era.

  1. The shift to floating

The strains culminated in the tumultuous events of 1971, when US president Richard Nixon suspended the ability of other governments to convert their dollar holdings into gold and devalued the dollar by 11 % (the Smithsonian Agreement), and 1973, when the major pegs were abandoned for good.  The new floating system demonstrated its worth later in 1973, when automatic depreciation of the currencies of the most oil-dependent economies, notably Japan’s yen, helped them accommodate to the shocks of the Arab embargo and subsequent quadrupling in the price of oil.

The demise of exchange rate stability wasn’t entirely cliff-like.  For one thing, it had been presaged by realignments in 1967, when the pound devalued 14%, and 1969, when the deutsche mark revalued upward by 9%.   Also, the worldwide move toward flexibility continued after 1973.  Initially most smaller currencies remained pegged.  But during the ensuing decades, the trend among the mid-sized Emerging Market and Developing Economies was away from exchange rate targets and toward increased flexibility.

The choice as to exchange rate regime is a trade-off between pluses and minuses.  A list of advantages of fixed rates includes: facilitating trade and investment by cutting exchange rate risk and transactions costs; providing a readily monitored nominal anchor for monetary policy; and avoiding two drawbacks that sometimes afflict floating exchange rates — competitive depreciation (“currency wars”) and speculative bubbles. Countervailing advantages of floating exchange rates include the ability to set monetary policy independently of other countries; automatic adjustment to trade shocks; retaining seigniorage for the national government (the privilege of creating money to finance spending); retaining “lender of last resort” protection for the banking system, and avoiding the speculative attacks that sometimes afflict pegged exchange rates.

Gradually over the last 50 years, more and more countries have judged that, for them, the advantages of floating exchange rates outweigh the advantages of fixed rates.   A temporary reversal of this trend started in 1985, when some countries, particularly in Latin America, began returning to exchange rate targets as a means of defeating high inflation (the nominal anchor advantage).  But the trend toward flexibility resumed after 1994, when Mexico was forced by speculative attack to abandon its exchange rate target, followed by Thailand, Korea, Indonesia, Russia, Brazil, Argentina, Turkey and others.  (Another big exception to the overall trend of more flexible exchange rates was the creation of a shared currency, the euro, among 11 European countries in 1999, rising to 20 by now.)

A variety of popular arrangements lie somewhere in between the polar extremes of free floating and giving up one’s currency altogether.  They include bands (target zones), baskets, crawling pegs, escape clauses, and systematic managed floats.

Most major currencies (the dollar, euro, yen, pound, Australian and Canadian dollars) have floated almost freely.  To some, exchange rates seemed too volatile, and called for intervention in the foreign exchange market. There was a period of occasional concerted intervention — most prominently, a cooperative effort by the G5 that was agreed in the 1985 Plaza Accord to bring the dollar down from its loftiest heights.  But intervention became uncommon after 1995.

  1. Currency wars and reverse currency wars

A proscription against “unfair” currency manipulation carried over to the post-1973 world.  Beginning in 2003, US politicians were concerned that China was keeping its currency unfairly undervalued: it intervened frequently, selling renminbi and buying dollars.  And Brazilian officials accused the US and Japan of unfair undervaluation in 2010-11, coining the phrase “currency war.”

But among advanced countries, the last major foreign exchange intervention seeking to lower the value of a currency was a cooperative effort to help Japan cope with side-effects of the Tohoku earthquake in 2011.  In February 2013, the G7 acted to foreclose currency wars, promising each other to refrain from intentionally driving down the values of their currencies, whether directly via foreign exchange intervention or indirectly via monetary expansion, in a little-known agreement that has held.  Even China, in truth, stopped resisting appreciation of its currency in 2014, and switched to fighting depreciation.

These days, currency wars are not in evidence. If anything, the worry is about “reverse currency wars.”  At a time when countries are less concerned about trade deficits and more concerned with bringing down inflation, they are competing to raise interest rates and thereby appreciate their currencies, not depreciate them.  Some countries are unhappy that the dollar has appreciated by 14 % over the last two years [March 2021-March 2023], reaching its third-highest peak in value since floating began in 1973.   (The American public hasn’t even noticed.)

Some have nostalgia for the old post-war monetary system or even yearn for the yet-older gold standard.  But the sinking of the ship Bretton Woods in 1973 was not the currency equivalent of the Titanic disaster. Rather, the last half-century has shown that it marked the emergence of a new, better system, which has remained afloat for 50 years despite frequently rough economic seas.


This post written by Jeffrey Frankel.

72 thoughts on “Guest Contribution: “Fifty Years of Floating”

  1. Moses Herzog

    That’s what humans do, yeah?? That’s what “we” do. That’s “how we roll”. No matter religion, no matter gender, no matter age, no matter ethnicity, no matter geographic location, no matter socio-economic level, no matter “inherent ability”, no matter educational level, we keep trying to find better ways of doing things, improving ourselves, no matter how misguided or straight on target, trying to “improve our lot” in life. And so it was with Bretton Woods, a supposed future “cashless society”, and on and on and on……. if we don’t burn up our planet in uninhabitable temperatures or drowned ourselves with melted glaciers etc first.

    Nice post, we’re so lucky Professor Frankel and Professor Chinn are friends.

  2. pgl

    “Countervailing advantages of floating exchange rates include the ability to set monetary policy independently of other countries”.

    In the late 1990’s Europe went back to fixed exchange rates in the Euro experiment – something opposed by many economists including Martin Feldstein and Milton Friedman. Now it is true under floating Italy’s inflation rate averaged 9% as opposed to Germany’s which averaged 3%. So giving up the lire did bring inflation down but Italy likely regretted the straight jackets of tight ECB policies driven by Germany.

    Sweden maintained a floating rate which allowed it to offset the downside of the pandemic. Yea – its inflation rate remained high relative to US inflation. That Princeton Steve blames that on Biden just tells you all you need to know about the lack of knowledge this “consultant” has. Wait Stevie is blaming Biden for high inflation in China even as policy makers there have kept inflation low.

  3. Macroduck

    Deutsche Bank is looking wobbly today. Considerable attention is being paid to a sharp rise in CDS rates and short-term funding costs for DB. I can find no news associated with the spike in CDS rates, but that doesn’t mean it isn’t out there.

    1. Karen James

      Your describing nothing new there. DB is a pro-Putin, Lukud, Murdoch bank. It’s built by money laundering by the Russian mob into “conservative” political causes, fake neo-nazi groups, fake “white nationalism” like half-Ashkenazi con man Fuentes. It’s a bank that needs to be nationalized and ripped apart.

      1. Moses Herzog

        These may be political risks taken on by DB with very poor judgement in order to increase profit margins and increase deposits, but they aren’t necessarily connected to CDS rates or broad interest rate risk for DB. And many of the things you brought up should be discussed in the open more. But I don’t think the two problems necessarily relate to one another directly, other than general poor leadership.

        We need more female voices participating in the comments section here on this blog. Hope you will contribute again, as the topics you brought up need to be discussed in a more general way.

      2. Macroduck

        Yep. All true. But why did Friday, in particular, go so badly for DB? If it’s an idiosyncratic problem, then spill-over is the only worry. If it is the impact of some non-idiosyncratic problem on an idiosyncratically bad bank, we have bigger worries.

        1. Moses Herzog

          @ Macroduck
          5-star comment from a 5-star person. OK, maybe you’re about 4 and 1/2 stars person, but I’m still looking up at you from the 2-star region of person

          : )

    2. Anonymous

      deutsche bank might be exposed to large derivative ‘positions’ per recent article by yves smith

    1. Macroduck

      There is apparently worry, after what happened with Credit Suisse bonds, that bank CoCos (contingent convertible bonds) could be worth very little in case of further problems for European banks. This is adding to pressure on Deutsche.


        But it’s impact to the U.S. is irrelevant. Dollars are scarce because Asia is collecting more yaun then dollars. Political separation is happening. It’s also creating reshoring of capital back to the United States. My view is as I said a week ago, East Asia, Oceania and Eurasia is coming back. Less free market globalism, more regionalism and capital controls. I can see Biden dusting off the Monroe doctrine as we speak. A Apple production supply chain split would not surprise me either for political reasons in 2024. I suspect China will demand all “western” business out eventually. Right now the unwinding is going slowly, and smoothly………

  4. pgl

    Mary Trump warns us of what her uncle (Donald) may be up to:

    Donald Trump is hosting his first official stump event for the 2024 race at the Waco Regional Airport on Saturday as the former president begins his third attempt at a presidential campaign. The site of his rally, however, has raised concerns due to Waco’s symbolic weight, as it’s scheduled during the 30th anniversary of the Waco siege, a botched federal raid often holding significance for anti-government and far-right groups.In a tweet Thursday night, Mary Trump said her uncle’s rally in Waco was “a ploy to remind his cult of the infamous Waco siege of 1993, where an anti-government cult battled the FBI.” “Scores of people died,” her tweet continued. “He wants the same violent chaos to rescue him from justice.”

    Donald Trump is just fine if his heated calls for violence ends up with a lot of other people being killed. No – Donald never had a soul.

    1. pgl

      “I know bank runs. In 1998, I was Director for Financial Advisory Services (FAS) for Deloitte & Touche in Budapest.”

      Well it sounds like your utter incompetence was the cause of the bank run Deloitte Hungary managed to pull off. But no one really cares about your past failures. You know NOTHING about what drove SVB down as you incessant bloviating BS proves. So again – why are you wasting our time with your incoherent babbling?

        1. Moses Herzog

          @ comrade JohnH
          Does pgl poke other commenters sometimes?? Yes, but it’s not “poking just for poking’s sake”. There’s usually an underlying lesson related to orthodox, well accepted, macroeconomics, with a long thread of research done to draw those conclusions/concepts. That’s a big difference between what pgl states (generally) and things the true troll spews.

          And aside from defending that old curmudgeon PhD Rosser, I mean, pgl really ain’t that bad a person. Maybe even a good person, (don’t quote me on that last part though)

          : )

    2. pgl

      Your suppression BS again? You resorting to the thoroughly discredited quantity theory of money again? Monetary policy is too hot – oh wait, it is too tight.

      My Lord man – the professionals need to take you away to the Cuckoo’s Nest as that blog was the most insane rants I have I have ever read. Please seek professional help.

      1. Steven Kopits

        You’re suggesting the Fed could goose the money supply by 40% with consequences. Clearly, that is not the case. QTM is actually holding up pretty well in the current situation.

        As for suppression and recession, you need to explain why holding the FFR at zero percent for seven years after 2008 caused no inflation or asset bubbles, but blew up both the stock market and housing values within just a few months in 2022-2022. What was the difference between these two events? Why did zero short term rates do nothing after 2008 and explode asset values in 2020?

        Perhaps Menzie could tell us what his theory is.

        1. Macroduck

          Something that “holds up in the current situation” is likely to be a coincidence.

          Actually, I linked to “Spurious Correlations” for fun. Run a correlation on money supply growth and inflation over the past 40 years. There isn’t much correlation. It’s tha evidence thing I keep moaning about.

          pgl needs to explain somethig? No, this is your circus. You need to do better than make claims and then insist that those claims are true unless someone else disproves them. Your claims. Your burden o proof.

          1. Steven Kopits

            Spurious. Goodness.

            Here are a group of economists:
            Erica Xuewei Jiang
            University of Southern California

            Gregor Matvos
            Northwestern University – Kellogg School of Management

            Tomasz Piskorski
            Columbia University – Columbia Business School, Finance

            Amit Seru
            Stanford University

            Combined, losses and uninsured leverage provide incentives for an SVB uninsured depositor run. We compute similar incentives for the sample of all U.S. banks. Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk. If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk. Overall, these calculations suggest that recent declines in bank asset values very significantly increased the fragility of the US banking system to uninsured depositor runs.


            Here’s Moody’s:

            Moody’s sees risk that U.S. banking ‘turmoil’ can’t be contained

          2. pgl

            Oh my – Stevie cites a paper by a group of economists that actually get banking. Oh wait – this paper has been cited by others. Of course little Stevie has no clue what their research implies. Then again I doubt little Stevie even knows what a bank is.

        2. pgl

          “You’re suggesting the Fed could goose the money supply by 40% with consequences. Clearly, that is not the case. QTM is actually holding up pretty well in the current situation.”

          I never said anything remotely close to the 1st sentence. BTW lying troll but Dr. Chinn has laid out his economic theory but I guess once again you were too dumb to follow. As far as the Quantity Theory of Money everyone with a working brain knows how poorly it failed. Then again – God forgot to give little Stevie a brain.

    3. Macroduck

      Try again. Fail again.

      Mostly, this is a repetition of your earlier unsubstantiated theory of the SVB run. “Unsubstantiated” remains the problem. You insist on the quantity theory of money when the variability of the velocity of money is clear eviden e against it. You name-check Friedman, but neglect to mention that Friedman, himself, repudiated the quantity theory in recognition of the instability of velocity. You keep this “recession vs supression” campaign going, but there is no theory of supression, no empirical research on suppression, nothing but your made-up stuff. Gertrude Stein has you “supression” stuff nailed: “There’s no there there.”

      You’ve also got simple factual problems, and that’s an accomplishment, since you mostly don’t rely on facts:

      “This view underpinned the Treasury’s decision to push the Federal Funds Rate (FFR) effectively to zero.”

      The Federal Reserve, not the Treasury, sets the fed funds rate. Nobody who pretends to any knowledge of how finance works should get this wrong.

      “As the bank (SVB) was unable to offer competitive terms, depositors removed their money.”

      Except you’ve already noted that banks in general *are* able to raise their deposit rates. “Unable” is a misstatement of fact. And the made-up claim that banks would run into margin problems if they were to raise deposit rates to market level is, ya know ow, unsubstantiated. Which is no surprise, given that in Q4 quarterly reports, banks’ net interest margins have been much improved over recent quarters because of higher interest rates. If banks haven’t raised deposit rates, it’s not from a lack of ability to do so. It’s a choice, and a bad one – a poor business decision.

      Looks like bank supervision fell down. We know that supervisors highlighted deposit troubles at SVB, but it seems that nothing was done until the run started. That’s not “supression” and it’s not that SVB lacked capacity to raise deposit rates to market levels. If it’s true that there was no follow-up on bank supervisors’ warnings, that’s the Fed’s problem – specifically the San Francisco Fed’s problem.

      Made-up explanations for the SVB deposit run aren’t helpful. Your readers will come away from reading your essay less well I formed than of they hadn’t read it. Please stop.

      1. pgl

        Does Stevie have any readers? Note there are ZERO comments and ZERO likes to this trash. I guess the entire world has figured out Stevie’s blog is a total waste of time.

      2. pgl

        You must have stopped reading before Stevie started macroeconomics, which was wise as this troll dusted off his suppression trash and of course the Quantity Theory of Money. Never mind velocity collapsed over the past few years. The theory must be true per some mean revision mess:

        Huh – what’s the mean? The 1.8 monetarist used to claim. Oh wait – that disappeared. Maybe it was 1.45 over the last decade. Oh wait – that went away too. We asked Stevie to be more specific and of course he could not. Is mean now 1.25%. Mean revision is nonsense if the mean keeps changing. But Stevie still believes this nonsenses? Yea – he is THAT STUPID.

        1. Macroduck

          Now your just hoping some lay person won’t click the link. The chart you link to shows than M2 velocity hasn’t been stable since around 1990. That’s 33 years without reverting to any particular mean.

          Either you don’t know ehat reversion to a mean means, or your simply lying. Who’s you intended audience? Who do you think will believe that “the data say” M2 velocity is mean reverting?

        2. pgl

          The data says it is NOT. Yea – you should Velocity is mean reverting but then you say a lot of really stupid things. Of course our host just shut down your latest lie. Try paying attention troll.

        3. pgl

          “we had a debate … ”

          This is so typical of Princeton Stevie pooh. Yea there was some debate where others devastated something pompous but utterly stupid from Stevie. But Stevie kept repeating the stupid things he said paying no attention to the devastating rebuttals. So since consultant Steve spoke – Steve must have been correct.

          This is your MO for every topic. Look – you are a flaming moron. But yea – you are too arrogant to get how utterly wrong you were about this and EVERY OTHER topic you have opined on. So Stevie keeps mansplaining to the rest of us lessor beings as that is how he rolls.

    4. pgl

      ‘It is a story of bad management, not at the commercial banks, but rather at the US Federal Reserve Bank and Treasury.’

      In this episode of Steve v. Steve – Stevie tells us that this is not a regulatory problem after Stevie told us the regulators botch this.

      In this episode of Stevie v. Stevie – Stevie whines that monetary policy is too tight even if he criticizes the FED for loose monetary policy.

      Stevie never does know his head from his backside but he continues to write the stupidest garbage in the history of time.

  5. Macroduck

    I’m starting to wonder whether the volatility of Treasury yields is, itself, a source of stress for financial markets. Long bills and notes out to about 5 years haven’t been this volatile in some years:

    Because Treasury yield volatility is associated with turns in Fed policy, there is also an association between yield volatility and recession. That’s not what I’m curious about just now. I’m curious whether yield volatility in some mechanical way creates stress in financial markets. Creates, not merely indicates. I suspect it does, but don’t have evidence just now.

    1. Ivan

      Panic has a certain self-reinforcing component.

      Right now a lot of silly people are exiting FDIC insured banks to invest in MM accounts. Some may recognize that they are not going to a safer place, when they see the ups and downs in treasuries. They may also be contacted by their banks and told that the bank has a service to spread money so they can have all their cash covered by FDIC.

  6. pgl

    Kevin Drum has a post showing how total borrowings by financial institutions from the FED jumped to $122 billion last month. Kevin does not say what his source was but I think this is it:
    Total Borrowings from the Federal Reserve

    Alas FRED has yet to update this for the month of February. FRED does allow one to look at this series back to 1991. Kevin’s graph does not even go back to the bad old days of the Great Recession – alas.

        1. Macroduck

          Or the very model of a modern major general. Or a featherless bird. Are you unwilling to make a case for you aseettion, or unable?

          Make your case.

        2. pgl

          Epitome? Systematic? For an complete Village Idiot you like to use big words to make up for your utter incompetence.

  7. Macroduck

    A bit of foreshadowing of the current bank-run mess. Blackstone’s Real Estate Income Trust began limiting withdrawals in December, and limits remain in place:

    From the investor point of view, a limit on withdrawals from one account creates increased need for withdrawal capacity from other accounts. Blackstone wasn’t the only place limiting withdrawals. At a guess, this made Thiel and his ilk more sensitive to potential runs, so they created runs.

    1. pgl

      “A Blackstone spokesperson declined to comment on how the New York-based firm calculates the valuation of its REIT, but said its portfolio was concentrated in rental housing and logistics in the southern and western United States that have short duration leases and rents outpacing inflation.”

      Interesting. So if the demand for housing is not totally collapsed this REIT can see an increase in the return to their assets to match the increase in the cost of funds. But shhh – don’t tell little Princeton Stevie as his blog is off on combining his usual effing insanity (as is the maturity mismatch issue is locked in stone, suppression economics, and yes – the good old Quantity Theory of Money).


        Considering the market is backhanding the Fed by diving into 30 year bonds……most of the black rock withdrawals look stupid. Idiots who don’t understand how the monetary system is set up. Last time this occurred was 1966-67.

  8. pgl

    Kevin Drum has a post showing how total borrowings by financial institutions from the FED jumped to $112 billion last month. Kevin does not say what his source was but I think this is it:
    Total Borrowings from the Federal Reserve

    Alas FRED has yet to update this for the month of February. FRED does allow one to look at this series back to 1991. Kevin’s graph does not even go back to the bad old days of the Great Recession – alas.

    1. Moses Herzog

      You’re intentionally trying to depress me aren’t you?? The most mis-labeled law in the history of legislation. Republicans are nothing if not the masters of deception and subterfuge.

  9. pgl

    “The United States Postal Service (USPS) has taken the most dramatic step in a half-century to re-establish a postal banking system in America. In four pilot cities, customers can now cash payroll or business checks of up to $500 at post office locations, and have the money put onto a single-use gift card. It’s the most far-reaching executive action that the Biden administration has taken since Inauguration Day. The move puts the USPS in direct competition with the multibillion-dollar check-cashing industry, which operates storefronts to allow unbanked or underbanked residents to cash their paychecks.”

    I bring this up because Princeton Stevie’s latest insane blog rant starts off with claiming we Americans do not know what a postal bank is. Yes Stevie’s combines arrogance and stupidity in almost every dumb comment he makes.

    Now his latest ends with his usual brand of insanity in macroeconomics – Quantity Theory of Money and “suppression” economics. Yes when his rants are thoroughly debunked you can count on Stevie on doubling down.

    But check out what he did in Hungary. He worked for apparently the most corrupt group of accountants in a very corrupt nation. And he takes pride of being in charge of bringing the entire Hungarian banking system down. Yes Stevie brags about being utterly incompetent. Go figure.

    1. Ivan

      There is no doubt the postal service needs to find something else to add to its services given that its main activities of moving paper is failing. This seems like a great thing to do with all those buildings and people. We need to get rid of the predatory check cashing industry.

        1. pgl

          We know that clown. Everyone knew that. But you being an arrogant turd tried to pretend only you knew that. And your point? Oh yea – you led a corrupt accounting firm in a corrupt nation to destroy their banking sector. Good show!

  10. Karen James

    No credit event from SVB. No deceleration in credit values. Just panicking rich people scared over the Fed making short term debt nominally more expensive. It is a political event. Fund managers vs investors. Yves Smith had a good article on this a few days back. The idle rich aren’t used to nominally more expensive short term debt. So they have been panicking frankly, rather pathetically. My take is the Powell Fed is in trouble with Fund managers. This is the same situation as 2000 when the corporate bond investment bubble busted and long term debt became attractive while nominally denominated short term debt became less attractive. This liquidity can cause a long run surge around animal spirits in mortgage lending. Indeed, housing activity accelerated in 2000. Only in 2001 during the 97-2005 off shoring boom was job loss strong enough to blunt it for a year. Today, we are in a different situation, if not reversed from 2000. Lessons probably learned.

    This is a difficult environment to figure out. The Fed is biased to services, which has major drawbacks. Tech is a great example of this. The services side is struggling, but the goods side is not. Considering most of Tech is in goods, it makes little sense to base economic predictions on just services. It leads to underestimated growth and employment growth.

    Hello. I am new to this forum.

    1. Ivan

      Yes indeed welcome. We need more participant who are knowledgable and who can formulate and argue a fact-based opinion.

    2. Steven Kopits

      No credit bubble has burst. No one has said that SVB or the other banks had any problems on the asset, ie loan, side. Nor was the damage limited to SVB. First Republic had an even more conservative balance sheet than SVB. And what about CS, DB, and all the regional US banks? Is this all just rich people panicking? Or is the problem that deposits require 4%+ interest when banks lent at 3% on mortgages and similar loans?

      The problem is that the Fed and Treasury don’t know what they are doing. They screwed up on the way in, and they are screwing up on the way out.

      1. Macroduck

        Treasury screwed up? How? And remember, contrary to the claim you made at your website, Treasury doesn’t set the funds rate.

      2. pgl

        Our trying to mansplain our new friend with your usual incoherent contradictory BS? Dude – she is much smarter than you could ever be so lay off.

      3. pgl

        “The problem is that the Fed and Treasury don’t know what they are doing.”

        And you do? Oh yea making up stupid terms like suppression and trying to tell us velocity is mean reverting. Listen clown – we have had enough of your stupid lecturing as you have no clue what you are babbling about.

    3. Moses Herzog

      You’re very welcome here. Both of the blog hosts are welcoming to female voices. Maybe if you feel ok to contribute more here, other women who are shy to comment on economics blogs will see we are not ravaging wolves here, and women’s perspectives add another palette of colors that is beneficial to the dialogue.

  11. pgl

    Wrestling coach who likes to fondle his college athletes Jim Jordan is an utter coward:

    Representative Jim Jordan, an Ohio Republican and staunch supporter of Donald Trump, gave no comment about a post the former president made on Friday in which he warned about potential “death & destruction” if he’s indicted as part of the hush money payment investigation involving adult film star Stormy Daniels. When NBC News reporter Sahil Kapur asked the congressman about what he thinks of Trump’s post, Jordan said that he hasn’t seen it. Kapur then showed him the post on his phone, but the GOP lawmaker said he can’t read well without his glasses.

    Then put your glasses on you worthless POS.

  12. pgl,2023-03-16%3A%204.57%20%28%2B%20more%29%20Updated%3A%203%3A25%20PM%20CDT
    3-Month Treasury Bill Secondary Market Rate, Discount Basis

    Princeton Stevie wants us to believe that a 4% rise in this interest rate has never happened in US history. But of course Princeton Stevie knows nothing. We have seen larger increases in this rate before and yet we did not have a banking crisis afterwards. Yea we had decent banking regulation in the 1970’s but Princeton Stevie has declared that does not matter here. After all Princeton Stevie tells us his is the only one who understands banking issues. So forget the facts and what the real experts have said. Princeton Stevie has spoken so bow down.

  13. pgl

    We may need to update this:

    “Jack Of All Trades” Meaning
    When someone refers to a person as a ‘jack of all trades’ they are saying that the person is able to do many different types of jobs but may not be necessarily very skilled in any single one of them.

    Origin of this idiom
    The term ‘jack of all trades’ originally came from the 14th century when the name Jack was a general name given to the masses. The full phrase is usually said as ‘jack of all trades, master of none.‘

    Forget Jack. Steve thinks he is the master of issues but in reality he cannot compete with Jack in any of them.

    Seriously – is there a single economic issue where Princeton Steve has offered even the slightest insight? I can’t think of one. But Stevie presents he knows every issue better than even the experts. His own writings, however, show how utterly incompetent the world’s worst consultant is at everything.

  14. pgl

    “Kyle, let me apologize for this whacko, his attorney and the judicial system the way it is today, because you were completely exonerated in your criminal case,” said Ball.

    “So they’re suing me in the Eastern District of Wisconsin for emotional damages, pain and suffering, humiliation, a bunch of other things, I think conspiracy is one of them,” said Rittenhouse. “And it’s quite honestly ridiculous, it’s frustrating, and I’m just praying it doesn’t go anywhere because if they win, this is a new standard for people who defend themselves and are rightfully acquitted in a criminal court. If they’re proven to use lawful self-defense, they’re gonna say, hey, I know you were found not guilty, but we’re gonna come after you in civil court, we’re gonna take your money and we’re gonna file these lawsuits against you and we’re gonna drown you in a mountain of debt.”

    Oh boo hoo – poor little Kyle. When OJ murdered his wife the DA blew the criminal trial but they got OJ during the civil trial. But poor little Kyle does not want this civil trials? Why not? I am sure Kyle can go all emotional as he lies to this jury too. MAGA!

  15. Raymond L. Love

    My understanding of the Triffin Dilemma is that the US Dollar global float must keep pace with global growth. Thus, the US, while running decade after decade of trade deficits is a designed effort to keep too many dollars from repatriating.

    In 2009 Bernanke explained to a Congressional panel that through the years leading up to the 2008 bubble-fest, that reshoring dollars had caused a glut which was part of the cause of the asset-bubble explosion. I was curious at the time if the glut was a result of the vast global dollar float, or a Triffin issue, but Volker stated thereafter that he felt that the Triffin Dilemma was no longer a pressing concern.

    Ironically, here we are again, much like in 2008, with a bulging money supply. But this time there are those, who are blaming the money supply to be the cause for the price/wage inflation. The old ‘too many chasing dollars’ argument. Yet wages are not even keeping up with prices. And in the years before the Great Recession there was also a bulging money supply, but price/wage inflation was not problematic. I’m confused maybe, not quite able to get my mind around how a reserve currency provider cannot use use ex-nihilo funding in order to keep pace with the global demand for dollars.

    1. Macroduck

      Yes! Somebody knows how reserve currencies work!

      I would say that “designed” is maybe a stretch. Reserve currency status is as likely to be a natural state of affairs as something that happens by design. The results are the same, though.

      The Triffin problem is real. You hear it every time the Fed tightens or eases monetary policy, as financial leaders abroad complain about the effect on their own economies. It was very clearly on display, to the advantage of the U.S., during the Asian crisis. Financial inflows to the U.S. lowered the cost of capital, but inflation was limited by the collapse of commodity prices.

    2. Macroduck

      Yes! Somebody who understands how reserve currencies work.

      I would say, though, that “designed” may be a stretch. Reserve currency status is probably a natural consequence of conditions, rather than by design. There are too many moving parts to control them all.

      And we do see the Triffin dilemma any time the Fed eases or tightens policy. Financial leaders in the rest of the world complain about the effect of increased financial flows, exchange rate fluctuations and the like, and for good reason.

  16. Raymond L. Love

    Thanks, and yea, I hesitated on the use of ‘designed’, maybe ‘accepted’ would have been less presumptuous. And it was one facet of many, naturally.

    So much though shrouded in half-truths and etc. We now have nonsensical national conversations, or maybe we’ve always been confused, collectively, but more so now, with more info in play.

    The cause for ‘greedflation’ is coming out, like an unwanted child. We need strong econ-minded leadership. An intelligent and genuine Trump, if that is possible, lol.

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