Given the Senate Banking Committee’s approval of Judy Shelton’s nomination to the Board of Governors of the Federal Reserve, it seems like a good time to see what stabilizing the price of gold in US dollars would’ve required in terms of the policy rate (akin to how the exchange rate is managed). Using the policy rate to stabilize the dollar price of gold at February 2020 levels would required the increase of the Fed funds rate by 1.15 percentage points higher than it was at that time. The Fed actually decreased the Fed funds rate by 1.5 percentage percentage points by June 2020.
Category Archives: Federal Reserve
Very Broad Money and the Price Level
I keep on getting missives from the IIMR. Here’s today’s, from a Tim Congdon:
Worried about Surging Inflation?
Periodically, I get emails from some guy named Tim Congdon of the Institute of International Monetary Research, bewailing the tendency “to shrug off the inflation risks that have in the past arisen from too much monetary financing of large budget deficits.” So…big increases in the Fed’s balance sheet: will they collide with reduced supply over the medium run to produce inflation? TIPS say no…
The Current Crisis: SitRep and Interpretation Lecture
I was lucky enough to get assigned to coteach a macro course (with Charles Engel) this semester. However, as time passed, it seemed strange to go through the models without referring to current events — in my half of the course, I got to teach one lecture in person, and then had to switch to remote teaching –, so here is my digression from the syllabus, talking about — among other things — why a “V” recovery is not likely, contra Larry Kudlow, Stephen Moore, et al.
Coping with the COVID-19 economic shock
Every recession is different. The recession of 2020 will not be an exception to that rule.
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Malleable and Ductile
Those are two characteristics of gold … and of Judy Shelton’s economics. From Deutsche Bank today (Luzzetti & Hooper):
The return of the Fed’s balance-sheet policies
The Federal Reserve has increased the size of its balance sheet by a third of a trillion dollars over the last 15 weeks, returning to tools that a short while ago we thought it had abandoned. But the Fed’s current goal in these operations is quite different from what we had seen earlier.
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Guest Contribution: “The Role of Network Effects in the International Transmission of US Monetary Policy”
Today, we are fortunate to be able to present a guest contribution by Stéphane Dees (Banque de France and Univ. Bordeaux) and Alessandro Galesi (Banco de España). The views expressed here are those of the authors and do not necessarily reflect the views of Banque de France, Banco de España, or the Eurosystem.
Guest Contribution: “Is capital flow management effective? Evidence based on U.S. monetary policy shocks”
Ken Rogoff: “Is this the beginning of the end of central bank independence?”
Why you should attend this UW Economics JPGI talk by Kenneth Rogoff tomorrow (Wednesday) at 4:30 pm: