Category Archives: inflation

Return to the gold standard

Several sources reported that the 2012 Republican Platform would call for a commission to explore the possibility of the U.S. returning to a gold standard. However, the final document makes no mention of gold, and instead seems to have settled on a proposal that is unlikely to do any harm:

President Reagan, shortly after his inauguration,
established a commission to consider the feasibility
of a metallic basis for U.S. currency. The
commission advised against such a move. Now, three
decades later, as we face the task of cleaning up the
wreckage of the current Administration’s policies, we
propose a similar commission to investigate possible
ways to set a fixed value for the dollar.

I thought it would be worthwhile to review some of the reasons why we should be thankful that saner heads seem to have prevailed.

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U.S. monetary policy since the financial crisis

The Federal Reserve Bank of New York announced on Thursday that it had sold the last remaining securities from its Maiden Lane III portfolio, successfully closing the chapter on its assistance to insurance giant AIG. I thought this would be a good occasion to review the various measures that the Fed implemented over the last 5 years– what they were attended to accomplish, what they did accomplish, and the significance of Thursday’s announcement.

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The housing market and the case for higher inflation targets

From a VoxEU column today, by me and Joshua Aizenman:

Might more inflation be good for the US and Europe? This column looks at the housing market in the US and argues that, with houses dropping in price, buyers are playing a waiting game. And as buyers keep delaying, the price drops further. Given the importance of property in many economies, the knock-on effects are severe. Yet one way to break this vicious cycle is with inflation.

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Should the Fed do more?

Johns Hopkins University Professor Larry Ball, Princeton Professor Paul Krugman, U.C. Berkeley Professor Brad DeLong, University of Oregon Professor Tim Duy and Texas State University Professor David Beckworth are among those recently arguing that Fed Chairman Ben Bernanke is neglecting his own earlier academic insights into what the central bank should be doing in a situation such as the United States presently finds itself. Here’s what I think they’re overlooking.

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