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This morning I did a presentation for Danske Bank clients about US monetary policy and who will be the next Fed chairman.
Market Montarists are tireless in arguing in favour of NGDP level targeting. However, we normally do not spend much time on how such a target should practically be implemented. Scott Sumner obviously has argued that an NGDP target should be implemented with the use of NGDP futures. I love Scott's suggestion, but it might not convince everybody and it might therefore be worthwhile looking at other possibilities.
Market Monetarists have long argued that governments should issue bond linked to the development in nominal GDP. The main argument has been that NGDP-linked bond would be a very good indication of monetary policy conditions.
Since the collapse of Cyprus' economic and financial system earlier this year everybody have been looking for the next euro zone country to get in trouble. In fast became clear that the next country in line could very well be Slovenia and the country's Prime Minister Alenka Bratušek has been fighting to save her country from disaster in the last couple of months.
Over at freebanking.org Kurt Schuler has a new post on "Hong Kong's durable currency board".
I am presently spending my time vacation in the Christensen vacation home in Southern Sweden. The weather is fantastic and family is doing equally fantastic so I really don't have any reason to be pessimistic about life - and I am not, but do find myself being increasingly pessimistic the rise in protectionist tendencies around the world and therefore as somebody who is an admirer of Bastiat I also fear that we are moving toward a less peaceful world.
When presented with the idea of Free Banking - that is private money issuance - most people will shake their head and even most free market oriented think the idea of private money is insane or at least highly unrealistic. However, the fact is that money is not a government invention. Money developed spontaneously way before government got involved and there is no reason to believe that money could not be provided by the market rather than by governments in the future.
If one go through the huge empirical literature on the real and nominal effects of monetary policy one will realize that most of this research is based on extremely simple and often very wrong measures of monetary policy.
And that might well be the case, but if we look at a little bit longer period then it is hard to argue that something special is going on in the US stock