ALL BLOG POSTS
I have a new piece in today's City AM on central bankers as (pretend) superheros versus rules based monetary policy:
Here is what I believe:
I like to tell people that I prefer taxis where the driver is not wearing a seatbelt. This mostly confuses people – at least non-economists – because the general perception is that people who do not wear seatbelts are more “irresponsible”.
I have a piece in City AM today on the impact of fiscal austerity in the UK:
US bond yields continue to rise. To some this is a major risk for the global economy. However, I continue to think that there is no reason to worry about rising US bond yields - at least not from the perspective of the US economy.
It is now very clear that what Milton Friedman advocated the Bank of Japan should do back in the mid-1990s – to expand the money base to get Japan out of deflation – is in fact working. Nominal spending growth is accelerating and with it deflation has come to an end and real GDP growth is fairly robust.
I see a lot of people in the US have been happy to declare yesterday labor AND capital day (See for example Mark Perry at the American Enterprise Institute here). The argument is that you not only need labour to produce, but you equally need capital. That is all fine - even though I think it is a bit childish. For most Americans labor day is a just another holiday with no political significance. Celebrating the role of labour in the economy does not mean Americans think less of capitalists after all most Americans deep down fully well know that capital is at least as important as labour in the production of goods and services.
The concept of moral hazard can often be hard to explain to non-economists - or at least non-economists are often skeptical when economists try to explain excessive risk taking in banking with moral hazard problems. Non-economists often prefer a simpler explanation to banking crisis - bankers are simply evil and greedy bastards.