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The big story in the financial markets this week is the continued decline in commodity prices - particularly the drop in gold prices is getting a lot of attention.
One of my ambitions with my blog has always been to be a facilitator in the sense of trying to get different people with interest in monetary policy issues together - whether we talk about financial sector professionals, professors, students or policy makers - yeah even journalists. This is also the reason why I have started the Global Monetary Policy Network (find GMNP on Linkedin here).
There is no doubt that the main monetary policy problem in world over the last five years has been overly tight monetary policy - particularly in the US and the euro zone. However, there are certainly also central banks of the world that have erred on the other side.
A couple of days ago I wrote a post on the behavior of prices in the 'bust' phase of an Austrian style business cycle. My argument was that the Austrian business cycle story basically is a supply side story and that in the bust there is a negative supply shock. As a consequence one should expect inflation to increase during the 'bust' phase.
Former UK Prime Minister Margaret Thatcher died earlier today. It is truly sad news.
I have been thinking about an issue that puzzles me - it is about inflation in an Austrian School style bust.
If you write a blog you obviously want people to read what you write and even better you want to inspire discussion. I was therefore very happy when Duncan Brown sent me his two latest blog posts, which both are inspired by stuff I have written.
After 15 years of deflationary policies the Bank of Japan now clearly is changing course. That should be clear to everybody after today's policy announcement from the Bank of Japan. I don't have a lot of writing here other than I will say this is extremely good news. Good for Japan and good for the global economy and what the BoJ is doing is nearly textbook style monetary easing. The only minus is that the BOJ is targeting inflation and not the NGDP level, but anyway I am pretty convinced this will work and work soon.