ALL BLOG POSTS
This is Argentine central bank governor Mercedes Marcó del Pont in an interview on March 26 2012:
I strongly believe that we can learn a lot about the present crisis from studying economic and monetary history. Particularly the study of the Great Depression should be of interest to anybody who is interested in the causes of the present crisis and how to get us out of the crisis.
I am going to Moscow in a couple of weeks. Going to Russia always inspires me to think about monetary policy in commodity exporting countries. I recently found what looks to be an interesting paper on monetary policy in commodity exporting countries - "Monetary Policy in an Economy Sick with Dutch Disease". The paper is from 2007.
Bryan Caplan has a very good blog post over at Econlog on "The Grave Evil of Unemployment" and on why free market economists should be deeply concerned about unemployment. I strongly agree with Bryan on this topic (and most other topics) - free market economists are often far too nonchalant about unemployment.
If we want to explain the Market Monetarist position on banking crisis then it would probably be that banking crisis primarily is a result of monetary policy, but also that moral hazard should be avoided and a strict 'no bailout' policy should be implemented. However, the fact that Market Monetarists now for example favour aggressive monetary easing in the euro zone, but at the same time are highly skeptical about bailouts of countries and banks might confuse some.
Charles Calomiris undoubtedly is one of the leading experts on banking crisis in the world. Calomiris has a new book coming out - co-authored with Stephen Haber. The main thesis in the book - "Fragile by Design: Banking Crises, Scarce Credit,and Political Bargains" - is that banking crisis is not an inherent characteristic of a free-market financial system, but rather the outcome of what Calomiris and Haber terms the "Game of Bank Bargains" between the government and special interests and how this game lead to different incentives for excessive risk taking or not.
The graph below shows the yearly growth rate of Chinese currency reserves and the yearly change in the gold price. If the Chinese central banks stops intervening in the currency markets to curb the strengthening the yuan then it effectively is monetary tightening - the FX reserve accumulation will slow as will money supply growth.
I will leave it to my readers to speculate whether the People Bank's of China should be blamed for the drop in gold prices.