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Thursday was a very interesting day for me. You might think it was so because Mark Carney - the next Bank of England governor - was testifying in the British parliament. But frankly speaking even though Carney said some interesting things I have to disappoint you dear Mark - I wasn't really listening. I had more important things to do.
I continue to be completely puzzled that somebody would think that central banks somehow have run out of ammunition and that monetary policy is impotent. The developments in the global financial markets since August-September last year clearly tell you that monetary policy is extremely potent - also when interest rates are at the Zero Lower Bound.
These days we are getting a proper illustration of the Chuck Norris effect - that the central bank can ease monetary policy through sheer credibility without even printing more money. In fact in the case of Mark Carney he is now easing monetary policy in the UK even before he has become Bank of England governor. That is pretty impressive, but also good news for the UK economy. It is of course the expectation that Mark Carney as coming BoE governor will be in charge of introducing some form of NGDP level targeting.
John Taylor is out with new paper on "The Effectiveness of Central Bank Independence Versus Policy Rules".
In my view one of the key reasons that Australia avoided recession in 2008-9 was the Reserve Bank of Australia (RBA) effectively is operating what I earlier have called a "Export Price Norm". Here is what I earlier had to say about that:
This is interesting - Gabe Newell on Youtube on the value of prediction markets. I love it...Gabe is co-founder and managing director of Video game developer video game development and online distribution company Valve Corporation (I stole that from Wikipedia). This guy is brilliant and he certainly understands markets.
One of my favourite Scott Sumner blog posts is on the connection been monetary policy failure and the impact of political news on the financial markets. I have quoted Scott many times on this issue, but let me do it again:
Today is Super Bowl Sunday - even in Europe we know that. So even though I strongly believe football is a sport where the player kick the ball rather than using the hands all the time I have to do a post on the topic.