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By chance I today found an ECB working paper from 2004 - "The Great Depression and the Friedman-Schwartz hypothesis" by Christiano, Motto and Rostagno.
It is very easy to get frustrated about the discussion of monetary policy in today’s world. However, this morning we got something to cheer about as Vince Cable British Minister for Business, Innovation and Skills gave a speech on the UK recovery in the 1930s and the parallels to today’s crisis at the think tank Centre Forum. The entire speech is very uplifting.
Our good friend and die hard British market monetarist Britmouse has a new post on his excellent blog Uneconomical. I think it might just be the coolest idea of the year. Here is Britmouse:
It is no secret that I have been fascinated by some of Havard professor Jeff Frankel's ideas especially his idea for Emerging Markets commodity exporters to peg the currency to the price of their main export (PEP). I have written numerous posts on this (see below) However, Frankel is also a long-time supporter of NGDP target and now he has restated is his views on NGDP targeting.
Speculation about a Greek exit for the euro zone continues ahead of the weekend's Greek parliament elections. If Greece leaves the euro (or is kicked out) then it will not be the first time Greece has been forced out of a currency union.
As the euro crisis continues speculation of an eventual break-up of the euro also continues. There are numerous examples in monetary history of currency unions breaking up. One is the breakup of the Scandinavian Currency Union in 1924.
History is fully of examples of massive monetary policy failure and today's policy makers can learn a lot from studying these events and no one is better to learn from than Swedish monetary guru Gustav Cassel. In the 1920s Cassel tried - unfortunately without luck - to advise Danish and Norwegian policy makers from making a massive monetary policy mistake.
My previous post on Ferguson's and Roubini's FT piece about the lessons from 1932 reminded me that I actually have done quite a bit of blog posts on 1931-33 myself. Both about the actual events of those years and about what policy lessons these events should have for today's policy makers.
Niall Ferguson and Nouriel Roubini have a comment in the Financial Times. I have great respect for both gentlemen - even though I often disagree with both of them - and their latest comment raises some very key issues concerning the future of the euro zone and Europe in general. And it is very timely given that this weekend the Spanish government has asked the EU for a massive new bail out.