Monetary System

Deficits present governments with the sole challenge of making good on future promises without inflation. For nations sovereign in currency, the constraint is inflation, not solvency.

The Federal Reserve meets today and tomorrow to decide on the next step on monetary policy. In my view, this meeting is crucially important because it not only will mark a regime shift away from quantitative easing toward forward guidance,…

The problem in a nutshell is that the U.S. is the world's reserve currency. And so, other countries are forced to adhere to Fed dictates in a liquidity crisis because everyone is hoarding dollars, trying to maintain their supply of…

The problem of not understanding fraud mechanisms is most intense among economists, who typically do not study fraud, do not understand fraud mechanisms, and have a tribal taboo against even writing or speaking the word “fraud.”

I spoke at a Euromoney conference on inflation-linked products last year. My thesis at the time that deflation is the real problem and that inflation isn't going to be a concern - which has largely proved right - was out of step with most…

By Frances Coppola In my post on the anatomy of a bank run, I suggested that the rule should be "provide central bank liquidity support to everything, taxpayer support to nothing". This is because in a bank run/liquidity crisis, it isn't…

In my last post, I argued that enforced separation of investment banking and commercial banking would not eliminate the need to provide central bank support to investment banks and other non-banks in the event of another Lehman-type…

The Fed will be stuck at zero for a very long time, perhaps forever. Investors who are anticipating the Fed's tightening are premature in their assessment of when rate hikes can reasonably occur. Ben Bernanke and other Fed members have made…

Glass-Steagall is dead. Rather like Soviet-era Communist leaders, it has been officially dead since 1999, and actually dead for much longer. Though there was no state funeral, the body was not embalmed or put on display and few people…

The Eurozone's banks are continuing to deleverage, with total loan balances to euro area residents now at the lowest level in 5 years. What makes the situation even more troubling is that many Eurozone banks banks are repeating the Japanese…