Richard Koo

I ended yesterday's post writing that the only thing one could predict with certainty was that there will be policy errors going forward. When faced with so much uncertainty on both the healthcare front and on economic policy, it's…

Raghuram Rajan has an interesting post now up on Project Syndicate. The overall tone of it has an Austrian feel as it stresses the failure of stimulus to allow developed economies to attain higher GDP growth a full five years after a…

Debt deflation is taking hold in Europe. We have seen the crash in Greece's economy unfold over the last two years. And now we are witnessing similar things in Spain. As Marshall Auerback puts it, Spain is the New Greece. But now come signs…

At around 9:00am London time this morning Lord Wolfson held a press conference to announce the five finalists in his economics prize contest. Naturally Lord Wolfson is not looking for just any solutions, as the initial question makes clear,…

If and when the demand for credit increases, so too will the money supply.

Clearly, economic policy is now far more complex than it appeared to be before the GFC. As we enter this Age of Deleveraging, the worst thing we can do is apply policies that appeared to work during the preceding Age of Leverage—but were in…

For my part, I am with Richard Koo. Monetary policy reflation will not work in a balance sheet recession when fiscal policy is contractionary. But at some point, the Fed will be compelled to act anyway.

Rather than adding stimulus with the aim of goosing demand to help the economy reach escape velocity, I would say that the central objective of economic policy is to help the economy reach full employment. Doing so will increase demand,…

So, the Fed has basically just announced it will stop QE2. It will then start selling Treasuries. And remember, this is at the same time the Treasury is selling $10 billion a month in mortgage securities. Only after this will rates be…

Below is a video of Richard Koo from this past weekend's INET conference in Bretton Woods giving us his latest thoughts on policy responses to a balance sheet recession. He believes that Europe, the U.S. and China have much to learn from…