Tuesday, 07 July 2015
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    Interest rates

    On interest rate targeting

    July 6, 2015
    Previously I discussed inflation targeting as a popular rule for governing central bank behavior. In this post I will discuss interest rate targeting, another popular recommendation that has its own costs and benefits. The most prominent interest rate rule is the Taylor rule, devised by John Taylor of Stanford University. Taylor originally proposed the rule […]
    Greek Crash

    Understanding the Greek crisis

    June 30, 2015
    As I write these lines, it is almost certain that Greece will default on its debt today, June 30. What led to such a disastrous situation? To understand, we must look back in time to the events leading up to and surrounding today’s expected default. A brief clarification must be made in order to understand […]
    Free Banking on Piggy Bank

    Why free-banking?

    June 29, 2015
    The need for and convenience of a central bank are usually taken for granted. To say that a central bank is a good institution and, therefore, needed, is not enough. Unfortunately, the assumption that central banks are necessary seems to weigh more heavily than the facts that suggest otherwise. Good and bad are relative terms. […]
    Target On Tree

    Inflation targeting as a monetary policy rule

    June 22, 2015
    Among economists who agree that monetary policy should be conducted according to predictable rules, perhaps no proposed rule enjoys greater support than inflation targeting.  In brief, inflation targeting means the central bank conducts monetary policy such that it comes as close as possible to creating (or rather, setting the macroeconomic conditions for markets to create) […]
    Monetary Policy

    Sound money alternatives series

    June 19, 2015
    Over the next few weeks, the Sound Money Project will be running a series of blog posts exploring free-market monetary alternatives. Our dedicated fellows will prepare a series of posts that explain the principles and importance of the following topics: Nominal GDP targeting Currency board Commodity backed currencies Gold Standard Free banking Interest rate targeting […]
    Discount

    Why are real interest rates so low?

    June 17, 2015
    In a recent blog post, Alex Salter discusses the problem of reasoning from a price change in the context of interest rates. Simply put, observing a low interest rate does not necessarily mean that monetary policy is loose (or tight!). Instead, we should consider what caused this price to change. Low real interest rates could […]
    stacked coins ascending series, symbolic photo for financial planning, increasing yield and good rat

    More on money and interest rates

    June 15, 2015
    A confusion arising from the popular usage of the word “money” is that bankers claim to lend money and bank customers claim to borrow money. But, people do not increase their indebtedness in order to hold greater idle cash balances! The extension of credit by financial intermediaries does not alter the amount of money in […]
    Woman In Depression And Despair Crying On Black Dark

    Old money: How the Fed’s actions harm millennials

    June 8, 2015
    By Diana Furchtgott-Roth and Jared Meyer In our new book, Disinherited: How Washington Is Betraying America’s Young, we show how government policy is biased towards older people and creates an environment that systemically works against young Americans. In monetary policy, too, Washington is playing favorites and the young are the losers. They do not benefit from […]