Wednesday, 01 April 2015

Blog

Managed money ≠ sound money

Posted by Jerry Jordan
March 30, 2015

When asked (especially during Congressional oversight hearings) a central banker will resolutely declare a belief in “price stability.” Then, with a straight face, express concerns that the rate of increase of consumer prices is below target! The belief that the average of the prices of things households purchase on a regular basis should always increase […]

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Deposit insurance and monetary stability

Posted by Thomas L. Hogan
March 18, 2015

Government deposit insurance from the Federal Deposit Insurance Corporation (FDIC) is intended to stabilize the financial system by preventing bank runs and financial contagion. As discussed in a previous blog post, however, most evidence indicatest hat  deposit insurance actually increases bank failures. When bank depositors are insured, banks face less monitoring and tend to take […]

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On regulating bitcoin

March 17, 2015

There’s a lot of discussion about regulating cryptocurrencies like bitcoin these days. The New Jersey Legislature’s Assembly Financial Institutions and Insurance Committee had a hearing on February 5th. In the same week, the New York Department of Financial Services’ released a revised draft version of the BitLicense proposal. One can hope that, regardless of whether […]

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The multiple moral hazards of central banking

Posted by Jerry Jordan
March 12, 2015

In an introductory economics course, students are taught that there is “moral hazard” in the incentives of commercial banks because of access to the “safety net” offered by central banks and the government’s guarantee/insurance of bank deposits. There are a couple dimensions to this. One is that bank managers have less concern about the liquidity […]

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What is sound money? A macroeconomic perspective

March 9, 2015

The term “sound money” means different things to different people. Some stress the stability of purchasing power over time. Some stress the money’s ability to facilitate exchange. Some stress the money’s ability to promote macroeconomic stability. And, at least historically, some have stressed the sound a money makes when clinking against a glass or dropping […]

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Sound Money meets the Fed

March 6, 2015

In October of last year, while speaking at the Boston Fed, Yellen announced her concern over growing inequality in the United States, revealing that she thought it was “appropriate to ask whether this trend is compatible with values rooted in our nation’s history.” This concern was turned into action on November 14 when she met […]

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