How the Fed operates
We are often asked about the mechanisms by which the US Federal Reserve Board (the Fed) influences the level of US interest rates and…
Central banks and money creation is there any connection?
According to traditional economics textbooks, the current monetary system amplifies the initial monetary injections of money. The popular story goes as follows: if the…
Pool of wealth and economic bust
It has now become settled wisdom that the massive monetary pumping by the US central bank during and after the 2008 financial crisis saved…
Should cash be eliminated?
At the World Economic Forum in Davos Switzerland, Joseph Stiglitz the Nobel Prize-winning economist argued in favor of phasing out currency and moving towards…
Can the Fed tighten without rocking the economy?
Fed policy makers are of the view that the correct interest rate policy could bring the economy onto a path of economic stability and…
Can sophisticated technology prevent a recession?
The world has come a long way since the heady days before the Great Depression of the 1930s. Technology, for one thing, has meant…
Why the free market is the best defence against the money multiplier
Some commentators are of the view that the present monetary framework is instrumental for the emergence of the so-called money multiplier. Consider the case…
Unemployment and inflation: is there any relation?
A fall in the US unemployment rate to 4.6% in November from 4.9% in the month before and 5% in November last year has…
Does the Divisia monetary gauge help to define what money is?
Most economists hold that, since the early 1980s, correlations between various definitions of money and national income have broken down. The reason for this…
Why inflation is not about general increases in prices
There is almost complete unanimity among economists and various commentators that inflation is about general increases in the prices of goods and services….