- Back
- Education, Culture, Ideology
- Politics, Political Parties, Election Regulations
- Social Policy, Transfers and Entitlements
- Immigration
- Monetary Policy
- Fiscal Policy
- Science, Technology and Innovation
- Constitutional Issues, Federalism, Federal Agencies and Administrative Law
- Energy and Environmental Policy
- National Defense and Foreign Policy
- Education
- Culture and Ideology
- Russia and Europe
- Middle East
- China and the Far East
- Latin America
John H. Cochrane - Over the past 15 years the Fed has engineered a fundamental advance in monetary policy by paying interest on reserves and supplying “ample” reserves...Banks holding lots of reserves don’t lend less. If the Fed buys Treasury bonds to create reserves, banks hold more in reserves and less in Treasurys. Money available for lending is the same...More deeply, we learned that the Fed can fully control the short-term interest rate by simply varying the rate it pays on reserves without having to ration money. Read More
By Spencer Jakab - Say you added just 1 percentage point to the average interest rate in the CBO’s forecast ...That would result in an additional $3.5 trillion in federal debt by 2033. The government’s annual interest bill alone would then be about $2 trillion. For perspective, individual income taxes are set to bring in only $2.5 trillion this year. Compound interest has a way of quickly making a bad situation worse—the sort of vicious spiral that has caused investors to flee countries... Read More
By David Malpass - The Fed’s bond purchases make matters worse by enabling Washington’s fiscal irresponsibility. The Federal Reserve’s monetary policy is broken. Normalization of interest rates has been needed for years to allow markets, not regulators, to allocate capital. But with interest rates at 5.5% and the dollar strong, the inflation battle must shift to the problem of government spending and regulation. The Fed’s silence on the fiscal and regulatory roots of this inflation crisis, and its insistence on using an antiquated inflation model that blames growth and jobs for price hikes, risks an even weaker U.S. economy. Read…
By William M. Isaac - Instead, the FDIC should have turned to its 1982 innovation: the modified deposit payoff. This would ameliorate the damage a bank failure inflicts on the economy without creating the moral hazard accompanying a 100% guarantee. Uninsured money that would otherwise sit idle for years at the failed bank receivership would be returned promptly to the local marketplace to support economic growth. Read More
By Judy Shelton - Welcome to the era of good-cop, bad-cop tactics from major government institutions. Fiscal and monetary policy are now working at odds to fight inflation. The Fed could crush demand by raising interest rates to stratospheric levels only to have a spendthrift White House and complicit Congress pump up consumer prices through fiscal measures that expand spending power—cash payments, subsidies, rebates, student loan forgiveness. Read More
By Judy Shelton - Now that the U.S. economy seems to be turning the corner on the worst inflation in 40 years, it’s important to remember that sound money and sound finances go hand in hand. While the Federal Reserve will continue to focus on reducing demand through restrictive interest rates, Congress should concentrate on expanding supply. Yet it all needs to be accomplished while also pursuing a balanced budget. Read More
By Tunku Varadarajan and John Cochran - The present crisis may “reteach our politicians, officials and commentariat the classic lessons that there are fiscal limits, that fiscal and monetary [policy] are intertwined.” It may also teach them, Mr. Cochrane says, “that a country with solid long-term institutions can borrow, but a country without them is in trouble.” Read More
By Christian Broda and Stanley Druckenmiller - The emergency conditions are behind us. Inflation is already at historical averages. Serious economists soundly rejected price controls 40 years ago. Yet the Fed regularly distorts the most important price of all—long-term interest rates. This behavior is risky, for both the economy at large and the Fed itself. Read More
By Red Jahncke - The Federal Reserve’s policies of increasing interest rates and quantitative tightening—reducing its $8.9 trillion balance sheet—will increase the volume and cost of federal government borrowing, slamming the federal budget and exposing the consequences of decades of deficit spending. Total federal gross interest cost over the 12 months ending on May 31 was $666 billion. If we include the impending extra interest on Treasury bills and the maturing notes, that figure rises to $863 billion. This is a staggering cost. National military spending was $746 billion over the past 12 months; Medicare spending was $700 billion. Read…