Englund

But the ECB was deliberately constructed to be different from normal central banks.  One of the most striking moments in the euro crisis saga was when European elites forced Silvio Berlusconi to leave office in favour of unelected Mario Monti. This was possible because Italy is a member of the euro area, and is therefore uniquely vulnerable to capital flight and bank runs. Spaniards have good reason to hold euros in bank deposits and euro-denominated bonds as their safe asset, but have literally no reason to hold Spanish bank deposits or Spanish government bonds.  At any moment, euro-area creditors could decide they no longer wish to finance a country’s banks and its government. This arrangement is inherently unstable. Matthew C Klein, FT Alphaville 9 November 2017

Local banks and non-financial companies ended up borrowing dollars and yen short-term  to fund real estate bubbles and acquisitions. Matthew C Klein, FT Alphaville 8 November 2017

One of the interesting ideas we discussed was the “re-nationalisation of fiscal policy”.  In exchange for accepting German plans for a European Monetary Fund, which would only provide emergency lending after private creditors are forced to take large losses,  elected governments would have more freedom to tax and spend.  Treaty-based deficit rules would be replaced by market discipline. Matthew C Klein, FT Alphaville 8 November 2017

They have a game called “Chair the Fed” where you get to set the level of short-term interest rates once every three months. The European Central Bank has its own game  Matthew C Klein, FT Alphaville 30/10 2017

Matthew C Klein, FT Alphaville 18 Octobr 2017

But while a few warned about the dangers in real time, most policymakers, risk managers, and academics failed in their responsibility to protect the rest of us. Matthew C Klein, FT 13 September 2017

If you like the euro, why not just call for a global gold standard? Argentina and Korea at least had the option of breaking their pegs to the dollar and printing money to support their banks. Similarly, countries bound by the gold standard always had the option of de-linking and re-pegging.  There is no comparably straightforward way to exit the strictures of the euro. So, for those who believe the euro was a good idea at the time and remains a good idea for prospective members, why would you oppose restoring the classical gold standard? Why should the benefits of integration and price stability be limited to Europe? Matthew C Klein, FT Alphaville 21 April 2017 Om man har en sedelpress går man inte i konkurs, skrev jag den  4 november 2011

Historical experience — not just Greece’s experience, but that of a typical advanced country —  is inconsistent with the primary surplus    paths that would make Greece’s current debt sustainable. New research from Jeromin Zettelmeyer, Eike Kreplin, and Ugo Panizza suggests Schaeuble is wrong:  there is no reasonable likelihood that the Greek government can continue without significant further debt relief. Matthew C Klein, FT 13 april 2017

Inflation is always and everywhere a monetary phenomenon … –Milton Friedman, “The Counter-Revolution in Monetary Theory” (emphasis in original) Matthew Klein, FT Alphaville 30 August 2016 Många av oss kommer ihåg när Bildt och Wibble lade fram sina sparpaket när budgetunderskottet skenade när räntorna steg (för att försvara växelkursen) och inkomsterna sjönk när konjunkturen gick ned. Kronkursförsvaret

According to the latest figures from the International Monetary Fund, the Greek government owes almost 180 per cent of the country’s yearly output and this debt is denominated in a currency the Greek government can’t print . Creditors rarely get all their money back in those sorts of situations, so they’re demanding high interest rates to compensate for the risk of large losses. Many borrowers, especially governments and businesses, rarely expect to repay all their debt at once when it comes due, instead preferring to roll over maturing debts into new ones.  This isn’t usually a problem, since investors generally want to own some fixed income and would whine about asset shortages if all debts were repaid, but it makes these borrowers vulnerable to changes in investor opinion.  Matthew C Klein, FT Alphaville 13 May 2016 

Matthew C Klein FT Alphaville  Feb 08, 2016

Jaime Caruana, the general manager of the Bank for International Settlements, and the former boss of the Bank of Spain, gave an important speech Friday, which, among other things, highlights the radically different frameworks economists use to evaluate what’s going on. In textbook macro models, economies grow at some “trend” rate based on productivity on population growth, except when occasionally buffeted by “shocks” in different directions such as an oil price spike or a tax cut — shocks that fade in importance over time as economies “naturally” return to their “trend”. In these models, policymakers should focus on boosting productivity, which improves the trend path, and establishing institutions that smooth out the impact of the shocks when they occur by temporarily shifting resources to those most affected. Little else matters. Alan Greenspan argued in The Age of Turbulence that “in a market economy, rising debt goes hand in hand with progress” (page 346 of 2008 paperback...