Tag Archives: central banking

Could Bitcoin affect emerging market monetary policy?

Source: Bitcoin.com
by Justin Connell

"Federal Reserve Bank of St. Louis Vice President, Dr. David Andolfatto, is optimistic about Bitcoin, as an alternative currency could impose limitations on the ability of governments to raise revenue through money creation. … 'What people do in high inflationary and hyperinflationary circumstances is seek alternative or competing currencies,' Dr. Andolfatto tells Bitcoin.com. 'This could be the U.S. dollar, gold and things like that. Governments and central banks often then impose currency restrictions, maybe by implementing laws keeping people from opening USD denominated bank accounts.' It's not so easy, however, for a money printing central bank to stymie capital inflows into digital currency." (02/13/17)

https://news.bitcoin.com/could-bitcoin-affect-emerging-market-monetary-policy/

Fed's Fischer: "Significant uncertainty" about fiscal policy under Trump

Source: Reuters

"U.S. Federal Reserve Vice Chair Stanley Fischer said there was significant uncertainty about U.S. fiscal policy under the Trump administration, but the Fed would be strict in meeting targets of creating full employment and getting inflation to 2 percent. Speaking at the Warwick Economics Summit on Saturday, Fischer also said he thought Dodd-Frank financial regulation would not be repealed as a whole, and he hoped capital requirements for banks would not be significantly reduced. 'There is quite significant uncertainty about what's actually going to happen, I don't think anyone quite knows. It's a process which involves both the administration and the Congress in deciding fiscal policy,' Fischer said, in response to a question." (02/12/17)

http://www.reuters.com/article/us-usa-fed-fischer-idUSKBN15Q0G0

Steve Mnuchin defends the myth of Fed independence

Source: Cobden Centre
by Tho Bishop

"One of the biggest surprises during Donald Trump's unconventional presidential campaign was his frequent criticism of the Federal Reserve. Though he was highly inconsistent on what he thought the Fed should do, coming out as both a critic and advocate of the current low interest rate policy, he was steadier in his dismissal of the Fed as an independent institution. During one of the debates, he went as far as to accuse Fed Chairwoman Janet Yellen of 'being … more political than Hillary Clinton.' While it is possible Donald Trump may still believe this, it is clear his Treasury Secretary does not." (02/01/7)

http://www.cobdencentre.org/2017/02/steve-mnuchin-defends-the-myth-of-fed-independence/

US Federal Reserve staffer fined for mining Bitcoin at work

Source: CoinDesk

"A former employee of the Federal Reserve Board of Directors has [been] fined $5,000 and put on probation after being caught mining bitcoins on a server owned by the US central bank. The Fed's Office of the Inspector General said today that Nicholas Berthaume, who previously worked as a communications analyst for the board before being fired in light of the incident, had been placed on 12 months of probation after accepting a plea deal on 27th January. He plead guilty to one count of unlawful conversion of government property, a misdemeanor." (01/30/17)

http://www.coindesk.com/federal-reserve-staffer-mining-bitcoins/

Can the Fed tighten without rocking the economy?

Source: Cobden Centre
by Dr. Frank Shostak

"In her speech, [Federal Reserve chair Janet Yellen] suggested that the U.S. central bank should continue to raise interest rates slowly to keep jobs plentiful and inflation low. … We suggest that a gradual tightening cannot prevent a subsequent economic bust. Economic busts are simply the inevitable removal of various activities that emerge on the back of loose monetary policy. Such activities grow thanks to that policy and disappear when this distortionary intervention disappears — they simply cannot survive without the continued support of an 'accommodating' central bank. The distortions occasioned by these interventions do great harm to the economy — diverting investment away from genuine wealth generating activities." (01/23/17)

http://www.cobdencentre.org/2017/01/can-the-fed-tighten-without-rocking-the-economy/

The money myths behind the creation of the Federal Reserve

Source: Ludwig von Mises Institute
by Patrick Newman

"'The problem with economic historians,' Murray Rothbard once quipped, 'is that half of them are historians who don't know any economics and the other half are economists who don't know any history.' After reading America's Bank: The Epic Struggle to Create the Federal Reserve by Roger Lowenstein, I was reminded of Rothbard's remark, which is as prescient as ever. Succinctly captured in the subtitle, Lowenstein's book is about the grand — and often secretive — story behind the founding of the Federal Reserve System. It is informative about the unique personalities and interests of the people involved and the historical steps, including various congressional maneuvers, leading up to the passage of the Federal Reserve Act in 1913. However, the book suffers some serious shortcomings when describing the economics of central banking (and economics without central banking), in particular the economy of the United States before and after the Federal Reserve." (01/19/17)

https://mises.org/blog/money-myths-behind-creation-federal-reserve

Central banks pray for electoral "shocks"

Source: Cobden Center
by Gordon Kerr

"Mainstream media are worried about 2017 shocks. So they should be. If you had gambled a pound (or euro) this time last year on a triple accumulator; Leicester City to be English football champions, Brexit, and then Trump, you would have redeemed your betting slip for a million. Bookmakers are not offering odds anywhere like that on a 'quad' bet now popular; i) Geert Wilders (Netherlands, March 15th), presently polling at 20%, ii) Marine Le Pen, (France, April 23rd), 25%; iii) Frauke Petry and Jorg Meuthen (Germany, August 27th), 13.5%; iv) Beppe Grillo of 5 Star (Italy, date uncertain, perhaps October), 28%. Your authors, despite reduced odds, fancy a little flutter. For the ECB and Bank of England, already struggling with separate credibility problems discussed below, any such shocks might prove rather welcome." (01/18/17)

http://www.cobdencentre.org/2017/01/central-banks-pray-for-electoral-shocks-forced-to-nationalise-monte-dei-paschi-italy-looks-in-trouble-but-cleverly-plays-its-sicilian-defence/

Bitcoin extends loss after China's central bank threatens investors

Source: Bloomberg

"Bitcoin extended Friday's tumble amid concern China will tighten rules on the digital currency to curb capital outflows. The cryptocurrency slid 1.4 percent to $888 at 5:43 p.m. in Hong Kong, after falling as much as 10 percent on Friday. The People's Bank of China's Shanghai branch said in a statement late Friday that its officials, along with the city's financial office, asked bitcoin trading platform BTCChina.com to conduct self-checks and rectify any problems. The State Administration of Foreign Exchange has scrutinized some major bitcoin exchanges, possibly to investigate the use of the digital asset to evade capital controls, QQ.com reported." (01/09/17)

https://www.bloomberg.com/news/articles/2017-01-09/bitcoin-extends-loss-after-china-s-central-bank-warns-investors

What is this "neutral" interest rate touted by the Fed?

Source: Ludwig von Mises Institute
by Mark Spitznagel

"There's a lot of talk these days about the so-called 'neutral' (or 'natural' or 'terminal') interest rate projections of the Federal Reserve. In fact, their projection of this number is a key argument in their ongoing decision to keep rates at historically very-low levels for what has been an extended period of time. (Specifically, Federal Reserve officials have argued that the neutral interest rate has sharply declined in recent years, meaning that apparently ultra-low interest rates do not really signify easy monetary policy.) What is this neutral rate? The neutral rate, it is argued, is simply the federal funds rate at which the economy is in equilibrium or balance. If the federal funds rate were at this mysterious neutral rate level, monetary policy would be neither loose nor tight, and the economy neither too hot nor too cold, but rather just chugging along at its long-run optimal potential." (01/04/17)

https://mises.org/blog/what-neutral-interest-rate-touted-fed

Cato Daily Podcast, 12/27/16

Source: Cato Institute

"How should the Federal Reserve clear the way for competitive currencies? Jim Grant is publisher of Grant's Interest Rate Observer. We spoke during Cato's monetary conference in November." [various formats] (12/27/16)

https://www.cato.org/multimedia/cato-daily-podcast/monetary-methods-election-2016