Inside the Fed

by on March 11, 2009 at 7:50 am in Books, Economics | Permalink

I enjoyed this book, which is written by Stephen Axilrod and has the subtitle Monetary Policy and Its Management, Martin Through Greenspan to Bernanke.

I liked this part:

John Ehrlichman's arrival toward the end of our visit was the main event, unadvertised as it had been.  He had something very definite to say to us.

His speech went something like this: "When you gentlemen get up in the morning and look in the mirror while you are shaving, I want you to think carefully about one thing.  Ask yourselves, "What can I do today to get the money supply up?"  That was it; that was why we were there — not to explain, but to hear.

p.167 has an interesting (though not quite accurate) discussion of what distinguishes some top economics scholars from obsessive-compulsives.

1 Rohit March 11, 2009 at 8:01 am

Any thoughts on the recent piece by Willem Buiter about the ‘uselessness of modern monetary economics’, which in effect indicts most of the new keynesian stuff as mere trickery? (http://blogs.ft.com/maverecon/2009/03/the-unfortunate-uselessness-of-most-state-of-the-art-academic-monetary-economics/#more-667)

2 Tyler Cowen March 11, 2009 at 8:41 am

Benquo, I was joking. The author suggests they are virtually identical, but I don’t think that is correct, at least not for the top economists I have met.

3 Andrew March 11, 2009 at 10:14 am

Robert Shiller reminds me a little of Mary Kate, though hardly indistinguishable.

4 but pinho story March 11, 2009 at 5:22 pm

Raivo Pommer
raimo1@hot.ee

Europabankrotte
nur auf Portugal

Ein Gespenst geht um in Europa – das Gespenst des Staatsbankrotts. Die Investoren sind alarmiert durch enorm hohe Prämien für Kreditausfallversicherungen auf europäische Länder wie Griechenland, Irland oder Österreich. Diese sogenannten Credit Default Swaps auf fünfjährige Anleihen Irlands sind binnen Jahresfrist um mehr als 300 auf 360 Basispunkte hochgeschossen. Das sind 3,6 Prozent für die zu versichernde Summe. Will ein Anleger eine Millionen Euro an irischen Schuldtiteln gegen den Ausfall versichern, kostet ihn das eine Prämie von 36.000 Euro im Jahr.

Darin kommt zum Ausdruck, dass die Marktteilnehmer befürchten, dass die Stützungsmaßnahmen für das marode Bankensystem den irischen Staat gerade in einer sich täglich verschärfenden Rezession überfordern könnten. Hinzu kommen die strukturellen Schwierigkeiten im Zuge des Platzens der irischen Immobilienpreisblase. Doch am Anleihemarkt kann sich der ehemalige keltische Tiger noch immer zu erstaunlich günstigen Konditionen refinanzieren. Die in dieser Woche begebenen dreijährigen Titel im Volumen von 4 Milliarden Euro muss Irland mit einem Zinskupon von lediglich 3,9 Prozent ausstatten.

Portugal’s long-term sovereign debt was recently downgraded by the international ratings agency Standard and Poor’s to “A plus,” the same level as Greece and Ireland.

All three countries must pay higher rates of interest to sell their bonds on international markets as a result.

But Pinho said Portugal’s situation was not comparable with those of Greece and Ireland, in part because Lisbon had considerably reduced its public deficit in recent years.

Portugal also is not suffering from a real-estate crisis, and banks in the country are faring better than those in Greece and Ireland, he said.

But Portugal, like many European countries, fell into recession last year, and its gross domestic product (GDP) contracted by two percent in the fourth quarter of 2008.

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