Angela Merkel, the German Chancellor has rebuked the United States for its easy money policies, suggesting it was kicking the can down the road and setting up a greater problem later. It is high time the debate about monetary policy made it to the political arena.

This chart and the commentary both come from FT Alphaville:

A look at the Fed’s balance sheet currently will tell you it’s very much in the business of supporting liquidity/prices in assets other than Treasuries. The graph below is a month old, but the point still holds:

Deregulation and laissez-faire orthodoxy bears much of the blame for the current economic mess we are experiencing. Dean Baker notes with chagrin that Barack Obama, who will take office as U.S. President shortly, has put some of the progenitors of deregulatory laissez-faire policy at the helm of his economic team (hat tip Marshall).
Below is [...]

Below is a link to an article I wrote about the Bank of England’s aggressive 1.5% interest rate cut that appeared in yesterday’s Guardian newspaper.
The unkindest cut, GuardianThe long and short of it is that I am very skeptical about the need for such a large cut. Many pundits felt the BoE was behind [...]

Central banks around the world are whacking interest rates at a breakneck clip. The Fed, the Reserve Bank of Australia, the Bank of Japan and now the ECB and the BoE. The BoE made the most dramatic move with an outsized 150 basis point cut. However, I am not convinced this is [...]

The Bank of England has cut interest rates to 3%, a 1 1/2 point cut. Just weeks ago, the BoE Governor Mervyn King was writing to the Government explaining how they had let inflation run out of control. However, with the economy tanking, credit short of hand and commodity prices plummeting, the Monetary [...]

The U.S. Federal Reserve is tasked with watching inflation while keeping the economy growing. This dual mandate is a juggling act no mortal could manage successfully for long. The result has been a Fed which has largely erred on the side of growth over inflation, leading to a weak dollar and many an [...]

The Federal Reserve and its fellow central banks are pulling out all the stops to make sure the panic phase of this crisis is well and truly over. These kinds of moves are already having results as Libor and Euribor (the rate at whch banks lend to one another in Dollars and Euros) have [...]

I caught a story in the Wall Street Journal today about Paul Volcker’s impact on the Obama campaign that bears passing on (hat tip Barry Ritholtz). One reason people have become more comfortable with Obama over time is because his economic team is absolutely the best: Austan Goosbee, Robert Rubin, Larry Summers, Warren Buffett [...]

The United States had been living beyond its means for a very long time before the credit crisis finally hit. The truth of the matter is that U.S. monetary and fiscal policy rewarded risk-taking and leverage at the expense of prudence and saving.
The goal of government it seemed was to avoid the pain of [...]