Economics

Het gebruik en misbruik van de monetaire geschiedenis

Apr 10, 2013 Barry Eichengreen

BERKELEY – Stel je eens twee centrale banken voor. De ene is hyperactief en reageert agressief op de gebeurtenissen. Hoewel zij er zeker niet van kan worden beticht de huidige ontwikkelingen te negeren, wordt haar beleid alom bekritiseerd omdat het de problemen zou doorschuiven naar de toekomst.

De andere centrale bank is onverstoorbaar. Zij blijft kalm onder alle gebeurtenissen en probeert ten koste van alles te voorkomen iets te doen dat zou kunnen worden uitgelegd als het aanmoedigen van buitensporige risico's of het creëren van ook maar een klein beetje inflatie.

Wat ik zojuist heb beschreven, is uiteraard niet louter hypothetisch. Het is feitelijk een bondig portret van de Amerikaanse Federal Reserve (kortweg de 'Fed') en de Europese Centrale Bank.

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0 Comments on this paragraph, 8 Comments on this article

Dan Adams Apr 24, 2013

The US economy is the 1930s was only really saved by a catastrophic war.
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Ross Clem Apr 13, 2013

Was it monetary policy in the 1930s that fueled U.S. recovery from the depression or the WWII?
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Pingfan Hong Apr 12, 2013

After the ECB launched the outright monetary transaction (OMT) programme in September 2012, there is no much difference between the ECB and the US Fed their monetary approaches any more.
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Procyon Mukherjee Apr 11, 2013

Robert Solow's note on Federal Reserve (How to save American Finance) that was written on 8th April opens up new thought on the challenges of excessive supply when the last dollars of financial activity absorbs more resources while doing precious little in improving either productivity or efficiency. This marginal efficiency issue has always been downplayed as the quantum increase in trading activity masks this. Trade is hardly an avenue for sustainable changes to happen in the economy.
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Procyon Mukherjee Apr 11, 2013

I fully agree with Barry that the abuse of Monetary History is rampant in the cognitive dissonance that abounds around the continuation of an ultra loose monetary policy for extended periods of time; current historicity seem to suggest with the help of data that the impact is transitory in form of constructive and sustainable demand/job creation engine while its influence to make bubbles in certain classes of assets has been confirmatory. Barry’s reference to prior periods as old as 1920 or 1930 has very little significance given the excessive financialization that we are avowed in current times.
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Gerald Silverberg Apr 10, 2013

Or there is a third alternative, that in a balance-sheet recession, monetary policy is largely ineffectual ("pushing on a string"). It was only fiscal policy (massive infrastructure and armaments expenditures), naturally with supporting credit expansion, that brought countries out of the Great Depression one by one after leaving the Gold Standard and suspending/repudiating international debts.

But Eichengreen's point is well taken - that Europe's obsession with the German hyperinflation of 1923 is misplaced and puzzling, and that the proper analogy is with the disastrous Brüning austerity emergency decrees and Austrian Creditanstalt bank run of 1931.

You can vote for candidates for the 'Creditanstalt' Brüning and Mellon Memorial Prizes at http://silverberg-on-meltdown-economics.blogspot.com/2013/03/announcing-creditanstalt-heinrich.html.
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Michael Heller Apr 10, 2013

Barry: You’ve moved the dates around a fraction, but basically you are the umpteenth person to say the 1920s and 1930s are terribly relevant to the situation today. I doubt that. Just look around you. Does it still look like 90 years ago? I don’t think so. The variables are completely different, and the juxtaposition or inter-causality of the variables is similarly utterly different. I stifle a yawn before suggesting that it might be far more useful to get to grips with the underlying logical reasoning contained within the raging debates among classic masters of economic theory either side of the 1930s, who have no parallel today (evidence here). Max Weber, Joseph Schumpeter, Friedrich Hayek, James Buchanan, to mention only five if one includes Keynes. Your certainty, along with the certainty of the predominant media-savvy economist-intellectuals, seems so entirely shaped by Keynes that I simply cannot take seriously your historical analogies. If your analogies had any value at all they could not avoid drawing attention to the raging differences of opinion that fundamentally shaped the policy processes of the day 90 years ago. Instead you yourself have succumbed to the simplistic dichotomies of history’s straw man analogies. For this reason I conclude that yours, on this particular occasion, have no practical value in the present day. They are empty not only of Schumpeter but of logic and theory.
- Robert Lunn Apr 30, 2013
  
  Michael-it sure does not remind me of the 1930's. His "tale of two central banks" should be questioned on the premise. The ECB has engaged and promoted aggressive carry trade options bringing down rates on the periphery. They are also starting from a different level of intervention. (Cost of the safety net for example.) My point is the results of the activity by both banks should be examined.
  If measured by the impact on the average person, the Fed loses hands down.
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Het gebruik en misbruik van de monetaire geschiedenis

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