The Economist.........Great Articles....Read them

Discussion in 'Economics' started by jueco2005, Apr 23, 2009.

  1. Test of nerves

    The monetary-policy maze

    ”Mr Bernanke and his predecessor, Alan Greenspan, argued before the crisis that bubbles are hard to identify before they burst. Pricking them is even harder without wrecking the economy. Central banks should act only if bubbles threaten price stability; otherwise, they should wait and clean up after they burst. The shallow recession that followed the tech-stock boom of the late 1990s seemed to vindicate them.”

    Eric Rosengren, president of the Federal Reserve Bank of Boston, noted recently that the Fed has hit, or all but hit, the zero limit twice this decade. That is more often than earlier simulations had indicated—and it suggests higher inflation targets should be considered. Another proposal is that central banks aim at a path for the price level rather than the inflation rate. Suppose that this path rose by 2% each year. Then after deflation of 1% in year one, the central bank would aim for inflation of more than 2% in later years (inflation of 5% in year two, say) to bring prices back up to the target. Greg Mankiw, a Harvard University economist, goes further, suggesting that inflation simply be given lower priority. “There are worse things than inflation,” he says. “We have them today.”

    Baptism on Fire

    Mr Geithner presented a comprehensive explanation of the causes of the crisis, his response, the state of the economy and regulatory reform. But impatient panellists wanted to focus on whether banks were getting too sweet a deal. “How does protecting Citi’s common shareholders at the expense of taxpayers benefit our economy?” one demanded.

    The worst thing for the world economy would be to assume the worst is over

    Start preparing for the next decade
    Welcome to an era of diminished expectations and continuing dangers; a world where policymakers must steer between the imminent threat of deflation while countering investors’ (reasonable) fears that swelling public debts and massive monetary easing could eventually lead to high inflation; an uncharted world where government borrowing reaches a scale not seen since the second world war, when capital controls ensured that savings stayed at home.
  2. Great links and articles.

    The Economist is the best magazine in the world.
  3. Thank you.
  4. Thank You!
  5. Ditto!