tag:blogger.com,1999:blog-8897997766931633186.post6569774909079755512..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: Russ Roberts on the CrisisBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8897997766931633186.post-44826539661463905412017-01-16T20:50:08.082-05:002017-01-16T20:50:08.082-05:00The thing that I have learned is that we don’t nee...The thing that I have learned is that we don’t need to worry, as if we take unnecessary tension or stress over these things then we will be in big trouble. So, we just need to be fearless and follow good plans and never worry about the happening around. I never worry much and due to support of broker like OctaFX, I can cut it out nicely having 50% bonus on deposit which is use able plus many more benefits, it all works very nicely for me!Martinnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-27897776622220157292010-05-04T01:38:29.567-04:002010-05-04T01:38:29.567-04:00The fed did buy toxic assets directly from the ban...The fed did buy toxic assets directly from the banks.Doc Merlinhttps://www.blogger.com/profile/13615897698740661539noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-69841204228522409872010-04-30T23:18:16.929-04:002010-04-30T23:18:16.929-04:00It troubles me that Roberts alludes to 'the re...It troubles me that Roberts alludes to 'the repeal of the Glass-Steagall Act'.<br /><br />I've done a lot of reading about the financial crisis without reaching many firm conclusions. But one thing I'm sure of is that 'repeal' of Glass-Steagall never happened. It's a Big Lie, repetition of which is devastating to any commentator's credibility in my opinion.David Tomlinnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-29321806131170095222010-04-30T23:03:28.504-04:002010-04-30T23:03:28.504-04:00Before deposit insurance, banks needed to maintain...<i>Before deposit insurance, banks needed to maintain higher capital ratios to attract depositors.</i><br /><br />Why are owners generally inclined to take more risk than lenders? Is it just because equity generally attracts higher risk capital? Or is the full explanation more complicated?<br /><br /><i>I think that making equity holders take losses does reduce the moral hazard created by bailouts.</i><br /><br />It's not immediately obvious to me how/why both these statements would be true. If owners already want to take more risk than lenders allow, why would higher risk for themselves deter them?David Tomlinnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-76209109570949371782010-04-30T08:10:29.934-04:002010-04-30T08:10:29.934-04:00David:
Thank you for your comment.
The problem w...David:<br /><br />Thank you for your comment.<br /><br />The problem with the Taylor rule is interest rate targeting. If the economy is in equilibrium and the rule is forward looking, it should work in theory. If it has already failed, I am not so sure. Remember, Taylor claims that monetary policy has been must fine for the last couple of years.<br /><br />I believe that the natural interest rate depends upon expectations and it role is coordination. And it is entirely possible that housing prices would rise as an equilibrium response to a change in the market and natural interest rate that was due to expectations that turn out to be based on mistaken expectations. <br /><br />None of this should be taken to mean that I am sure that the Fed didn't create an excess supply of money and push the market interest rate below the natural interest rate.Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-88467241145878368482010-04-30T07:08:53.310-04:002010-04-30T07:08:53.310-04:00Anonymous:
Thank you for your comment.
I think t...Anonymous:<br /><br />Thank you for your comment.<br /><br />I think there is a natural interest rate. It is the level of interest rates that exist without an imbalance between the quantity of money and the demand to hold it, and so, the interest rate where saving equals investment, and also, the interest rate where real planned expenditure equals the productive capacity of the economy. I don't doubt that market interest rates depend on both expected fed policy and also the fundamentals that determine the natural interest rate.Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-75281668019958295002010-04-29T22:09:13.678-04:002010-04-29T22:09:13.678-04:00Bill:
Many studies, if not most, show the actua...Bill: <br /><br />Many studies, if not most, show the actual real ffr was below the natural (or neutral) rate during the early-to-mid 2000s. For example, remember this <a href="http://4.bp.blogspot.com/_b6CLevEGCD0/SyaWpKQDSfI/AAAAAAAABo0/wvkmmTdetY0/s1600-h/canada2.jpg" rel="nofollow">figure</a> which comes this <a href="http://macromarketmusings.blogspot.com/2009/12/us-vs-canadian-monetary-policy-during.html" rel="nofollow">post</a>? It is based off of Laubauch and Williams 2003 RESTAT paper. Or try this <a href="http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp794.pdf" rel="nofollow">study</a> which shows an increasing natural rate during this period. Given these findings, why don't you believe the Fed's interest rate policy was distortionary?<br /><br />Regarding the Taylor Rule, it is nothing more than a special case of a nominal income targeting rule. (Or some might say a nominal income targeting rule is a special case of the Taylor Rule.) Maybe it should be forward looking, but even in its standard form it does a good job--when used to show how the ffr deviated from the Taylor ffr target--in explaining the housing boom in the U.S. and in the OECD more generally.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-7535565585632968232010-04-29T21:47:56.948-04:002010-04-29T21:47:56.948-04:00There is no "natural interest rate." The...There is no "natural interest rate." The market sets interest rates partially based on "fundamentals" and partially based on what it thinks the Fed will do. It knows well the Fed cannot tolerate any fall in the price level as the banking system would go bust given the leverage involved.Anonymousnoreply@blogger.com