Monthly Archives: June 2010

In September 1931 Great Britain ceased paying gold for UK currency and there ended the interwar international gold standard, as most of the world followed Britain off gold. The doctoral thesis I’m writing takes up the story from there. What kind of beast was the international monetary system for the remainder of the 1930s? The […]

Published in CNN-Expansión (Mexico) English translation: Greece and the Great Depression Scott UrbanGuest contributor to Centro de Estudios Espinosa Yglesias In the Great Depression, the prevailing wisdom argued that currency was only trustworthy if pegged to another currency — preferably, one which is pegged to gold. The idea was to limit the potential for fiscal malfeasance. […]

Times of crisis give rise to reconsideration of the monetary order. It has always been that way. With no small help from the likes of Peter Schiff, Rand Paul and other advocates of the Austrian school, the gold standard is enjoying a renaissance. At least around the water cooler. It’s time to pour some of that […]

About two years ago I had lunch with one of the most eminent economic historians alive today. We were reflecting on how aggressive were the actions of governments to combat the global downturn. “Does the expansion of government spending put central banks at risk of being forced to pick up the tab?” we wondered. In […]

In the first year of any macro course a key emphasis is the fact that real variables matter. Nominal variables are what you see quoted — and usually reported. So, for example, when you read that the euro has fallen to 1.20 dollars, that’s the nominal exchange rate. The real exchange rate is this nominal rate […]

The trilemma holds that economic policy must sacrifice one of the following three items: open capital flows, fixed exchange rate, monetary policy independence. For reasons that I won’t explain here, policymakers must forswear macroeconomic demand management completely (not just monetary policy) if they choose peg+open capital flows. And if they choose peg+independent macro management, then […]

Fantastic column this morning by Kevin O’Rourke — a guy who knows a thing or two about globalization. (He wrote the book.) Turns out that markets — not unreasonably — want both fiscal realism and economic growth. In other words, an austerity programme which delivers only that (austerity) is useless to investors, and won’t be rewarded by […]

Michael Mussa, former head of research at the IMF and presently a senior fellow at the Peterson Institute, argues that Greece ought not restructure (pdf) and definitely ought not leave the euro-area, whilst also sketching out how unwieldy are the debt dynamics with or without the IMF/EU program. It’s an example of the cognitive dissonance we’re seeing […]

and blocked in China, according to a Beijing correspondent.