The Money View | Institute for New Economic Thinking (INET)

Mehrling on Soros

by Perry G. Mehrling on April 16, 2012 5 comments

The text below is the comment I offered on Mr. Soros' opening speech at INET's Berlin Conference April 12, 2012. The text of Mr. Soros' own speech is here. Video of the entire session is below--my bit starts at 55:00.

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World Without Money Reconsidered

by Perry G. Mehrling on April 08, 2012 7 comments

FT Alphaville has picked up on my friend James Sweeney's latest, and since James cites the latest writings by other friends Zoltan Pozsar, Manmohan Singh, as well as my own most recent, the piece reads like a discussant's comments on a shadow banking symposium. Read more

Renminbi Swap Lines

by Daniel H. Neilson on March 28, 2012 4 comments

Last week the central banks of China and Australia announced the creation of a $31bn currency swap line. Like every such agreement, it was hailed as another step towards the renminbi's displacement of the dollar as the world's reserve currency. Are the renminbi swap lines in fact a genuine step forward for the internationalization of the RMB? Read more

Eurocrisis Redux

by Perry G. Mehrling on March 13, 2012 3 comments

Entangling alliances or entangling leagues are nothing to the entanglements of cash owing—Keynes

The recent BIS Quarterly Review article "European Bank Funding and Deleveraging" takes a stab at connecting all the dots in the Eurocrisis. It is only 12 pages, but with 8 (triple) graphs, there is a lot here to digest. Let's take a stab. Read more

Liquidity: Not Like Water (part 1 of many)

by Daniel H. Neilson on March 05, 2012 2 comments

Discussion of the results of the ECB's LTRO2 has revolved around the question of hoarding, specifically whether banks are using the newly-created reserves to fund new lending. Answers to this question usually make reference to the amount of overnight deposits held by eurozone banks at the ECB. Read more

Crisis Averted: Understanding LTRO2

by Perry G. Mehrling on March 01, 2012

Fundamentally, the ECB is trying to keep the ongoing sovereign debt crisis from turning into a full-fledged bank credit crisis. Three things they are worried about (see here, here, here). Read more

Fed, ECB balance sheet update

by Daniel H. Neilson on February 24, 2012

Perry and I extend our apologies for the unplanned hiatus. By way of breaking radio silence, it seems appropriate to check in on our two favorite banks. Here's the Fed's balance sheet, asset side first:

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Bank or no bank?

by Daniel H. Neilson on January 30, 2012 7 comments

A money view of SDRs

In a market economy, when you need something, you go out and buy it. Liquidity is no different, in that respect at least. If it is market liquidity that you need, you go to a dealer, who stands ready to buy what you are selling. You pay for the convenience, though—the dealer is getting more for the same asset than you are. If it is funding liquidity that you need, you go to your bank, who stands ready to lend. You pay for the convenience, though—the bank is paying less for its funds than you are. Read more

Why did the ECB LTROs help?

by Perry G. Mehrling on January 22, 2012 9 comments

From a money view perspective, the central issue is settlement of TARGET balances between national central banks within the Eurozone, and the key is to understand TARGET balances as a kind of interbank correspondent balance. What I want to suggest is that the ECB's Long Term Refinance Operation can help settle the troublesome TARGET balance overhang.

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Delicate balance

by Daniel H. Neilson on January 18, 2012

The current account still matters, but other things do too, and maybe more. In light of recent focus on gross flows, here and elsewhere, I want to argue for the language of the balance of payments. This language has a quaint feel to it, and my sense is that economists view it as archaic and outmoded. I am certain, at least, that one can get through grad school with no fluency in it. Read more

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The idea of this blog is to engage current financial news and policy debates from the standpoint of the classics of monetary theory. We ask, “What would Bagehot say?”, “What would Minsky say?”, “What would Fischer Black say?” Like them, our starting point is the idea that capitalism is essentially a financial system, which means that we need to take a money view in order to understand how it works.

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The New Lombard Street

Perry Mehrling is the author of The New Lombard Street, which traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913.