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The ECB cut its IOR to minus 0.5%; it should have been minus 50%

The ECB should stop playing around with negative interest rates and simply put a prohibitive tax on excess reserves (something I proposed in 2009). If a small amount of excess reserves are needed to clear interbank balances, then exempt a modest amount of bank reserves from the negative 50% interest rate (aka 50% tax rate.)   […]

Lagarde at the ECB?

IMF head Christine Lagarde has been proposed as the new leader of the ECB, replacing Mario Draghi. I don’t feel that I know enough about either Lagarde or the internal dynamics of the ECB to have a firm opinion on this nomination. But the following caught my eye: Lagarde would bring the star quality of […]

Futures targeting at the ECB

Geoff Orwell sent me the following: The idea that monetary policy could use derivative markets to pursue its objectives has appeared in the literature 3) but has very seldom found application. The need to find new tools for the intractable problem of unanchored inflationary expectations could now provide the incentive to test the idea in […]

Take it easy ECB; don’t over exert yourself

In recent months there has been a rising chorus of calls for fiscal stimulus, from pundits all over the world.  If I didn’t know better I’d conclude that the world’s major central banks had run out of paper and ink, and that only fiscal policy remained effective. And then I get jolted back into the […]

The Fed did monetary offset and the ECB did not

Who just posted this right-wing market monetarist interpretation of recent events? Well, the euro area has had a (slightly) shrinking population aged 15-64 since 2008, while the US has not (although our growth is slowing). How does this affect the picture, and what changes? Europe still does badly, but not by as bad a margin […]