Monetary policy cannot make safe wealth in the future any more valuable.

That, not China's exchange rate policy, is the culprit.

John Maynard Keynes once said that monetary policy may work like a string.

China s monetary and foreign exchange policies are now in a state of limbo.

A monetary policy at war with itself cannot long endure.

Most Americans care little about China's currency policy or its stance on intellectual property rights.

These countries may exit the crisis their crisis only if monetary policy allows them room to grow.

The second would be the world international monetary system.

This channel is ignored for one good reason exchange rate policies are fundamentally of the beggar thy neighbor variety. Unconventional policies that aim at weakening the exchange rate are technically possible even at zero interest rates, and they are quite likely to be effective at the level of individual countries.

Europe needs a monetary policy that views aiding employment growth in northern Europe as more important than continental price stability.

This channel is ignored for one good reason exchange rate policies are fundamentally of the beggar thy neighbor variety.

The zero bound on short_term rates does represent an important constraint on what monetary stabilization can achieve, but it is a more modest barrier than deflation pessimists insist. Monetary policy is far from powerless to mitigate a contraction in economic activity when deflation strikes, or when an economy flirts dangerously with it.

The key is to create the right kind of expectations regarding how monetary policy will be conducted in the longer term.

Monetary policy is far from powerless to mitigate a contraction in economic activity when deflation strikes, or when an economy flirts dangerously with it.

Over the past 25 years in Europe, unemployment rose as monetary policy was tightened and interest rates were raised to fight inflation. But after inflation succumbed, unemployment did not fall or not by much.

Over the past 25 years in Europe, unemployment rose as monetary policy was tightened and interest rates were raised to fight inflation.

Given the short term net costs of premature euroization, the most compelling alternative is an independent monetary policy based on direct inflation targeting (DIT).

The problem comes when expansionary monetary policy via standard open market operations and central bank guarantees of orderly markets prove insufficient.

The thinking behind the new arrangement was that an independent and flexible monetary policy would serve the nation s interest better than a fixed exchange rate that tied the naira to the pound.

But domestic money growth in China s immature bank based capital market is high and unpredictable, while many interest rates remain officially pegged. Thus, the People s Bank of China (PBC) cannot rely on observed domestic money growth or interest rates to indicate whether monetary policy is too tight or too loose.

Paul Krugman, for example, calls deflation a black hole once you fall into it, monetary policy becomes ineffective because no amount of monetary expansion can further reduce interest rates.

Thus, expansionary monetary policy via standard open market operations by a central bank is the first item on the checklist of what to do in a financial crisis.

Thus, the People s Bank of China (PBC) cannot rely on observed domestic money growth or interest rates to indicate whether monetary policy is too tight or too loose.

But politics, alas, is politics.

Ukraine s politics are not those of the steppe.

If the gossips decide it's politics, it will be politics.

Monetary policy in the industrial core has been far from perfect in this age of independent central banks, but it has been much better than what came before, representing a victory for technocracy.

Rising asset prices lead to a general increase in purchasing power, because many asset holders are willing (and able) to borrow more. Many Europeans tried to argue in recent years that monetary policy should also take asset price developments into account, whereas American policymakers and academics largely resisted this approach.

Many Europeans tried to argue in recent years that monetary policy should also take asset price developments into account, whereas American policymakers and academics largely resisted this approach.

The policy worked.

Blood Politics

Piñata Politics

Foreign policy .

Constitutional Politics

Monetary Policy.

Fiscal Policy.

Labor Policy.

The Politics of Frustration

The Politics of Fun

The Politics of Values

The Politics of Islamophobia

Energy policy

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Tribal politics

US Politics?