Tag Archives: Central Bank

Economics for Business Lecture 21

Here are the lecture notes in 2*2 format, a recording of the lecture is below.

Irving Fisher's 1933 article on Debt, Deflation, and Depression is here, Hyman Minsky's big book on financial panics and the theory of debt-deflation is here, you can learn more about him here. Federal Reserve Chairman Ben Bernanke's 1983 paper on debt-deflation is here.

Economics for Business Lecture 21 from Stephen Kinsella on Vimeo.

McWilliams hits the nail on the head on Irish Credit Crunch Solution

Banknotes from all around the World donated by...Image via Wikipedia

David McWilliams, echoing Martin Feldstein in the FT earlier this week, suggests a Central Bank refinancing of banks to introduce liquidity into the system using the fact we are in an economic and monetary union. McWilliams' sense of social justice ensures the developers, whom he blames for the present mess (and he's not too far wrong there) will get short shrift from this deal. This is an excellent idea from McWilliams.

The key insight of the post is that EMU is not just a set of constraints on monetary policy---it is also an opportunity to provide free liquidity, at least on the relatively small scale Ireland would require.

McWilliams tells us, in a lovely turn of phrase:

Monetary union is a two-way street. While we can’t affect our interest rates, we can engineer liquidity.

A longer post on this when I start teaching Economics of EU Integration in a few weeks.