The Federal Reserve has allowed itself an image of a marshmallow when it comes to the banking system it is (one-third) charged with regulating. First and foremost, along with the two other (redundant) triplets, the OCC and FDIC, the US central bank is not a central bank at all; it is near exclusively a domestic bank regulator. And while “macroprudential” [...]
One of the biggest challenges facing central banks in this increasingly post-myth environment is that they have to deal with the consequences of those past myths. Not all that long ago, it was widely believed that a central bank just did what it wanted to do, and that was the end of all discussion. If the Federal Reserve wanted to [...]
In looking at the “portfolio effect” of monetary policy, monetarists always see benefits without costs. The one exception in recent years has been Jeremy Stein of the FOMC, who is no longer a member. It was his statement in February 2013 about “reach for yield” that seems to have set off something odd in the policy apparatus. Some of that [...]
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