federal reserve

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Abolishing the Federal Reserve

It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning
– Henry Ford, American Industrialist.

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Still uncharted territory – post-crisis central banking

With Janet Yellen firmly in the reigns of the world’s largest central bank, many are looking to the legacy left by her predecessor Ben Bernanke. Love or loathe him, Bernanke undoubtedly pioneered a new style of central banking based on large scale direct market intervention, mainly through policies such as quantitative easing. With the policy now being scaled down, it is useful to ask whether QE and more broadly whether the Federal Reserve has been successful in supporting the US recovery.

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The challenges of an orderly exit from quantitative easing

With the US debt ceiling talks and the new Chairman of the Federal Reserve (Fed) Janet Yellen dominating the business and economics headlines, the economic woes of the US are back in the spotlight. It reminds us of the sluggish and vulnerable economic recovery that the US is currently facing on the back of ongoing Quantitative Easing (QE) monetary stimulus. Despite the debt standoff and the likely continuation of QE as Yellen leans towards employment over inflation, what is still a looming concern is the eventual exit of the QE program by the Fed. Due to the risks of a disorderly exit, the process is made more complex as timing, pacing and communication all need to be carefully managed, and both implications for the US economy and the potential collateral damage around the world need to be considered.

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U.S. debt ceiling under scrutiny

“I have a more fundamental question. Why do we have a debt limit in the first place?”

More than two years have elapsed since former Chairman of the Federal Reserve, Alan Greenspan, expressed this sentiment – and it is still a question that begs answering.

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Replacing Bernanke: who should be next head of the Federal Reserve?

Note: This article was written before the recent changes in candidacy. Nevertheless, it provides a valuable analysis of important factors to consider when evaluating candidates’ credentials.

On September 15 Lawrence Summers unexpectedly withdrew as a candidate for the next Federal Reserve chairman. His letter to Barack Obama stated, ‘I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.’ Janet Yellen now faces competition from new candidate Donald Kohn or, some have speculated, an as-yet unnamed economist.

Whether you love or loathe him, there is no question that Ben Bernanke in his last eight years as chairman of the United States Federal Reserve has had his work cut out for him.

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Bank of Japan’s monetary policy: Japan and Australia

Last year on December 26th, Shinzo Abe assumed office as Japan’s current Prime Minister and immediately began fulfilling his electoral campaign promises of bringing sweeping economic reform and output growth to the world’s third largest economy. After suffering decades of lacklustre output and many failed attempts to induce growth, Abe’s policies, both currently implemented and in the pipeline, are the biggest things to hit Japan since Godzilla itself.

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