Wednesday , January 23 2019
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Tony Yates: Long and Variable

Long and Variable is a blog about monetary policy and central banks. Authored by Professor Tony Yates (University of Birmingham), this blog is quite detailed and knowledgeable about global monetary policy.

Whatever Powell says, the Fed can’t avoid taking political considerations into account.

Yesterday, Jerome Powell said, following the Fed’s decision to raise its policy rate:  “political considerations play no role whatsoever in our discussions”. In some important senses, this cannot or at least should not be true. Trump has on several occasions commented in public to the effect that he would prefer the Fed not to raise rates.  The reason is an old one, and relates to why central bank independence was thought a good idea in the first place.  Trump has not wanted the Fed to...

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What is the best Brexit outcome for the SNP?

There are still multiple possible outcomes of the ongoing Brexit process.  The UK could revoke our A50 notice to leave the European Union and remain members.  We could seek a Brexit In Name Only solution, retaining freedom of movement and membership of the single market.  We could ratify the Draft Withdrawal Agreement and negotiate a harder Brexit involving an end to freedom of movement, and a departure from some elements of the single market, depending on efforts to obviate the...

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Legitimacy somersaults

Have a look at this Tweet by Paul Embery. It’s fascinating. It’s not the only one.  Dan Hannan has sent roughly the same message. 1.  The 2016 Referendum result was legitimate. 2.  Any further referendum would not be legitimate, but instead an act of the establishment trying to get its way because it didn’t like the result of the first.  [Notice, no ill intentions of the establishment intended in the first round]. 3.  Despite the second referendum – this is hypothetical at present, of...

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An optimistic forecast concerning the inconsistent ambitions of Lexiters and Brexiters

David Chivers, [AP in macro at Durham University], wrote today: We can debate just where the electorate agree on post Brexit plans.  But they surely do not agree with all of them.   Not least because they are not consistent with each other. This leads us to the natural observation that an additional barrier for Lexiters and Brexiters is each other.  Lexiters seek a trajectory to socialism.  Right wing Brexiters – as well as former centrist Remainers – will oppose that vehemently. ...

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Why Brexit is so much more problematic than the financial crisis of 2008

An interesting thread by David Hayward [@SimeonStylites] on Twitter today compared the severity of the crisis engulfing us with Brexit to the financial crisis of 2008.  Although the economic damage has been so far less, and more slow-moving, in may ways I think the difficulties we face now have the potential to be much worse. For starters, during the financial crisis we had governments that were coherent entities and able to respond to events as they unfolded.  At present, both the...

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If you can’t beat them, join them: Remainers try their hand at attacks on the civil service.

Anthony Adonis tweeted this yesterday:  Civil servants do not need this unsolicited advice, foghorned over Twitter.  The tweet comes out of nowhere, prompted by nothing in particular, and insinuates in a way full of foreboding by omitting reference to anything specific.  Presumably, if there were some specific allegation, it would have been made? It is the mirror image of the accusations by the Brexit Ultras that the civil service is run by ‘Remoaner Saboteurs’, of which the latest...

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Next time do QE with a Treasury twist, not central bank money-printing?

This post writes up tweets I sent last night.  The case is not overwhelming, and maybe not even decisive, but it’s worth rehearsing the arguments for.  I’ll write this as though it were for a UK audience only, but the basic idea applies, with some qualifications, for other central banks too. In the UK QE meant the BoE creating new money, electronic central bank reserves, and buying long-dated government bonds [government bonds that mean that you get your money back in a long time, like...

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