Oxford University Press's
Academic Insights for the Thinking World
Last month, the European Central Bank (ECB) announced its plans to commence a €60 billion (nearly $70 billion) of quantitative easing (QE) through September 2016. In doing so, it is following in the footsteps of American, British, and Japanese central banks all of which have undertaken QE in recent years. Given the ECB’s actions, now is a good time to review quantitative easing. What is it?
Burdensome, costly, and—let’s face it—just plain stupid government regulation is all around us. And even well-meaning, reasonably well-designed regulations can impose costs all out of proportion with their benefits.
In the weeks and months following the subprime crisis, a number of financial swindles have come to light. Perhaps the most famous of these was the Bernie Madoff scandal. Madoff ran a Ponzi scheme, in which he attracted money from individuals (and institutions) who were hoping that he would provide sound investment management and a healthy return on the funds entrusted to him. Instead, the money ended up in his pocket. The small number of “investors” who did withdraw their funds from Madoff were paid with money from new investors.
Although the media hype is usually most frenetic during presidential election years, this season’s mid-term elections are generating a great deal of heat, if not much light. By October 13, contestants in 36 gubernatorial races had spent an estimated $379 million on television ads, while hopefuls in the 36 Senate races underway had spent a total of $321 million. For those addicted to politics, newspapers and magazines have long provided abundant, sometimes even insightful coverage.
I have written about the dangers of making economic policy on the basis of ideology rather than cold, hard economic analysis. Ideologically based economic policy has laid the groundwork for many of the worst economic disasters of the last 200 years.
As an early-stage graduate student in the 1980s, I took a summer off from academia to work at an investment bank. One of my most eye-opening experiences was discovering just how much effort Wall Street devoted to “Fed watching”, that is, trying to figure out the Federal Reserve’s monetary policy plans. If you spend any time following the financial news today, you will not find that surprising. Economic growth, inflation, stock market returns, and exchange rates, among many other things, depend crucially on the course of monetary policy.
Is it morbid or therapeutic to analyze the economic catastrophes of the past? What critical strategies can be imported from the realms of medicine and military history to the study of the current state of the economy? Richard Grossman, author of Wrong: Nine Economic Policy Disasters and What We Can Learn From Them, skillfully dissects the cadavers of economic policies.
Many questioned how the London 2012 Summer Olympic Games Opening Ceremony was going to make a mark after the spectacular Beijing Olympics only four years earlier. While Beijing presented the Chinese people moving as one body — dancing, marching, and presenting a united front to the world — the British answer was a chaotic and spirited ceremony, shifting from cricket matches to coordinated dance routines, Mr Bean’s comedic dream to a 100-foot Lord Voldemort.