Negative rates: a massive transfer from savers to bank shareholders and governments with little impact on economic growth. (Post in response to Miles Kimball)

This post explores the consequences of deeply negative interest rates set by the ECB, as proposed by professor Miles Kimball. It’s a shorter version of my previous post, plus an estimation of the economic stimulus of the proposal. Continue reading “Negative rates: a massive transfer from savers to bank shareholders and governments with little impact on economic growth. (Post in response to Miles Kimball)”

Carrot or stick? The Lonergan-Kimball debate

Update 1, 12/12/2017: Prof. Kimball replied on Twitter. I have added his remarks just before the discussion section.

Update 2, 12/12/2017: See my follow-up post with more details on the distributional and stimulative effects of deeply negative ECB rates.

Central banks around the developed world have been struggling to meet their inflation targets. Economists are divided on what the Fed, the ECB or the Bank of Japan should do.

Massive amounts of quantitative easing have proven to be ineffective at boosting inflation. Some economists have proposed that central banks raise inflation expectations.

At the 5th Bruegel – Graduate School of Economics, Kobe University conference1, Eric Lonergan and professor Miles Kimball advocated their preferred solutions: helicopter money and deep negative interest rates, respectively. Continue reading “Carrot or stick? The Lonergan-Kimball debate”

Books on money and banking: a classification

Let’s say you want to read a book about money and banking. What options do you have?

As it turns out, quite a few. Here’s my classification of the literature into six broad themes. The discussion is limited to books that deal with banking and the monetary system. I don’t cover the popular genre of personal finance books that tell the reader how to invest or how to minimize taxes. The books mentioned in this post are illustrations of categories. They should not be interpreted as endorsements. Continue reading “Books on money and banking: a classification”

Three news stories

I wrote Bankers are people, too to help non-economists put the financial news into perspective.

Three recent news stories were no surprise to readers of my book.

  • Articles about the Paradise Papers showed how global elites hide their wealth in tax havens.

I covered previous leaks in the chapter ‘Tax evasion and offshore services’ (p. 100).

Continue reading “Three news stories”

Green infrastructure bonds with macro strings attached: How the ECB could fulfill its mandate by fighting climate change

This is the paper I submitted to the Central Banking and Green Finance workshop organized by the Council on Economic Policies (CEP) and De Nederlandsche Bank. I wrote it to stimulate a discussion about how central banks can contribute to the fight against climate change. The text does not necessarily reflect my personal opinion. Continue reading “Green infrastructure bonds with macro strings attached: How the ECB could fulfill its mandate by fighting climate change”

“Bankers are people, too”: why that title?

Several readers have asked me why I called my book Bankers are people, too.

It sure wasn’t the working title, which was Money, Banks, and Power. The working title reflected the role of politics and regulation in real-life banking. A realistic description of the financial sector cannot neglect the world outside banks. Continue reading ““Bankers are people, too”: why that title?”

Preparing physics students for 21st-century careers

Are universities teaching physics students the things they need to succeed in the real world? The vast majority of physicists don’t work as physics professors. Jobs outside of physics departments often require skills that are less important for an academic career.

In Physics Today (open access during November 2017), professors Laurie McNeil and Paula Heron discuss how universities can teach relevant business skills, without neglecting the physics curriculum. Based on statistical data and interviews, they show that there is much room for improvement. Continue reading “Preparing physics students for 21st-century careers”

Definitely not a bubble

Calling bubbles in real time is hard, but come on:

This company added the word ‘Blockchain’ to its name and saw its shares surge 394%

and

How Floyd Mayweather helped two young guys from Miami get rich

“The boxer’s endorsement of Centra, along with a similar endorsement from the popular rapper DJ Khaled, lent a patina of credibility to a project that has ended up with more than a few problems, including a chief executive who does not appear to have been a real person and a shaky, fast-shifting business plan.”

and Continue reading “Definitely not a bubble”

#FinanceQuiz

If you’re on Twitter, please join my #FinanceQuiz. I’ll post one question a day (not during weekends). The answer will be posted the following day. The quiz covers anything money related: history, banking, famous bankers, technology…

Further reading on Blockchain and all that

There is a lot of hype surrounding blockchain1, ICOs, crypto assets, etc. You can find thousands of articles on distributed ledger technology and its potential applications.

As usual, the quality of these pieces varies greatly. Few are worth your time. Below are some links to explanations that I found useful. Continue reading “Further reading on Blockchain and all that”