Swiss Ubs Bailout
Posted by admin on June 14th, 2008
Swiss Ubs Bailout
Since publication of Robert L. Hetzel's The Monetary Policy of the Federal Reserve (Cambridge University Press, 2008), the intellectual consensus that had characterized macroeconomics has disappeared. That consensus emphasized effective markets, rational expectations, and the efficacy of the price system in assuring macroeconomic stability. The 2008-2009 recession not only destroyed the professional consensus in regards to the kinds of models required to understand cyclical variations but likewise revived the credit-cycle or asset-bubble explanations of recession that eclipsed thinking in the 19th and original half of the 20th century. These "market-disorder" views emphasize exuberant danger taking in financial markets and the need for government regulation. The present book argues for the substitute "monetary-disorder" view of recessions. A review of cyclical instability over the last two centuries places the 2008-2009 recession in the monetary-disorder tradition, which focuses on the monetary instability produced by central banks rather than on a boom-bust cycle in financial markets.
ReviewAdvance praise: 'Hetzel's book is a detailed, authorized account of the recent credit turmoil and recession told as percentage of a narrative monetary history of business cycles dating back to the nineteenth century. The book is an immensely rewarding read for severe students of central banking.' Marvin Goodfriend, Carnegie Mellon University
'Robert Hetzel's cognition of the Federal Reserve System, and of monetary history more generally, is in particular extensive and insightful. His thesis concerning the main cause of the Great Recession of 2008-2009 will come as a surprise to galore readers.' Bennett McCallum, Carnegie Mellon University
'Robert Hetzel applies his experience as a central banker and his skillfulness as a monetary economist to make a compelling case for rules rather than discretion, showing that 'monetary disorder' rather than a rudimentary 'market disorder' is the cause of poor macroeconomic performance. At the same time, he acknowledges and discusses disagreements amongst those who argue for rules rather than discretion.' John B. Taylor, Stanford University
'The Great Recession upends the traditionalisti view that the recession of 2008-2009 was caused by a massive financial market failure. Instead, Robert Hetzel places blame squarely on the Federal Reserve for failing to ease monetary policy acutely in summer 2008. He argues that the recession heightened before the Lehman Brothers failure and that contractionary monetary policy turned a moderate recession caused by shocks to energy prices and the housing sector into a severe economic contraction. With a rich narrative and provocative history in the spirit of Friedman and Schwartz, Hetzel returns monetary forces to the forefront of business cycle analysis.' David C. Wheelock, Federal Reserve Bank of St LouisAbout the AuthorRobert L. Hetzel is Senior Economist and Policy Adviser in the Research Department of the Federal Reserve Bank of Richmond, where he participates in argues over monetary policy and prepares the Bank's president for meetings of the Federal Open Market Committee. Dr Hetzel's exploration on monetary policy and the history of central banking has appeared in publications such as the Journal of Money, Credit, and Banking; the Journal of Monetary Economics; the Monetary and Economics Studies series of the Bank of Japan; and the Carnegie-Rochester Conference Series. His writings provided one of the catalysts for the congressional hearings and treasury studies that led to the issuance of Treasury Inflation Protected Securities (TIPS). Dr Hetzel has given seminars or served as a visiting scholar at the Austrian National Bank, the Bank of England, the Bank of Japan, the Bundesbank, the European Central Bank, the National Bank of Hungary and the Center for Research into European Integration in Bonn, Germany. He received his PhD in 1975 from the University of Chicago, where Nobel Laureate Milton Friedman chaired his dissertation committee. Dr Hetzel is author of The Monetary Policy of the Federal Reserve: A History (Cambridge University Press, 2008).
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