quantitative easing

The Lords of Easy Money: How the Federal Reserve Broke the American Economy
by Christopher Leonard
Published 11 Jan 2022

Bernanke, chairman, Board of Governors of the Federal Reserve System, at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, August 27, 2010. The basic mechanics and goals of quantitative easing: This description of quantitative easing is based on the author’s interviews with current and former Federal Reserve officials, financial traders, financial analysts, and senior members of the New York Federal Reserve Bank who designed and implemented the program, 2016–2020; Brett W. Fawley and Christopher J. Neely, “Four Stories of Quantitative Easing,” Federal Reserve Bank of St. Louis, Review, January/February 2013; Stephen Williamson, “Quantitative Easing: Does This Tool Work?,” St. Louis Federal Reserve Bank, The Regional Economist, Third Quarter 2017; Quantitative Easing Explained, Economic Information Newsletter, Research Library of the Federal Reserve Bank of St.

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The experimental program had, like all things at the modern Fed, a name that was intentionally opaque and therefore difficult for people to understand, let alone care about. The plan was called “quantitative easing.” If the program was enacted, it would reshape the American financial system. It would redefine the Federal Reserve’s role in economic affairs. And it would make all of the things that Hoenig had been voting against look quaint. He was planning to vote against quantitative easing, and his dissent was going to be a lonely one. There was a tense debate inside the FOMC about quantitative easing, but the public barely knew about it. Political fights over America’s money supply had become increasingly insular, even hidden, as they were decided by the Fed’s leaders.

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The theory was that banks would now be forced to lend money, whether they wanted to or not. Quantitative easing would flood the system with money at the very same moment that it limited the refuge where that money might be safely stored. If economic growth was weak and fragile during 2010, then quantitative easing would shower the landscape with more money and cheaper loans and easy credit, enticing banks to fund new businesses that they might not have funded before. Hoenig had spent a whole year complaining about the dangerous “allocative effects” of 0 percent interest rates. Now, at Jackson Hole, those complaints looked quaint. The allocative effect of quantitative easing would be like nothing ever seen in American finance.

When the Money Runs Out: The End of Western Affluence
by Stephen D. King
Published 17 Jun 2013

Mortgage rates come down, homeowners with a mortgage are, as a result, better off, companies' borrowing costs drop and, thus, spending begins to revive: if we all believe this, a rate cut can become a self-fulfilling event. Quantitative easing, unfortunately, doesn't offer the same intuitive message: for many, it sounds distinctly suspect, has no personal relevance and, thus, makes little difference to economic behaviour. And with economic performance far worse than the protagonists of quantitative easing expected, the credibility of such esoteric measures has steadily withered on the vine. One reason for increased scepticism relates to the impact of lower long-term interest rates – thanks to quantitative easing – on pension fund deficits. As Charlie Bean, the Deputy Governor of the Bank of England, explained in a May 2012 speech: Quantitative easing does not inherently raise pension deficits.

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So if a fund starts off relatively ‘asset poor’, the sponsors will now find it more costly to acquire the assets to match its future obligations … A corollary of this is that the cost of provisioning against additional pension entitlements being accumulated by currently serving staff unambiguously rises.6 This would, perhaps, be a small price to pay if, as a result of quantitative easing, the economy quickly recovered, allowing quantitative easing to be reversed. In that case, bonds held by the central bank as a result of quantitative easing would be sold back to the market, yields would rise and the pressure on pension deficits would be alleviated. Yet this hasn't happened. Compared with a typical period of recession, during which interest rates fall rapidly only to rise swiftly thereafter, the absence of meaningful recovery leaves pension funds facing the prospect of permanently lower interest rates and, thus, growing difficulties in meeting their obligations.

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This is a form of financial repression, a way of ensuring that the government is able to rig credit markets to suit its own aims even if the economy as a whole may perform less well as a consequence. Quantitative easing may originally have been designed to improve economic performance but it has also allowed governments to raise debt on the cheap. With economic stagnation, quantitative easing has merely allowed governments to postpone the fiscal ‘day of reckoning’. And the longer stagnation persists, the worse the reckoning will eventually be. Quantitative easing is a useful way of masking persistent increases in government debt, as if those increases come at no economic cost. It is also, by implication, a useful way of allowing governments to muscle their way to the front of the credit queue: with the value of government bonds in effect ‘ring-fenced’ by the actions of central banks, quantitative easing in a risk-averse world will only encourage more and more investors to invest in government bonds.

The Curse of Cash
by Kenneth S Rogoff
Published 29 Aug 2016

I hope this section has cleared up some of the mystery surrounding quantitative easing. If not, then “Quantitative Easing Explained” (the section title) also happens to be the title of a hilarious and truly brilliant 6-minute cartoon video produced in 2010 by real estate manager Omid Malekan that contains a lot of genuine insight, though hopefully readers of this book will also spot a few misconceptions.27 Empirics of Quantitative Easing Even though the empirical evidence on QE is far from decisive, pretty much everyone agrees that the first round of US quantitative easing, at the height of the financial crisis , was very important.

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Some have argued that the zero bound hasn’t really turned out to be all that important, because central banks have found pretty good ways to get around it, using unconventional tools such as “forward guidance” and “quantitative easing.” The first involves telling investors that the monetary authorities intend to elevate inflation in the future, even if they cannot do it now. When it works, forward guidance succeeds in bringing down the real interest rate, even if the nominal interest rate is stuck at zero, since of course the real interest rate is the nominal interest rate minus the expected rate of inflation. A second idea is quantitative easing (QE). We discuss QE in much greater detail later in this chapter, but essentially it involves using short-term central bank debt to buy long-term assets, such as government debt, thereby bringing long-term government interest rates down.

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A few key further points in the literature are introduced in an appendix to this chapter (grouped with other appendices at the end of the book), which gives a flavor of some of the issues that need to be taken into account. QUANTITATIVE EASING We now turn to alternative approaches that central banks have adopted to deal with the zero bound, short of negative rates. This section deals with the policies that the monetary authorities actually used during the financial crisis, namely, quantitative easing (QE) and forward guidance. Our purpose is to ask to what extent these various alternatives obviate the need for negative interest rate policy, or at least mitigate it to a large extent.

The New Depression: The Breakdown of the Paper Money Economy
by Richard Duncan
Published 2 Apr 2012

Moreover, short-term currency movements are notoriously difficult to predict. Quantitative Easing and Asset Prices The immediate effect of quantitative easing is to push interest rates down and to push stock prices and commodity prices up. As just mentioned, in a capitalist system, when a government borrowed money it pushed up interest rates. That is no longer necessarily the case. Today, interest rates are determined not only by the demand for money but also by the supply of money. Consider the second round of quantitative easing. Between November 2010 and mid-2011, the Fed created $600 billion and used it to buy government bonds.

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See also U.S. economy Election of 2012, issues of government spending and indebtedness Emotions, in Mitchell’s theory of business cycles Energy and energy prices. See also Solar initiative, proposed excluded from CPI in New Great Depression quantitative easing and England Equation of exchange European Central Bank Extended-baseline scenario, of Congressional Budget Office Fannie Mae: conservatorship of credit creation and decline in liquidity reserves quantitative easing and U.S. debt guarantees and FDIC Federal Reserve. See also Quantitative easing commercial bank reserves (1945–2007) end of gold standard, creation of fiat money, and expansion of credit policy actions regarding New Depression Federal Reserve Act of 1913 Fiat money: end of gold standard and creation of government deficit in 2013 and 2014 and Fiat Money Inflation in France (White) Financial sector: debt and lack of liquidity reserve requirements and credit expansion Fiscal stimulus, needed with additional quantitative easing Fisher, Irving theory of debt-deflation Fixed-interest-rate debt, in diversified portfolio Flow of Funds Accounts of the United States Food prices: deflation and excluded from CPI quantitative easing and Foreign causes, of credit expansion Bernanke’s global savings glut theory and central banks’ creation of fiat money and foreign exchange reserves possibility of end to China’s buying of U.S. debt Foreign exchange reserves.

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Impact on the Economy Net Worth Profits Tax Revenue Different, Not Just More Impact on Capital Conclusion Note Chapter 4: The Quantity Theory of Credit The Quantity Theory of Money The Rise and Fall of Monetarism The Quantity Theory of Credit Credit and Inflation Conclusion Notes Chapter 5: The Policy Response: Perpetuating the Boom The Credit Cycle How Have They Done so Far? Monetary Omnipotence and the Limits Thereof The Balance Sheet of the Federal Reserve Quantitative Easing: Round One What Did QE1 Accomplish? Quantitative Easing: Round Two Monetizing the Debt The Role of the Trade Deficit Diminishing Returns The Other Money Makers Notes Chapter 6: Where Are We Now? How Bad so Far? Credit Growth Drove Economic Growth So, Where Does that Leave Us?

Where Does Money Come From?: A Guide to the UK Monetary & Banking System
by Josh Ryan-Collins , Tony Greenham , Richard Werner and Andrew Jackson
Published 14 Apr 2012

This policy was also ineffective, but thanks to using a label originally defined as expanding credit creation – ‘quantitative easing’ – it caught the imagination of investors and commentators. Thus today often monetarist reserve or base money expansion is referred to as ‘quantitative easing’, or QE.* Unlike the Bank of Japan, the Federal Reserve implemented a policy more directly aimed at expanding bank credit creation, as explained by Chairman Bernanke.† This paid off in 2012 as bank credit growth recovered. In contrast, the Bank of England adopted the Bank of Japan’s monetarist reserve expansion under the label ‘quantitative easing’, and did not target bank credit creation directly, although it has made substantial efforts to ensure that bond purchases take place (to a significant extent) from the non-bank sector.

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Werner, R. A., (2012). Lessons from the Bank of England on ‘quantitative easing’ and other ‘unconventional’ monetary policies. International Review of Financial Analysis, Volume 25, December 2012, pp. 94-105 32 Voutsinas, K. and Werner, R.A., (2010). New Evidence on the Effectiveness of ‘Quantitative Easing’ and the Accountability of the Central Bank in Japan, Centre for Banking, Finance and Sustainable Development, Discussion Paper, School of Management. University of Southampton, Southampton 33 Ryan-Collins, J., (2010). Quantitative easing is stimulating commodity trading, not the real economy. London: nef 34 Greenham, T., (2012).

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Is cash a source of ‘debt-free’ money? 4.5. How do banks decide how much central bank money they need? 4.6. Is commercial bank money as good as central bank money? 4.6.1. Deposit insurance 4.7. Managing money: repos, open market operations, and quantitative easing (QE) 4.7.1. Repos and open market operations 4.7.2. Standing facilities 4.7.3. Quantitative Easing 4.7.4. Discount Window Facility 4.8. Managing money: solvency and capital 4.8.1. Bank profits, payments to staff and shareholders and the money supply 4.9. Summary: liquidity and capital constraints on money creation 5. REGULATING MONEY CREATION AND ALLOCATION 5.1.

The Long Good Buy: Analysing Cycles in Markets
by Peter Oppenheimer
Published 3 May 2020

This can result in some institutions taking too much risk to meet guaranteed returns, but it can also result in more demand for bonds as the yields fall, resulting in yet lower bond yields. Notes 1 See How quantitative easing affects bond yields: Evidence from Switzerland. Christensen, J., and Krogstrup, S. (2019). Royal Economic Society [online]. Available at https://www.res.org.uk/resources-page/how-quantitative-easing-affects-bond-yields-evidence-from-switzerland.html 2 See Gilchrist, S., and Zakrajsek, E. (2013). The impact of the Federal Reserve's large-scale asset purchase programmes on corporate credit risk.

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Hatzius, J., Phillips, A., Mericle, D., Hill, S., Struyven, D., Choi, D., Taylor, B., and Walker, R. (2019). Productivity paradox v2.0: The price of free goods. New York, NY: Goldman Sachs Global Investment Research. Hayes, A. (2019, April 25). Dotcom bubble. Investopedia. How quantitative easing affects bond yields: Evidence from Switzerland. (2019). Royal Economic Society [online]. Available at https://www.res.org.uk/resources-page/how-quantitative-easing-affects-bond-yields-evidence-from-switzerland.html How to tame the tech titans. (2018). The Economist. Hutchinson, J., and Persyn, D. (2012). Globalisation, concentration and footloose firms: In search of the main cause of the declining labour share.

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Index 100 year bond 34 1920s, United States 148, 154, 157, 160 1945-1968, post-war boom 129–131 1960s ‘Nifty Fifty’ 114, 130–131, 233, 235 structural bear market 130 1970s Dow Jones 131 equity cycle 56 oil crisis 108 1980s bull markets 131–133 Dow Jones 15–16, 131–132 equity cycle 56–57 Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 technology 12–15 1990s 16–17 Asia crisis 108, 133 equity cycle 57 S&P concentration 114 technology bubble 33, 93–94, 149–150, 156–157, 158–159, 161, 164 2000-2007 equity cycle 57 2007-2009 financial crisis 169–174 emerging markets 171–173 forecasting 19–21 growth vs. value company effects 94–96 impact 169–170 phases 171–174 quantitative easing 173–174, 178–179 sovereign debt 170, 171–173 structural bear market 110, 118–119 A accounting, bubbles 163–165 adjustment speed 74, 89–90 Akerflof, G.A. 23 American Telephone and Telegraph (AT&T) 154, 225, 235–236, 238 Asia crisis, 1998 108, 133 ASPF see Association of Superannuation and Pension Funds asset classes across phases 66–68 contractions and expansions 63–65 cyclical 83–89 defensive 83–89 diversification 42, 45–47, 178–179 growth 83–84, 90–96 and inflation 65–66, 70 levels of yield 74–76 relationship through cycle 68–76 returns across cycle 63–79 speed of adjustment 74 structural shifts 76–79 value 83–84, 90–96 see also bonds; commodities; equities Association of Superannuation and Pension Funds (ASPF) 77 AT&T see American Telephone and Telegraph austerity 239 Austria, 100 year bond 34 B bank margins 214–215 bear markets 49, 99–125 1960s 130 characteristics 100–106, 117–118 cyclical 105, 106–107 deflation 109, 113 duration 100–101, 106–111, 117 employment 121–124 event-driven 105, 107–109 false negatives 119–120 financial crisis 118–119 growth momentum 122–123 indicators 106, 108, 109–110, 119–125 inflation 101–103, 109, 121–122 interest rates 106, 111–113 prior conditions 121–124 private sector financial balance 124 profitability 115–117 recovery 101 risk indicator vs MSCI index 124–125 S&P 500 103–105 structural 105 triggers 101–105, 106, 108, 111 valuations 123 yield curve 122 behavioural factors 5, 22–25 Berlin Wall, fall of 133 Bernanke, B. 133 betas 65, 85 ‘Big Bang’ deregulation 12 Bing 237 Black Monday 16, 102, 148 Black Wednesday 16–17 ‘bond-like’ equities 96 bonds, 100 year 34 bond yields across phases 66–68, 72–76 current cycle 95–96, 191–193, 201–220 cyclical vs. defensive companies 87–88 and demographics 215–217 and equity valuations 72–76, 206–208 and growth companies 92–94 historical 43, 202 and implied growth 210–215 and inflation 65, 70 quantitative easing 173–174, 202–205 and risk asset demand 217–220 S&P 500 correlation 72–73 speed of adjustment 74, 89–90 ultra-low 201–220 and value companies 92–94 vs. dividends 78–79 vs. equities 43–45, 68–76, 78–79 Bretton Woods monetary system 102, 130–131 broadcast radio 154, 225 Bubble Act 147, 157 bubbles 143–165 1920s US 148, 154, 157, 160 1980s Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 accounting 163–165 canal mania 152 characteristics 145–146 deregulation 157–159 easy credit 160–161 famous 145 financial innovation 158–159 government-debt-for-equity swaps 151–152 Mississippi Company 147, 151 ‘new eras’ 150–157 personal computers 155 psychology 144–145 radio manufacturing 154 railways 148, 152–154, 157, 160, 163 Shanghai composite stock price index 156 South Sea Company 147, 151, 153 structural bear markets 113 sub-prime mortgages 70, 102, 118, 133, 145, 159 technology, 1990s 33, 93–94, 149–150, 156–157, 158–159, 161, 164 tulip mania 146–147 valuations 161–162 bull markets 49, 127–142 characteristics 127–141 composition 138 cyclical 134–136 disinflation 131–133 duration 136–138, 139–141 equity performance 135–136 Great Moderation 133–134, 187–189 non-trending 138–141 post-war boom 129–131 quantitative easing 134 secular 127–134 United States 136 C canal mania 152 CAPE see cyclically adjusted price-to-earnings ratio capital investment, Juglar cycle 3 CDO see collateralised debt obligations characteristics bear markets 100–109, 111, 117–118 bubbles 145–146 bull markets 127–141 cyclical bear markets 106–107 event-driven bear markets 108–109 structural bear markets 111 China 15, 156 Cold War 14–15, 133 collateralised debt obligations (CDO) 159 commodities across phases 66–68 Kitchin cycle 3 composition of bull markets 138 concentration structural bear markets 115 and technology 238–240 contractions asset performance 63–65 mini cycles 60 see also recessions Cooper, M. 162 corporate debt 65, 110, 114, 160–161 corporate profitability bear markets 107, 115–117 current equity cycle 185–186 monetary policy 239 credit crunch 78–79, 170, 171 crowds, psychology of 21–22, 144–145 cult of the equity 77–78 current equity cycle 57–58, 167–240 bank profitability 214–215 bond yields 191–193 demographic shifts 215–217 drivers 179–180 earnings per share 195–196 employment and unemployment 183–185 equity valuations 206–208 ‘first mile problem’ 226–227 future expectations 246–247 global relative performance 193–196 growth momentum 174–178, 182–183, 227–231 growth and value companies 190–196, 239–240 implied growth 210–215 inflation 180–182, 203–205 interest rates 180–182, 239–240 Japan, lessons from 196–200 lessons from 244–245 market and economy incongruence 174–178 monetary policy 178–179, 201–205 opportunities 230–231 profitability 185–186 quantitative easing 202–205 returns 174–179 risk asset demand 217–220 structural changes 76–79, 93–96, 169–200 technology 189–190, 221–241 term premium collapse 204–205 ultra-low bond yields 201–220 valuations 233–235 volatility 187–189 cycles 1970s 56 asset returns 63–79 cyclical vs. defensive companies 85–89 equities 49–62 growth vs. value companies 90–96 investment styles 81–96 long-term returns 29–47 riding 11–27 sectors 83–85 valuations 53 cyclical bear markets 105, 106–107, 117, 118 vs. event-driven 109 cyclical bull markets 134–136 cyclical companies bond yields 193 inflation 88 sectors 83–84 vs. defensive 85–89 cyclical growth 83–84 cyclically adjusted price-to-earnings ratio (CAPE) 37–38, 44–45 cyclical value 83–84 D DDM see discounted dividend model debt levels bubbles 160–161 structural bear markets 110, 114 decarbonization 13 defensive companies 63–65 bond yields 193 inflation 88 Japan 198 sectors 83–84 vs. cyclical 85–89 defensive growth 83–84 defensive value 83–84 deflation bear markets 109, 113 Volker 102, 131 delivery solutions 226–227 demographics and zero bond yields 215–217 deregulation 12, 132–133, 157–159 derivative markets 158–159 design of policy 25–26 despair phase 50–52, 53, 55–56, 60, 66–68 cyclical vs. defensive companies 86, 88 growth vs. value companies 92 Dice, C. 161 Dimitrov, O. 162 discounted dividend model (DDM) 36, 69 discount rate 68 disinflation 131–133 disruption 1980s 12–15 current equity cycle 189–190, 221–241 electricity 226 historical parallels 222–227 printing press 223–224 railway infrastructure 224–227 telecoms 225–226 divergence, and technology 238–240 diversification 42, 45–47, 178–179 dividends asset yields 38–41, 69 reinvestment 38–40 value of future streams 209 vs. bonds 78–79 Dodd, D. 163, 164 domain registrations 12–13 dominance of technology 231–233 dotcoms 12–13, 33, 93–94, 102, 161, 237 Dow Jones 1970s 131 1980s 15–16, 131 Black Monday 16, 102, 148 Draghi, M. 17, 173 drivers of bull markets 138 current equity cycle 179–180 duration bear markets 100–101, 106–111, 117 bull markets 135–138, 139–141 cyclical bear markets 106–107, 117, 118 cyclical bull markets 135–136 dominance of technology 231–233 event-driven bear markets 108–109, 117–118 non-trending bull markets 139–141 structural bear markets 109–111, 117 term premia 204–205 DVDs 227 E earnings per share (EPS) bear markets 115–117 historical 189 since pre-financial crisis peak 195–196, 209–210 easy credit, and bubbles 160–161 ECB see European Central Bank Economic Recovery Act, 1981 132 efficient market hypothesis 4 electricity 226 email 13 employment 121–124, 183–185 Enron 164 environmental issues 13 EPS see earnings per share equities across phases 66–68 ‘bond-like’ 96 and bond yields 72–73, 74–76, 206–208 bull market performance 135–136 CAPE 37–38, 44–45 dividends 38–41, 69, 78–79, 209 and inflation 65–66, 70 mini/high-frequency cycles 58–61 narrowing and structural bear markets 114–115 overextension 36–37 phases of investment 50–58 quantitative easing 173–174, 178–179 S&P 500 historical performance 42 valuations and future returns 43–45 vs. bonds 43–45, 68–76, 78–79 equity cycle 49–62 1970s 56 1980s 56–57 1990s 57 2000-2007 57 current 57–58, 76–79 historical periods 56–58 length 49 mini/high-frequency 58–61 phases 50–56 structural shifts 76–79 equity risk premium (ERP) 35–38, 69–72, 210 ERM see exchange rate mechanism ERP see equ ity risk premium ESM see European stability mechanism Europe dividends 39–40 exchange rate mechanism 16–17, 111 Maastricht Treaty 17 market narrowing in 1990s 115 privatisation 132 quantitative easing 17, 204–205 sovereign debt crisis 170, 171–173 European Central Bank (ECB) 17, 171, 173 European Recovery Plan 129–131 European stability mechanism (ESM) 173 event-driven bear markets 105, 107–109, 117–118 vs. cyclical 109 excess see bubbles exchange rate mechanism (ERM) 16–17, 111 exogenous shocks 108 expansions, asset performance 63–65 F false negatives, bear markets 119–120 fat and flat markets 128, 139 features see characteristics Federal Reserve 16, 102, 131, 134, 150–151, 157, 203 financial crisis, 2007–2009 169–174 forecasting 19–21 growth vs. value company effects 94–96 impact 169–170 structural bear market 110, 118–119 financial innovation 158–159 ‘first mile problem’ 226–227 Fish, M. 19 fixed costs 84–85, 173–174 fixed income assets 35, 65, 69–70, 205 flat markets 138–141 see also non-trending bull markets forecasting 2008 financial crisis 19–21 bear markets 106, 108, 109–110, 119–125 behavioural aspects 22–25 difficulties of 18–22 future growth 211–212 neuroeconomics 24–25 and policy setting 25–26 recessions 20–21 and sentiment 21–25 short-term 17–18 weather 18–19 France Mississippi Company 147, 151 privatisation 132 Fukuyama, F. 15 future expectations 246–247 G Galbraith, J.K. 160 GATT see General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade (GATT) 129 Germany Bund yield 207 fall of Berlin Wall 133 wage inflation 185 Glasnost 14 Glass-Steagall Act, 1933 132 global growth 182–183 globalisation 14–16 global relative performance 193–196 global sales growth 212 global technology bubble 33, 93–94, 149–150, 156–157, 158–159, 161, 164 Goetzmann, F. 151 ‘Golden Age of Capitalism’ 129–131 Gold Standard 130 see also Bretton Woods monetary system Goobey, G.R. 77 Google 237 Gorbachev, M. 14 Gordon Growth model 209 government-debt-for-equity swaps 151–152 Graham, B. 161, 163, 164 Great Britain South Sea Company 147, 151, 153 see also United Kingdom Great Depression 4 Great Moderation 133–134, 187–189 Greenspan, A. 16, 113, 150–151 gross domestic product (GDP) cyclical vs. defensive companies 87 labour share of 185, 238–239 phases of cycle 52–53 profit share of, US. 186 growth bear markets 122–123 current equity cycle 174–178, 182–183, 227–231 technology impacts 227–231 and zero bond yields 208–210, 210–215 growth companies bond yields 92–94, 191–193 current cycle 190–196 definition 90–91 since financial crisis 94–96 interest rates 92–94 outperformance 239–240 sectors 83–84 vs. value 90–96 growth phase 50–52, 54–56, 67–68 cyclical vs. defensive companies 86 growth vs. value companies 92 Gulf war 102 H herding 21–22, 144–145 high-frequency cycles 58–61 historical performance 10 year bonds, US 43 bonds 43, 202 equities cycles 49, 56–58 S&P 500 38–39, 42 trends 29–31 holding periods 31–34 Holland, tulip mania 146–147 hope phase 50–52, 53–54, 55–56, 66–67 cyclical vs. defensive companies 86 growth vs. value companies 92 housing bubble, US 70, 102, 118, 133, 145, 159 Hudson, G. 163 I IBM 13, 155, 236 IMAP see Internet Message Access Protocol IMF see International Monetary Fund impacts of diversification 42, 45–47 financial crisis, 2007-2009 169–170 technology on current cycle 221–241 ultra-low bond yields 201–220 Imperial Tobacco pension fund 77 implied growth 210–215 income, Kuznets cycle 3 indicators bear markets 106, 108, 109–110, 119–125 cyclical bear markets 106 event-driven bear markets 108 structural bear markets 109–110 industrial revolution 224–226 industry leadership, S&P 500 232–233, 237–238 inflation asset performance 65–66, 70 bear markets 101–103, 109, 121–122 current equity cycle 180–182, 203–205 cyclicals 88 Volker 102, 131 Institute of Supply Management index (ISM) 59–61 bear markets 123 cyclical vs. defensive companies 86–87 interest rates bear markets 106, 111–113 current equity cycle 180–182, 239–240 growth vs. value companies 92–94 structural bear markets 111–113 and yield 69, 74–76 International Monetary Fund (IMF) 129 internet 12–13, 225–227 search 237 see also dotcoms Internet Message Access Protocol (IMAP) 13 inventories 84–85 Kitchin cycle 3 investment, Juglar cycle 3 investment cycle bear markets 122–123 current 57–58, 76–79 historical periods 56–58 lengths 49 mini/high-frequency 58–61 phases 50–56 structural shifts 76–79 see also cycles ISM see Institute of Supply Management index J Japan bubbles 114, 148–149, 155–156, 158, 160–161, 162, 164 defensive companies 198 dividends 39–40 lessons from 196–200 John Crooke and Company 160 Juglar cycle 3 K Kahneman, D. 22–23 Kennedy Slide bear market 102 Keynes, J.M. 22 Kindleberger, C.P. 22 Kitchin cycle 3 Kondratiev cycle 3 Kuznets cycle 3 L labour share of GDP 185, 238–239 land and property bubble, Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 laptop computers 13 largest companies S&P 500 237–238 technology 234–237 light touch regulation 157–159 see also deregulation Live Aid 13–14 Loewenstein, G. 21–22 long-term returns 29–47 M Maastricht Treaty 17 Mackay, C. 21 market forecasts short-term 17–18 see also forecasting market narrowing structural bear markets 114–115 and technology 238–240 markets current equity cycle 174–178 psychology of 21–25, 144–145 see also bear markets; bubbles; bull markets market timing 41–43 market value of technology companies 234, 235–238 Marks, H. 6–7 Marshall Plan 129–131 MBS see mortgage-backed securities Microsoft 12, 236–237 mini cycles 58–61 Mississippi Company 147, 151 monetary policy 157–159, 178–179, 201–205, 239 austerity 239 European Central Bank 17, 171, 173 Federal Reserve 16, 102, 131, 134, 150–151, 157, 203 quantitative easing 17, 70–71, 119, 133–134, 173–174, 178–179, 202–205 Montreal Protocol 13 mortgage-backed securities (MBS) 159 MSCI indices 91 N narrow equity markets 114–115, 238–240 NASDAQ 149–150, 161 negative bond yields 201–220 demographics 215–217 and equity valuations 206–208 and growth 208–210 implied growth 210–215 monetary policy 201–205 quantitative easing 202–205 risk asset demand 217–220 neuroeconomics 24–25 ‘new eras’ 113–114, 150–157 ‘Nifty Fifty’ 114, 233 non-trending bull markets 138–141 nudges 26 O oil 108, 226 opportunities, technology 230–231 optimism phase 50–52, 54–56, 67–68 cyclical vs. defensive companies 86 growth vs. value companies 91–92 output gaps 4 Outright Monetary Transactions (OMT) 171, 173 overextension 36–37 ozone layer 13 P pension funds 77, 218–219 Perestroika 14 Perez, C. 159 performance bull markets 134–136 current equity cycle 174–179 and cycles 53–56 diversification impacts 42, 45–47 dividends 38–41 equities vs. bonds 43–45 factors 41–45 historical trends 29–31 holding periods 31–34 interest rates 69, 74–76 long-term 29–47 market timing 41–43 risks and rewards 35–38 valuations 43–45 volatility 30–31 personal computing introduction 12–13, 155 phases 2007-2009 financial crisis 171–174 asset classes 66–68 bear markets 123 cyclical vs. defensive companies 86 of equities cycle 50–56 growth vs. value companies 91–92 Phillips curve 182 Plaza Accord, 1985 148–149, 158 PMI see purchasing managers’ index policy, design of 25–26 population decline 216 post-financial crisis see current equity cycle post-war boom 129–131 prediction see forecasting price-to-earnings ratio (P/E) 53–56 printing press 223–224 prior conditions to bear markets 121–124 private sector debt 65, 110, 114, 160–161 private sector financial balance 124 privatisation 132 productivity growth 227–230 profit labour share of 185, 238–239 share of GDP, US. 186 profitability banks 214–215 bear markets 107, 115–117 current equity cycle 185–186 property and land bubble, Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 psychology bubbles 144–145 of markets 21–25 policy setting 25–26 public ownership 132 purchasing managers' index (PMI) 59–61, 86–87, 89–90 Q QE see quantitative easing Qualcom 149–150 quality companies 193 quantitative easing (QE) asset returns 70–71, 119, 178–179 bond yields 173–174, 202–205 start of 17, 133–134, 171 United Kingdom 17, 204–205 United States 134, 171, 202–204 R radio, expansion of 154, 225 Radio Corporation of America (RCA) 154 railways bubbles UK 148, 152–153, 157, 163 US 153–154, 160 infrastructure development 224–227 Rau, P. 162 RCA see Radio Corporation of America Reagan, R. 14, 131–132 real assets 68 real estate bubble, US 70, 102, 118, 133, 145, 159 recessions bear markets 101–103 current equity cycle 174–178 forecasting 20–21 recovery bear markets 101 current equity cycle 174–178 reinvestment of dividends 38–40 return on equity (ROE) 43–45 returns bull markets 134–136 current equity cycle 174–179 cycles 53–56 diversification impacts 42, 45–47 dividends 38–41 equities vs. bonds 43–45 factors 41–45 historical trends 29–31 holding periods 31–34 interest rates 69, 74–76 long-term 29–47 market timing 41–43 risks and rewards 35–38 valuations 43–45 volatility 30–31 reverse yield gap 77 risk assets, demand for 217–220 risk-free interest rate 68 risk indicators bear markets 119–125 event-driven bear markets 108 structural bear markets 110–111, 113–114 risk premia equity 35–38, 69 neuroeconomics 25 term premia 204–205 ROE see return on equity Rouwenhorst, G. 151 Russian debt default, 1997 108 S S&P 500 bear markets 103–105 and bond yields 72–73 concentration in 1990s 115 dividends 38–39 historical performance 38–39, 42 industry leadership 232–233, 237–238 and ISM 60 largest companies 237–238 US Treasury yields 206 sales growth 212 savings, current equity cycle 182 Schumpeter, J. 150 search companies 237 ‘search for yield’ 217–220 secondary-market prices 229–230 sectors across the cycle 83–85 dominance 231–233 secular bull market 127–134 disinflation 131–133 Great Moderation 133–134, 187–189 post-war boom 129–131 secular stagnation hypothesis 181 sentiment 5, 21–25 see also bubbles Shanghai composite stock price index 156 Shiller, R.J. 4–5, 23 short-term market forecasts 17–18 skinny and flat markets 139–140 smartphones 226, 229–230 Solow, R. 229 South Sea Company 147, 151, 153 sovereign debt crisis 170, 171–173 Soviet Union 14–15, 133 speed of adjustment 74, 89–90, 122–123 Standard Oil 235 structural bear markets 105, 109–115 1960s 130 bubbles 113 debt levels 110, 114 deflation 113 duration 109–111, 117 financial crisis, 2007 118–119 interest rates 111–113 narrow equity markets 114–115 ‘new eras’ 113–114 risk indicators 110–111, 113–114 triggers 111 volatility 105, 115 structural changes 6 1980s 12–15 current equity cycle 76–79, 93–96, 169–200 sub-prime mortgage bubble 70, 102, 118, 133, 145, 159 Summers, L. 181 Sunstein, C.R. 26 ‘super cycle’ secular bull market 127–134 see also secular bull market T technology 1920s America 154 bubble in 1990s 33, 93–94, 149–150, 156–157, 158–159, 161, 164 current equity cycle 189–190, 221–241 and disruption in 1980s 12–15 dominance 231–233 and growth 227–231 historical parallels 222–227 industrial revolution 224–226 Kondratiev cycle 3 largest companies 234–237 market value 234, 235–238 opportunities 230–231 personal computers 12–13, 155 printing press 223–224 railway bubbles 148, 152–154, 157, 160, 163 railway infrastructure 224–227 and widening gaps 238–240 telecommunications 13, 154, 225, 235–236, 238 telegrams 225 term premium collapse 204–205 TFP see total factor productivity growth Thaler, R.H. 26 Thatcher, M. 14, 132 Tokkin accounts 158 ‘too-big-to-fail’ 133 total factor productivity (TFP) growth 238–240 triggers bear markets 101–105, 106, 108, 111 cyclical bear markets 106 event-driven bear markets 108 structural bear markets 111 tulip mania 146–147 Tversky, A. 22–23 U ultra-low bond yields 201–220 demographics 215–217 and equity valuations 206–208 and growth 208–210 implied growth 210–215 monetary policy 201–205 quantitative easing 202–205 risk asset demand 217–220 UNCTAD see United Nations Conference on Trade and Development unemployment 121–124, 183–185 unexpected shocks 108 United Kingdom (UK) Black Wednesday 16–17 bond yields, historical 202 canal mania 152 deregulation 132 exchange rate mechanism 16–17, 111 privatisation 132 quantitative easing 204–205 railway bubble 148, 152–153, 157, 163 South Sea Company 147, 151, 153 United Nations Conference on Trade and Development (UNCTAD) 129 United States (US) 10 year bond returns 43 Black Monday 16, 102, 148 bull markets 136 credit crunch 78–79, 170, 171 disinflation 132 dividends 38–39 Dow Jones 15–16, 131 equities in current cycle 207–208 housing bubble 70, 102, 118, 133, 145, 159 labour share of GDP 185, 238–239 market narrowing 114 NASDAQ 149–150, 161 ‘Nifty Fifty’ 114, 130–131, 233, 235 post-war boom 129–131 profit share of GDP 186 quantitative easing 133–134, 171, 202–204 radio manufacturing 154, 225 railway bubble 153–154, 160 stock market boom, 1920s 148, 154, 157, 160 vs.

The Levelling: What’s Next After Globalization
by Michael O’sullivan
Published 28 May 2019

We can take each option at a time, starting with infrastructure.19 In the period since 2011 the policy narrative has been dominated by the role of quantitative easing as a mechanism to support growth and raise inflation. It has succeeded in tranquilizing financial markets and lowering interest rates. But quantitative easing has not worked well in boosting economic potential. To be fair, the aim of quantitative easing has not been to change economic potential, but such has been the amplitude of quantitative easing and the power of central banks that many politicians appear comfortable in allowing central banks to underwrite risks.

…

If interest rates rise, as they are beginning to as of this writing, the burden of this debt will weigh down economic activity and fuel future crises. One cause of so much debt accumulation since the 2009 crisis is the monetary policy of “quantitative easing” (QE), that is, the buying of bonds and other securities by central banks, something that would have been unthinkable to earlier generations of central bankers. Quantitative easing is the financial equivalent of morphine, helping take pain away. Medicinal morphine is not supplied to patients on a continuous basis, and it is not known to cure cancer, heart disease, or other ailments.

…

Under this agreement, the world’s major central banks would agree—or rather, their political masters would agree for them—to use extraordinary measures like quantitative easing only in truly exceptional preset conditions of great market and economic stress. The effects would be that markets would properly price economic and political risks, politicians would therefore act to address those risks and fault lines, and, when extraordinary monetary policy needed to be launched, it would be more effective. By prohibiting quantitative easing or such extraordinary uses of the monetary toolbox (central banker speak for the many options they have invented to express their power), such a treaty would attune political leaders to the fact that the monetary comfort blanket could not be deployed against every threat and that governments would thus have to adopt a more proactive approach to avoiding and curing economic crises.

The Alchemists: Three Central Bankers and a World on Fire
by Neil Irwin
Published 4 Apr 2013

See Carney, Mark; King, Marvyn; Norman, Montagu Great Depression actions, 55, 60 imperialism, connection to, 10, 28–31 inflation, differing views of, 252–53 interest rate cuts (2009), 162–63 under Labour, limited powers, 234–35, 237–38, 242 location of, 30–31 MPC, King leadership of, 123, 239 MPC meetings, structure of, 239–40, 246 Northern Rock PLC crisis and bailout, 125–28 Osborne, new role proposed by, 247–48 Panic of 1866 bailout by, 27–28, 32–34 political independence, 121–22 quantitative easing (2009), 238–41 quantitative easing (QE2), 334–36, 340 Soros/Druckenmiller and devaluation of pound, 72–74 strong action, lack of, 138–39, 387–88 value of pound sterling (1992), 72 Bank of Greece, governor. See Provopoulos, George Bank of Japan, 86–94 Bernanke on, 84–85, 88–89 currency swaps with ECB (2011), 349–50 Hayami as governor, 87, 89–92 post–World War II power of, 86 quantitative easing by, 90–91, 255 zero-interest-rate policy, 87–88, 90–92 Bank of the Estates of the Realm, 24 Bank of the United States (1791), 37 Banque de France, 55, 115 Barclays, 154 Barker, Kate, 7, 122, 243, 247, 250 Barwell, Richard, 122 Bastasin, Carlo, 316–17 Bater, Jeff, 254 Bean, Charles, 97, 124, 142, 240–41 Bear Stearns bailout, 133–34, 139 collapse of, 132–33 Beck, Glenn, 256, 276 Beer Hall Putsch, 52–53 Benton, Thomas Hart, 38 Bérégovoy, Pierre, 77 Berlin Wall, end of, 76–77 Berlusconi, Silvio bombastic remarks of, 223, 299, 319–20 and ECB bailout conditions, 319–21, 346 successor to.

…

See Zhou Xiaochuan policymaking secrecy, 363–64, 373–74 Zhou reforms/programs, 369–73, 375–76 Perry, Rick, 327–28 Peston, Robert, 127 Peterson, Pete, 62 Pianalto, Sandra, 258 PIIGS nations, 213 Pimlott, Daniel, 249–50 Plosser, Charles, 192, 196, 258, 264, 275, 330, 332, 337, 385 Pooling, 74–75 Portugal financial crisis, 296–98 deficit reduction, 220, 353 ECB bond buying program, 287, 295 Posen, Adam, 247, 250, 252–53, 334, 337, 390 Powell, Jay, 385 Price increases. See also Inflation self-perpetuation of, 65–66, 134–35 Privatization Greece, 309–16 Italy, 319 Provopoulos, George, 201–2, 203, 215 Quantitative easing by Bank of England (2009), 238–41 by Bank of England (2011), 334–36, 340 by Bank of Japan (2000), 90–91, 255 by Fed (QE1), 263 by Fed, second round. See Quantitative easing (QE2) goals of, 238–39, 255 Quantitative easing (QE2), 255–80 Bernanke briefing in South Korea about, 273–74 economic rationale for, 259–61, 263–65, 267–70 effectiveness of, 279–80, 328 execution of purchase, 277–78 FOMC meeting on, 254–55, 274–76 goals of, 255, 374–75 implementation strategies, 272–73 negative reaction to, 256–58, 274, 275–76, 278–80, 328–29, 374–75 portfolio balance channel, 331 risks of, 267, 271–72, 274 Quantum Fund, 73 Rajan, Raghuram, 107–8 Rajoy, Mariano, 348 Ranieri, Lewis, 5 Raskin, Sarah Bloom, 275 Real estate prices.

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December 16—The Fed cuts its target interest rate to near zero and says it expects conditions will warrant “exceptionally low” rates for “some time.” 2009 March 5—The Bank of England slashes its target interest rate to 0.5 percent and announces £75 billion of bond purchases, or quantitative easing. March 9—Global stock markets reach their lowest levels in over a decade, with the Standard & Poor’s 500 off 57 percent from its 2007 peak. March 18—The Fed expands its own quantitative easing, to a total of $1.75 trillion in purchases of a variety of securities. March 24—Bernanke and Timothy Geithner, the treasury secretary and former New York Fed chief, are pilloried in a House committee hearing for bailing out AIG.

Currency Wars: The Making of the Next Gobal Crisis
by James Rickards
Published 10 Nov 2011

CHAPTER 6 Currency War III (2010–) “The purpose . . . is not to push the dollar down. This should not be regarded as some sort of chapter in a currency war.” Janet Yellen, Vice Chair of the Federal Reserve, commenting on quantitative easing, November 16, 2010 “Quantitative easing also works through exchange rates.... The Fed could engage in much more aggressive quantitative easing . . . to further lower . . . the dollar.” Christina D. Romer, former Chair of the Council of Economic Advisers, commenting on quantitative easing, February 27, 2011 Three supercurrencies—the dollar, the euro and the yuan—issued by the three largest economies in the world—the United States, the European Union and the People’s Republic of China—are the superpowers in a new currency war, Currency War III, which began in 2010 as a consequence of the 2007 depression and whose dimensions and consequences are just now coming into focus.

…

Like winners in many wars throughout history, the United States had a secret weapon. That financial weapon was what went by the ungainly name “quantitative easing,” or QE, which essentially consists of increasing the money supply to inflate asset prices. As in 1971, the United States was acting unilaterally to weaken the dollar through inflation. QE was a policy bomb dropped on the global economy in 2009, and its successor, promptly dubbed QE2, was dropped in late 2010. The impact on the world monetary system was swift and effective. By using quantitative easing to generate inflation abroad, the United States was increasing the cost structure of almost every major exporting nation and fast-growing emerging economy in the world all at once.

…

By buying intermediate-term debt, the Fed could provide lower interest rates for home buyers and corporate borrowers to hopefully stimulate more economic activity. At least, this was the conventional theory. In a globalized world, however, exchange rates act like a water-slide to move the effect of interest rates around quickly. Quantitative easing could be used by the Fed not just to ease financial conditions in the United States but also in China. It was the perfect currency war weapon and the Fed knew it. Quantitative easing worked because of the yuan-dollar peg maintained by the People’s Bank of China. As the Fed printed more money in its QE programs, much of that money found its way to China in the form of trade surpluses or hot money inflows looking for higher profits than were available in the United States.

The Price of Time: The Real Story of Interest
by Edward Chancellor
Published 15 Aug 2022

One of the explicit purposes of quantitative easing was to encourage Wall Street to take more risk. Investors who sold Treasury bonds and mortgage securities to the central bank were supposed to replenish their portfolios with higher-yielding securities (in Fedspeak, this was the ‘portfolio balance channel’). At the same time, ‘The Fed became possibly the biggest carry trader of all: its balance sheet is a huge carry trade with large holdings of yielding securities, such as Treasury securities and mortgage-backed securities, financed by very low-cost liabilities.’10 Central banking in the age of quantitative easing proved an extremely lucrative business.

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In the aftermath of Lehman’s bankruptcy, this ‘fear gauge’ climbed to a record high (just short of 90, roughly six times its average level). In the post-crisis years, market volatility collapsed, and the VIX remained lower for longer than ever before. Each of the Fed’s three rounds of quantitative easing took place at successively lower levels of stock market volatility.43 This was no coincidence. Quantitative easing, observed Kevin Warsh, a former member of the Fed’s Federal Open Market Committee, ‘works because we take volatility out of financial markets’.44 Dan Galai, the Israeli finance professor who created the VIX, suggested a link between ultra-low interest rates and ultra-low market volatility: ‘With so much liquidity in the market, it suppresses volatility,’ Galai mused as the VIX approached an all-time low in September 2017, ‘and that comes with interest rates [being] so low.

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Enoch, 290 Powell, Jerome, 262, 305, 310 Price, Richard, 8–9 price-stabilization policy of 1920s, 86, 87–91, 89, 92–4, 96–8, 108, 112, 120, 203; contemporary criticisms of, 87, 88, 90–91, 92, 97–8, 101; Hayek’s critique of, 92, 96, 96*, 101, 105, 108, 114, 133; rate cut after Long Island (1927), 83, 88, 92, 98; tightening (1928), 93, 94, 98, 108, 261 private equity firms, xxii, 162–3, 166, 204, 207, 223 ‘promoter’s profit’ concept, 158–9, 160, 161, 164 property markets: ‘Bank of Mum and Dad’, 212; booms in Spain and Ireland, 253; bubble in US before 2008 crisis, 112, 114, 115, 115†, 116, 117, 148, 191, 205; bubbles as red flags, 132, 135; bubbles in 1920s USA, 90, 93; bubbles in 1980s Japan, 106–7, 108; bubbles in post-crisis decade, 44, 173, 174–5; Chinese bubble, xxiii, 271, 272–4, 282, 288, 289; Fannie Mae and Freddie Mac, 292; ‘Generation Rent’ in UK, 212; housing affordability crisis in UK, 212–13; housing crisis in UK, 174; housing in ancient world, 15; importance of interest rates, 15, 44, 173, 174–5; inequality after 2008 crisis, 210–11, 212–13; mortgage equity withdrawal, 112–13, 191, 205; negative growth impact of building booms, 135–6, 144–5, 148; and negative interest rates, 174, 245; New York’s pencil towers, 209; post-2008 recovery in luxury real estate, 209–10, 212, 213; and quantitative easing, 292; skyscraper building in 1920s, 90; Turkish bubble bursts, 259–60; Xi’s ‘three red lines’, 310 protectionism, 261–2 Protestant Reformation, 26 Proudhon, Pierre-Joseph, xvii–xviii, xix, xxi, xxv, 9, 306 ‘public choice’ school, 286–7 Puerto Rico, 196 quantitative easing, 131*, 138, 236, 239–40, 263, 292; and ECB, 146, 241, 242; by Emperor Tiberius, 12; Fed’s rounds of, 175, 228, 238, 240; and international carry trade, 137; in Japan, 241, 242, 294; Law anticipates, xxii; and market volatility, 228, 237; the rich as chief beneficiaries of, 12*, 214, 215; timeline for adoption of, 241 Quarles, Francis, 172 Radio Corporation of America, 90 Rae, John, 30, 31 railways: in 1930s USA, 142–3; amalgamations in robber baron era, 157, 158, 159; in Argentina, 80, 80*; China’s high-speed network, 275; completion of US and European networks, 78; nineteenth-century manias, 70–72, 73–4 Rajan, Raghuram, 133, 134, 192, 205 Rand, Ayn, 110 rare earth elements, 173 Razak, Najib, 258 regulation of financial markets: after 2008 crisis, 227, 232, 292–4, 304; in ancient Near East, 9–10, 14, 24; Basel banking rules, 232; under Bretton Woods, 291; and causes of 2008 crisis, 114–15, 117; compliance staff, 232†; and interest rates, xxv; ‘macroprudential’ regulation, 232–3, 293; National Banking System in USA, 157; off-shore regulatory arbitrage, 65; ‘regulatory arbitrage’, 9–10, 14, 23–4, 65, 232–3 Renaissance, Italian, 21–4, 25 rent, xxiii*, 7, 15, 26, 31, 37, 212, 237, 299 Rifkin, Jeremy, The Zero Marginal Cost Society (2014), 127–8 Rigby, Edouard de, 56 risk: carry trading, 220–24, 227, 229, 233, 234, 236, 237–8; and central banks, 230–31; as central to capitalism, 220, 298; duration risk, 224–6; insurance underwriting, 219–20, 219†, 233; liquidity risk, 72–3, 75, 226–8, 304–5; measurement of, xxv, 139, 176–7, 218–19, 220–34; medieval Church acknowledges, 25–6; mispricing of, 176–7, 220, 222, 230–31; moral hazard, 75, 76, 136, 220, 226, 233, 284, 298; ‘portfolio balance channel’, 222; premiums, xxv, 12, 13, 14; ‘risk parity’ strategy, 229; and ultra-low interest rates, xxi, 52–61, 64–73, 77–81, 121–2, 135–9, 145, 149, 176–9, 220–34, 283, 285, 291–2; variety/types of, 219, 224–8; and volatility, 228–30, 233, 234, 254, 304, 305 Rist, Charles, 82, 83, 92 Robertson, Dennis, 97, 124, 311, 311* Robinhood Markets, 307 Robinson, Joan, 11 Robinson, William, 65 Rockefeller, John D., 157, 203 Rogoff, Kenneth, 235–6, 245, 294 Romania, 253 Rome, ancient, 9, 11, 12, 13, 13, 15, 25; attitudes to usury, 17–18, 20–21, 200, 219 Roosevelt, F.

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge
by Faisal Islam
Published 28 Aug 2013

‘They should know that Germany will resist this piece of advice, [because] mega-inflation is the nightmare consequence, the unavoidable consequence of printing money.’ British inflation has been by far the highest of the major European economies, and the Bank of England acknowledges that its quantitative easing policy has contributed. Europe had begun to notice Britain’s quantitative easing – but as an example to avoid, rather than to follow. Professor Werner’s view With no consensus among British economists about QE, who better to consult than the person who coined the term in the first place? Richard Werner, an expert on Japan, now of Southampton University, came up with the name in 1994.

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Europe was paralysed, given the choice between Germany’s ‘smallest loan possible, at the last possible moment’ strategy, and the collapse of its periphery. Elsewhere, in the USA and UK, central bankers had used quantitative-easing programmes to lower long-term interest rates by gobbling up their own government’s debt by the mountain-load. But the Eurozone was different. Only some smaller nations were in trouble, while the core nations were seeing their interest rates going down because of the crisis. It was like a spontaneous, naturally occurring quantitative easing for the rich Eurozone nations, caused by the collapse of the poorer ones. For many in Germany, this was the natural order of things – market discipline at work.

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And now in Britain, Europe and the USA, we are halfway through the CRUDER decade: Consistent Recession, Unemployment, Deleveraging Experiment and Realignment. This is why, as I write this, a new governor of the Bank of England is experimenting with radical alternatives for British economic policy. The old one, the inventor of the NICE concept, developed quantitative easing – opaque, little understood and rather redistributive, and yet in 2009 and 2012 it might have staved off depression. Abroad it was derided as a Weimar republic-style operation to fund a broke government. In Paris and Frankfurt the sense was that Britain and the USA were ‘cheating’, and would eventually pay for its accommodation of profligacy.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis
by Tim Lee , Jamie Lee and Kevin Coldiron
Published 13 Dec 2019

As previously mentioned, the dollar-funded carry trade at this new peak seemed to be in the magnitude of US$3 trillion in size. Despite the Bank of Japan’s adoption of quantitative easing policies and much talk in the financial markets about the yen carry trade, there was little evidence to suggest that the yen-funded carry trade had been resurrected back to its former heights. Instead, it seems likely that the European Central Bank’s conversion to the central bank trend of zero interest rates and quantitative easing promoted the development of a euro-funded carry trade during 2013 and 2014. Certainly, there was substantial growth in the net foreign assets of German, Dutch, and Spanish banks over this period, which provides strong circumstantial evidence of a growing euro-funded carry trade.

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This was mispricing of risk in the sense of socialization of risk: the famous “Heads I win; tails the taxpayer loses,” from the perspective of the financial speculator. The experimental monetary policies of central banks, their willingness to expand their balance sheets to support financial markets, from the Fed’s quantitative easing policies to the European Central Bank’s “whatever it takes” approach, sent a strong signal to speculators that central banks were standing behind them. As discussed in Chapter 6, the central bank’s quantitative easing is itself a giant carry trade; the central bank buys higher-yielding debt instruments and finances these purchases by issuing its own low- or zero-yielding liabilities—the high-powered money, of which it is the monopoly supplier.

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See also specific currencies alternative, 211 asset bases for, 211 availability of, 4 in carry regime, 108–113 creation of, 109 INDEX defining, 109 Divisia, 111 statistical measures of, 109 US household holdings of, 117, 117f VIX and value of, 100, 122 volatility and value of, 98–101, 122 money market funds, government guarantee for, 113 money supply, 20, 21 business cycle and, 125–126 carry crashes and, 122–123 monopoly power, 176 natural, 186 moral hazard central banks and, 195, 200 globalization of, 195–200 monetary policy and, 208 mortgage bubble, 36 movie stars, 184–186 multiple equilibria, 183 natural monopolies, 186 negative yields, 70 net claims Australia, 40, 40f currency carry trade measurement and, 41 Turkey, 43, 43f net foreign assets, 14, 16, 29 network effects, 185 New Zealand, interest rate spreads and, 60–61 New Zealand dollar, capital flows into, 62 nonbank financial sector, 137 nonmonetary assets carry bubbles and, 169 carry regime and, 112, 114, 122 Norway, sovereign wealth fund, 75 OECD (Organisation for Economic Co-operation and Development), 115 oil carry trade, 128–133, 132f oil prices, 129f, 131 oil producers, debt levels of, 130 “The Optimal Design of Ponzi Schemes in Finite Economies” (Bhattacharya), 142 optionality buying, 146 227 selling, 152, 153 volatility and, 93–95 options delta hedging, 149–151 delta of, 149 gamma of, 149–150 pricing of, 149 unhedged, 150 volatility and, 146–148 volatility bets with, 89 volatility implied by, 57 Organisation for Economic Co-operation and Development (OECD), 115 output gap, 125 Panic of 1907, 218 personal net worth, 137, 138f photosynthesis, 189 pi Economics, 27–29 Piketty, Thomas, 219 poker, 182–183 Polish zloty, 34 Ponzi schemes, 140–143 Pope, Alexander, 179 popularity, 181–182, 184 populist political movements, 1 portfolio insurance, 155 portfolio volatility, 159 power, carry as, 191–192 pricing kernel, 99 private equity leveraged buyouts, as carry trades, 78–80 productivity, 115 profit share, 82, 137, 138f, 139 proprietary trading, compensation incentives and, 77 public intellectuals, 186 put options, 34, 89 selling fully collateralized, 156n4 QE. See quantitative easing QE3, 101, 103 quantitative easing (QE), 101, 105, 127, 136, 196, 209, 219 BOJ and, 31 real economic activity, measures of, 56 real estate booms, currency carry trades contributing to, 13 228 realized volatility, 90, 164, 167–168 anti-carry regime and, 172 implied volatility relationship to, 158 recessions, carry and consequences of, 6 recipient currencies, 10–11, 13, 65 crashes in, 23 volatility in, 215 regulatory capture, 176 rent-seeking carry as, 175–177 defining, 175 reporting horizons, 70–71 reserve balances, 109–110 resource allocation, carry regime and, 114–115 return, risk and, 99 risk carry trade profit explanations and, 48 of carry trades, 3, 5 of CDOs, 36–37 currency, 12 exchange rate, 12–13 market, 99 mispricing of, 21, 35–37, 132, 134–140, 142 return and, 99 ruin, 65, 72 selling optionality and, 153 socialization of, 136 spreading, 35 risk controls, 65 risk premium, 148, 152 portfolio volatility and, 159 roll yield, 91 rubisco, 189 ruin risk, 65, 72 sawtooth patterns, 96–97, 97f shadow banks, 137 Shin, Hyun Song, 22, 80–81 short squeezes on liquidity, 165 short-term reporting horizons, 70–71 social hierarchies, 187 social networks, 187 social realities, 184 socialization of risk, 136 South Africa, 55n6 sovereign bonds, 162 equity indexes correlation to, 161 Sovereign Wealth Fund Institute, 75 INDEX sovereign wealth funds, 75–76 growth of, 83 S&P 500, 53–55, 55n6, 56, 95 carry regime importance of, 86–87, 87f as carry trade, 160–162 equity risk trade correlation with, 99 gamma for, 154, 154f liquidity premiums for, 161 market corrections and, 79 mean reversion of, 154f, 155 quantitative easing and, 103 selling volatility on, 98 volatility of, as global volatility risk factor, 99 volatility selling in, 89–92 volatility trading on, 85, 86 S&P 500 front e-mini future, 159 stagflation, 217 stochastic discount factor, 99 stock buybacks, 82, 83f stock market crashes, of 1987, 155 stock markets carry and structures of, 7 emerging currency stability compared with, 55 performance of, 1 recessions and crashes in, 6 volatility bets in, 89 stocks, put options against, 34 stopped out, 94 structured finance, 135 subprime mortgages, 36 superstar effects, 186 Swiss franc, 29, 31, 33, 34 taxi licensing, 175 Thai baht, 25 Thailand, balance of payments current account deficit, 25 Theron, Charlize, 185 trading frequency, 74 tulip bulbs, 133 Turkey, 19, 20, 23, 39, 202 balance of payments, 45 carry bubble and bust, 42–46 consumer price index, 44 credit and claims data for, 43, 43f GDP growth, 45 interest rates, 12–13 INDEX Turkish lira, 11, 13, 20, 21, 23, 44, 55n6 carry crash of 2018 in, 45, 65 Twitter, 186 uncovered interest rate parity (UIP), 47, 48 United States capital flows into, 18 carry trade funding and, 17–20 current account deficit, 17 personal net worth in, 137, 138f savings rates, 18, 19 US Federal Reserve, 14, 26 balance sheet of, 101–102 carry crashes limited by, 127 carry regimes and, 107, 208 carry trades by, 103 creation of, 218 interest rates and, 14, 137, 208 liquidity swaps by, 104–105, 196–198 quantitative easing and, 101, 105 US household financial assets, 117–120, 117f–120f valuation metrics, 204 vanishing point, 116, 195, 209–210 variance, 94 VIX, 85, 95, 99 forward curve average, 92, 92f money value and, 100, 122 shorting, 96 spikes in, 98 VIX futures, 90–92 selling volatility using, 156, 158 shorting, 148, 157 VIX futures rolldown, 59, 96 VIX index, 53n5 volatility, 3 currency, 62 currency carry trade collapse signs from, 215 direct bets on, 89 equilibrium structure of premiums for, 156–160, 157f equity, 59 financial crises and spikes in, 52 in funding currencies, 215 global, 99, 101 implied, 57, 90 market making as premium for, 158–159 229 negatively priced liquidity and, 166 optionality and, 93–95 options and, 146–148 portfolio, 159 realized, 90 in recipient currencies, 215 selling, as short position, 156 selling, by receiving implied and paying realized, 148–150 selling, by receiving realized and paying realized, 151–156 short, 4 signs of carry regime ending and, 214–218 spikes in, 98 time horizons of, 152, 153f, 154, 154f value of money and, 98–101, 122 of volatility, 90 volatility carry, 86 volatility selling, 86, 96 central banks and, 101–105 in S&P 500, 89–92 volatility shock, 161 volatility-selling trades, 33–35, 57, 69 Volcker Rule, 77 Volmageddon, 98, 161 VXO index, 53, 53n5, 54, 55n6, 90n2 VXX, 92 wealth distribution, carry and, 2 wealth inequality, central bank stabilization actions and, 6 “What Explains the Persistence of Global Imbalances?”

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead
by Alan S. Blinder
Published 24 Jan 2013

That said, the Fed did lose control of its balance sheet somewhat when it instituted “QE3” in September 2012. This brings us to . . . VARIETIES OF QUANTITATIVE EASING The Fed’s favorite unconventional weapon has been quantitative easing (QE), a term that encompasses a variety of ways to use the central bank’s balance sheet to improve financial conditions. Since the Fed has deployed this weapon multiple times and in several different ways, we need to spend a little time on it. Since quantitative easing can take many forms, table 9.1 offers a simple two-by-two taxonomy. Quantitative easing operations might alter either the composition of the central bank’s balance sheet (the left-hand column) or the size (the right-hand column).

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QE1, the Fed’s massive purchases of Fannie Mae and Freddie Mac bonds and MBS between late November 2008 and March 2010, was a much bigger deal, quantitatively. That’s when the term “quantitative easing,” a Japanese coinage, started to be used in the United States. But what we now call QE1 also included purchases of $300 billion worth of Treasuries (upper right cell). Like the CP program, the large-scale MBS purchases from 2008 to 2010 had a clear purpose: in this case, to reduce the spreads of MBS over Treasuries. And it worked. QE3 in late 2012 was essentially a repeat of the MBS part of QE1. QUANTITATIVE EASING A central bank normally eases monetary policy by reducing overnight interest rates—in the United States, that’s the federal funds rate.

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Never Again: Legacies of the Crisis Notes Sources Index LIST OF ACRONYMS AND ABBREVIATIONS ABCP: asset-backed commercial paper ABS: asset-backed securities AIG: American International Group AIG FP: AIG Financial Products AMLF: Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility ANPR: Advance Notice of Proposed Rulemaking ARM: adjustable-rate mortgage ARRA: American Reinvestment and Recovery Act (2009) BofA: Bank of America CBO: Congressional Budget Office CDO: collateralized debt obligation CDS: credit default swaps CEA: Council of Economic Advisers CEO: Chief Executive Officer CFMA: Commodity Futures Modernization Act (2000) CFPA: Consumer Financial Protection Agency CFPB: Consumer Financial Protection Bureau CFTC: Commodity Futures Trading Commission CME: Chicago Mercantile Exchange CP: commercial paper CPFF: Commercial Paper Funding Facility CPI: Consumer Price Index CPP: Capital Purchase Program DTI: debt (service)-to-income ratio ECB: European Central Bank EMH: efficient markets hypothesis ESF: Exchange Stabilization Fund FCIC: Financial Crisis Inquiry Commission FDIC: Federal Deposit Insurance Corporation FHA: Federal Housing Administration FHFA: Federal Housing Finance Agency FICO: Fair Isaac Company FOMC: Federal Open Market Committee FSA: Financial Services Authority (UK) FSLIC: Federal Savings and Loan Insurance Corporation FSOC: Financial Stability Oversight Council G7: Group of Seven (nations) GAAP: generally accepted accounting principles GAO: Government Accountability Office GDP: gross domestic product GLB: Gramm-Leach-Bliley Act (1999) GSE: government-sponsored enterprise H4H: Hope for Homeowners HAFA: Home Affordable Foreclosure Alternatives Program HAMP: Home Affordable Modification Program HARP: Home Affordable Refinancing Program HAUP: Home Affordable Unemployment Program HHF: Hardest Hit Fund HOLC: Home Owners’ Loan Corporation HUD: Department of Housing and Urban Development IMF: International Monetary Fund ISDA: International Swaps and Derivatives Association LIBOR: London Interbank Offer Rate LTCM: Long-Term Capital Management LTRO: Longer-Term Refinancing Operations LTV: loan-to-value (ratio) MBS: mortgage-backed securities MOM: my own money NBER: National Bureau of Economic Research NEC: National Economic Council NINJA (loans): no income, no jobs, and no assets NJTC: new jobs tax credit OCC: Office of the Comptroller of the Currency OFHEO: Office of Federal Housing Enterprise Oversight OMB: Office of Management and Budget OMT: Outright Monetary Transactions OPM: other people’s money OTC: over the counter OTS: Office of Thrift Supervision PDCF: Primary Dealer Credit Facility PIIGS: Portugal, Ireland, Italy, Greece, and Spain QE: quantitative easing Repo: repurchase agreement S&L: savings and loan association S&P: Standard and Poor’s SEC: Securities and Exchange Commission Section 13(3): of Federal Reserve Act SIFI: systemically important financial institution SIV: structured investment vehicle SPV: special purpose vehicle TAF: Term Auction Facility TALF: Term Asset-Backed Securities Loan Facility TARP: Troubled Assets Relief Program TBTF: too big to fail TED (spread): spread between LIBOR and Treasuries TIPS: Treasury Inflation-Protected Securities TLGP: Temporary Liquidity Guarantee Program TSLF: Term Securities Lending Facility UMP: unconventional monetary policy WaMu: Washington Mutual PREFACE When the music stops . . . things will be complicated.

The Joy of Tax
by Richard Murphy
Published 30 Sep 2015

Precisely because this is so easy, and partly also because commercial bankers wanted to protect their own right to create money, it is actually illegal for the Bank of England and other equivalent EU central banks to lend directly to the governments that own them, but this has been got round by quantitative easing. In the quantitative easing process the government issues a debt (or gilt, as they are called) to a commercial bank which is then purchased by a Bank of England subsidiary company specially created for the purpose and to which the Bank of England has lent the money (made out of thin air) to pay for the debt.

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There are two ways it can do this. The first is by running a deficit, i.e. spending more into the economy than it reclaims by tax, which then leaves money over in the economy, giving it a boost. The second is by quantitative easing. Both these processes can, of course, be reversed: governments can run surpluses (as happened in the UK from 1998 to 2001), and bonds purchased via the quantitative easing process could be resold to the financial markets. That said, in the worldwide history of QE no bonds have been resold to date; and the running of surpluses is very rare. Deficit funding is the normal form of fiscal policy.

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Many people seem to think this money-printing exercise an extraordinary idea, no doubt influenced by the fact that a lot of economists argue that money-printing should not happen because it will, in their opinion, always debase a country’s currency, with inflation running out of control as a consequence. Experience has, however, shown that this need not be the case. For example in the UK, where between March 2009 and July 2012 the Bank of England bought £375 billion of UK government debt in the London financial markets1 in an exercise technically described as quantitative easing but which did, in reality, print an exactly equivalent sum of new government-created money and yet in 2015 the UK has had zero per cent inflation. To put this figure in context: total UK government debt in March 2010 was £759 billion and by March 2013, when the programme had ended, it was a gross sum of £1,185 billion.2 So, over this period the government issued £426 billion of debt but during the same period the Bank of England – which is wholly owned by the UK government3 – repurchased £375 billion of government debt from those who owned it.

Money and Government: The Past and Future of Economics
by Robert Skidelsky
Published 13 Nov 2018

The Fiscal Crisis of the State 221 ii. The British Debate 225 ix C on t e n t s iii. Austerity: A Comparative Assessment 241 iv. Conclusion 244 Appendix 8.1: Monetary Financing of the Deficit 9. The New Monetarism 246 248 i. Pre-crash Monetary Orthodoxy 249 ii. Why Quantitative Easing? 253 iii. Quantitative Easing Programmes, 2008–16 256 iv. How was QE Meant to Work? 258 v. Assessment 263 vi. Conclusion 277 Appendix 9.1: A Note on Tim Congdon 10. Distribution as a Macroeconomic Problem 279 288 i. The Indifference of Mainstream Theory to Inequality 288 ii. The Microeconomics of Distribution 290 iii.

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Available at: http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/dcp171766_ 386187.pdf [Accessed 27 June 2017]. Joyce, M., Lasaosa, A., Stevens, I. and Tong, M. (2011a), The financial market impact of quantitative easing. International Journal of Central Banking, 7 (3), pp. 113–61. Joyce, M., Tong, M. and Woods, R. (2011b), The United Kingdom’s quantitative easing policy: design, operation and impact. Bank of England Quarterly Bulletin, Q3, pp. 200–212. Kaldor, N. (1966), Causes of the Slow Rate of Economic Growth of the United Kingdom. Cambridge: Cambridge University Press. Kaldor, N. (1970), The new monetarism.

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The main theme is that with fiscal policy quickly disabled by ballooning government debts, the task of stabilizing economic life fell to unconventional monetary policy. Chapter 8 examines the theory and practice of ‘fiscal consolidation’: the effort by governments to liquidate deficits and reduce national debts to restore ‘confidence’. Chapter 9 surveys the rationale, and limited success, of ‘quantitative easing’, the attempt by central banks to offset the deflationary effects of fiscal consolidation by injecting large amounts of money into the financial system. My broad conclusion is that the post-crash monetary–fiscal mix was successful in preventing the collapse of 2008–9 from turning into the rout of another Great Depression, but has not succeeded in restoring durable economic prosperity.

Crisis Economics: A Crash Course in the Future of Finance
by Nouriel Roubini and Stephen Mihm
Published 10 May 2010

Taylor, “Financial Instability, Reserves, and Central Bank Swap Lines in the Panic of 2008,” National Bureau of Economic Research Working Paper no. 14826, March 2009. 151 “quantitative easing”: Ben S. Bernanke, “The Crisis and the Policy Response,” Stamp Lecture, London School of Economics, London, January 13, 2009, online at http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm; Volker Wieland, “Quantitative Easing: A Rationale and Some Evidence from Japan,” National Bureau of Economic Research Working Paper no. 15565, December 2009; Paul Krugman, “Fiscal Aspects of Quantitative Easing (Wonkish),” online at http://krugman.blogs.nytimes.com/ 2009/03/20/ fiscal-aspects-of-quantitative-easing-wonkish/; and Chris Giles, Cynthia O’Murchu, Steve Bernard, and Jeremy Lemer, “Quantitative Easing Explained,” Financial Times, February 5, 2009, online at http://www.ft.com/cms/s/0/8ada2ad4-f3b9-11dd-9c4b-0000779fd2ac.html. 154 “some of the most esoteric components . . .”: John Carlson, Joseph G.

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It would also help drive down the costs of borrowing for corporations. The Federal Reserve was not alone in its use of quantitative easing. In Britain, the Bank of England was caught in a liquidity trap as well. It had cut its benchmark rates close to zero, the lowest since it was founded in 1694, and it had created liquidity facilities similar to those devised in the United States. But these moves failed to halt the prospect of debt deflation, and so in March 2009, in a bit of quantitative easing of its own, the Bank of England pledged to buy some £150 billion worth of government debt and corporate bonds.

…

At the end of 2008 they looked into the abyss and got religion. They started deploying all the weapons in their arsenal. Some tactics, like cutting interest rates, came from the standard playbook. But many others seemed to come from another world, and in some cases another era. To the uninitiated, the names of these tactics—“quantitative easing,” “capital injections,” “central bank swap lines”—defy definition. But these and many other unorthodox weapons came off the shelf and were mustered into battle. Some had been tried before; others had not. Some worked; some did not. Nonetheless, their collective effect arguably prevented the Great Recession from turning into another Great Depression.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth
by Michael Jacobs and Mariana Mazzucato
Published 31 Jul 2016

See also OECD Deflation Watch, http://www.oecdobserver.org/news/fullstory.php/aid/4807/Deflation_watch.html (accessed 19 April 2016). 18 Federal Reserve, http://www.federalreserve.gov/monetarypolicy/bst_crisisresponse.htm (accessed 19 April 2016); Bank of England, http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/qe_faqs.aspx (accessed 19 April 2016); Joyce and Spaltro, Quantitative Easing and Bank Lending; ECB, https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html (accessed 19 April 2016). 19 A. Blinder, ‘Quantitative easing: entrance and exit strategies’, Federal Reserve Bank of St. Louis Review, vol. 92, no. 6, November/December, 2010, pp. 465–79. 20 S. T. Fullwiler, ‘An endogenous money perspective on the post-crisis monetary policy debate’, Review of Keynesian Economics, vol. 1, no. 2, summer 2013, pp. 171–94. 21 Ibid. 22 B.

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The Failure of Austerity: Rethinking Fiscal Policy Introduction ‘Deficits saved the world’ The fiscal retreat and the monetary plunge A balanced budget or a balanced economy? Notes 3. Understanding Money and Macroeconomic Policy Introduction The orthodox view: exogenous money Endogenous money and modern money theory Money and monetary policy Quantitative easing Implications for the euro zone: the re-integration of money and fiscal policy Conclusion Notes 4. The Costs of Short-termism Introduction The literature on short-termism Empirical evidence of short-termism Policy implications Notes 5. Innovative Enterprise and the Theory of the Firm Introduction: what makes capitalism productive?

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Investment as a proportion of GDP had already been falling throughout the previous period of growth (see Figure 6). Since 2008 this has occurred despite the unprecedented persistence of near-zero real interest rates, bolstered in most of the major developed economies by successive rounds of ‘quantitative easing’, through which central banks have sought to increase the money supply and stimulate demand. Yet they have barely succeeded, as continuing low inflation rates have revealed. The decline in investment is also related to the marked ‘financialisation’ of the corporate sector. Over the past decade or so, an increasing percentage of corporate profits has been used for share buybacks and dividend payments rather than for reinvestment in productive capacity and innovation.

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank
by John Tamny
Published 30 Apr 2016

SIX Ben Bernanke’s Crony Credit SEVEN What the Supply-Siders and Hillary Clinton Sadly Have in Common EIGHT Why “Senator Warren Buffett” Would Be a Credit-Destroying Investor NINE The Credit Implications of the Fracking Boom TEN Conclusion: Sorry Keynesians and Supply-Siders, Government Is Always a Credit-Shrinking Tax PART TWO: BANKING ELEVEN NetJets Doesn’t Multiply Airplanes, and Banks Don’t Multiply Money and Credit TWELVE Good Businesses Never Run Out of Money, and Neither Do Well-Run Banks THIRTEEN Do We Even Need Banks? FOURTEEN The Housing Boom Was Not a Consequence of “Easy Credit” FIFTEEN Conclusion: Why Washington and Wall Street Are Better Off Living Apart PART THREE: THE FED SIXTEEN Baltimore and the Money Supply Myth SEVENTEEN Quantitative Easing Didn’t Stimulate the Economy, Nor Did It Create a Stock-Market Boom EIGHTEEN The Fed Has a Theory, and It Is 100 Percent Bogus NINETEEN Do We Really Need the Fed? TWENTY End the Fed? For Sure, But Don’t Expect Nirvana TWENTY-ONE Conclusion: The Robot Will Be the Biggest Job Creator in World History Notes Index FOREWORD Rob Arnott AS YOU READ this volume, prepare to be surprised.

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The Fed is no different. It can’t create credit as much as it can re-allocate it toward parts of the economy that it deems worthy. The problem is the Fed, like Congress, can’t do this effectively because there’s no market to discipline its failures. This truth will become even clearer in chapter 17, on “quantitative easing.” Some will reply that the Fed can create money out of thin air. While that is true, the creation of money is in no way the creation of credit. The two are entirely different. While the Fed’s ability to control or direct the supply of dollars is vastly overstated, the Fed could drop trillions of dollars from the sky, and no new credit would be created.

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Just as we don’t worry about where our shoes, socks, and T-shirts come from, it’s fair to say we needn’t worry about money either. So long as money has a legal, redeemable definition (and if it didn’t, markets would come up with a definition), let the markets provide the money supply much as they do so many other goods we desire. CHAPTER SEVENTEEN Quantitative Easing Didn’t Stimulate the Economy, Nor Did It Create a Stock-Market Boom You cannot step into the same river twice. —Heraclitus IN THE FALL OF 2014, the price of oil began to decline with great haste. While a barrel sold for more than $100 as recently as the summer of 2014, the price had fallen to $54 by December.

The Euro: How a Common Currency Threatens the Future of Europe
by Joseph E. Stiglitz and Alex Hyde-White
Published 24 Oct 2016

It focused exclusively on inflation—after all, that was its single mandate—and for a long time it continued to use as an indicator of its monetary stance (whether monetary policy was loose or tight) the rate of growth of the money supply, a holdover from the days when monetarism reigned king. QUANTITATIVE EASING When the Federal Reserve put interest rates down to zero—and still the economy did not recover—it felt it could and should do more. One idea was to purchase long-term bonds, driving down the long-term interest rates and providing more liquidity to the economy. This was called quantitative easing. The ECB was slow to introduce quantitative easing. It did so long after the United States, and even after Japan. Even as it undertook QE, the ECB may not have grasped why quantitative easing had such a limited effect in the United States—and why therefore the benefits would likely be still weaker in Europe.

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Rewriting the Rules of the American Economy. 11 There is no general theory that argues the optimal response to the higher oil price should be that the demand for all nontraded goods should be lowered so that a particular index, the weighted average price, should be unchanged. 12 Indeed, as we have noted elsewhere, the ECB, worried about inflation, actually increased interest rates twice in 2011. 13 See chapter 4 for a discussion of competitive devaluation. 14 See Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867–1960 (Princeton, NJ: Princeton University Press, 1963). 15 The rate itself was determined mechanically—the rate of growth of the real economy. 16 Japan began its quantitative easing in earnest in 2011, buying hundreds of billions of dollars’ worth of bonds since then. The United States’ quantitative easing, which was even larger (though not relative to the size of its economy), began in 2008 and eventually entailed buying trillions of dollars’ worth of bonds. The Bank of England’s somewhat smaller program ran from 2009 to 2012. The theory behind QE is discussed at greater length at the end of this chapter. 17 This presumes that the local banks have the capacity to lend.

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Africa, 10, 95, 381 globalization and, 51 aggregate demand, 98, 107, 111, 118–19, 189, 367 deflation and, 290 lowered by inequality, 212 surpluses and, 187, 253 tech bubble slump in, 250 as weakened by imports, 111 aggregate supply, 99, 104, 189 agricultural subsidies, 45, 197 agriculture, 89, 224, 346 airlines, 259 Akerlof, George, 132 American Express, 287 Apple, 81, 376 Argentina, 18, 100, 110, 117, 371 bailout of, 113 debt restructuring by, 205–6, 266, 267 Arrow-Debreu competitive equilibrium theory, 303 Asia, globalization and, 51 asset price bubbles, 172 Athens airport, 191, 367–68 austerity, xvi–xvii, 9, 18–19, 20, 21, 28–29, 54, 69–70, 95, 96, 98, 97, 103, 106, 140, 150, 178, 185–88, 206, 211, 235, 316–17 academics for, 208–13 debt restructuring and, 203–6 design of programs of, 188–90 Germany’s push for, 186, 232 government investment curtailed by, 217 opposition to, 59–62, 69–70, 207–8, 315, 332, 392 private, 126–27, 241–42 reform of, 263–65 Austria, 331, 343 automatic destabilizers, see built-in destabilizers automatic stabilizers, 142, 244, 247–48, 357 flexible exchange rate as, 248 bail-ins, 113 bailouts, 91–92, 111, 112–13, 201–3, 354, 362–63, 370 of banks, 127–28, 196, 279, 362–63 of East Asia, 202 of Latin America, 202 of Mexico, 202 of Portugal, 178–79 of Spanish banks, 179, 199–200, 206 see also programs balanced-budget multiplier, 188–90, 265 Balkans, 320 bank capital, 284–85 banking system, in US, 91 banking union, 129–30, 241–42, 248, 263 and common regulations, 241 and deposit insurance, 241, 242, 246 Bank of England, 359 inflation target of, 157 Bank of Italy, 158 bankruptcies, 77, 94, 102, 104, 346, 390 super–chapter 11 for, 259–60 banks, 198–201 bailouts of, 127–28, 196, 279, 362–63 capital requirements of, 152, 249 closing of, 378 credit creation by, 280–82 development, 137–38 evolution of, 386–87 forbearance of regulations on, 130–31 Greek, 200–201, 228–29, 231, 270, 276, 367, 368 lending contracted by, 126–27, 246, 282–84 money supply increased by, 277 restructuring of, 113 small, 171 in Spain, 23, 186, 199, 200, 242, 270, 354 too-big-to-fail, 360 bank transfers, 49 Barclays, 131 behavioral economics, 335 Belgium, 6, 331, 343 belief systems, 53 Berlin Wall, 6 Bernanke, Ben, 251, 351, 363, 381 bilateral investment agreement, 369 Bill of Rights, 319 bimetallic standard, 275, 277 Blanchard, Olivier, 211 bonds, 4, 114, 150, 363 confidence in, 127, 145 Draghi’s promise to support, 127, 200, 201 GDP-indexed, 267 inflation and, 161 long-term, 94 restructuring of, 159 bonds, corporate, ECB’s purchase of, 141 borrowing, excessive, 243 Brazil, 138, 370 bailout of, 113 bread, 218, 230 Bretton Woods monetary system, 32, 325 Brunnermeier, Markus K., 361 Bryan, William Jennings, xii bubbles, 249, 381 credit, 122–123 real estate, see real estate bubble stability threatened by, 264 stock market, 200–201 tech, 250 tools for controlling, 250 budget, capital, 245 Buffett, Warren, 287, 290 built-in destabilizers, 96, 142, 188, 244, 248, 357–58 common regulatory framework as, 241 Bulgaria, 46, 331 Bundesbank, 42 Bush, George W., 266 Camdessus, Michel, 314 campaign contributions, 195, 355 Canada, 96 early 1990s expansion of, 209 in NAFTA, xiv railroad privatization in, 55 tax system in, 191 US’s free trade with, 45–46, 47 capital, 76–77 bank, 284–85 human, 78, 137 return to, 388 societal vs. physical, 77–78 tax on, 356 unemployment increased by, 264 capital adequacy standards, 152 capital budget, 245 capital controls, 389–90 capital flight, 126–34, 217, 354, 359 austerity and, 140 and labor flows, 135 capital flows, 14, 15, 25, 26, 27–28, 40, 116, 125, 128, 131, 351 economic volatility exacerbated by, 28, 274 and foreign ownership, 195 and technology, 139 capital inflows, 110–11 capitalism: crises in, xviii, 148–49 inclusive, 317 capital requirements, 152, 249, 378 Caprio, Gerry, 387 capture, 158–60 carbon price, 230, 260, 265, 368 cash, 39 cash flow, 194 Catalonia, xi CDU party, 314 central banks, 59, 354, 387–88 balance sheets of, 386 capture of, 158–59 credit auctions by, 282–84 credit creation by, 277–78 expertise of, 363 independence of, 157–63 inequality created by, 154 inflation and, 153, 166–67 as lender of last resort, 85, 362 as political institutions, 160–62 regulations and, 153 stability and, 8 unemployment and, 8, 94, 97, 106, 147, 153 CEO compensation, 383 Chapter 11, 259–60, 291 childhood poverty, 72 Chile, 55, 152–53 China, 81, 98, 164, 319, 352 exchange-rate policy of, 251, 254, 350–51 global integration of, 49–50 low prices of, 251 rise of, 75 savings in, 257 trade surplus of, 118, 121, 350–52 wages controlled in, 254 as world’s largest economy, 318, 327 chits, 287–88, 290, 299–300, 387, 388–389 Citigroup, 355 climate change, 229–30, 251, 282, 319 Clinton, Bill, xiv, xv, 187 closing hours, 220 cloves, 230 cognitive capture, 159 Cohesion Fund, 243 Cold War, 6 collateral, 364 collective action, 41–44, 51–52 and inequality, 338 and stabilization, 246 collective bargaining, 221 collective goods, 40 Common Agricultural Policy, 338 common regulatory framework, 241 communism, 10 Community Reinvestment Act (CRA), 360, 382 comparative advantage, 12, 171 competition, 12 competitive devaluation, 104–6, 254 compromise, 22–23 confidence, 95, 200–201, 384 in banks, 127 in bonds, 145 and structural reforms, 232 and 2008 crisis, 280 confirmation bias, 309, 335 Congress, US, 319, 355 connected lending, 280 connectedness, 68–69 Connecticut, GDP of, 92 Constitutional Court, Greek, 198 consumption, 94, 278 consumption tax, 193–94 contract enforcement, 24 convergence, 13, 92–93, 124, 125, 139, 254, 300–301 convergence criteria, 15, 87, 89, 96–97, 99, 123, 244 copper mines, 55 corporate income tax, 189–90, 227 corporate taxes, 189–90, 227, 251 corporations, 323 regulations opposed by, xvi and shutdown of Greek banks, 229 corruption, 74, 112 privatization and, 194–95 Costa, António, 332 Council of Economic Advisers, 358 Council of State, Greek, 198 countercyclical fiscal policy, 244 counterfactuals, 80 Countrywide Financial, 91 credit, 276–85 “divorce”’s effect on, 278–79 excessive, 250, 274 credit auctions, 282–84 credit bubbles, 122–123 credit cards, 39, 49, 153 credit creation, 248–50, 277–78, 386 by banks, 280–82 domestic control over, 279–82 regulation of, 277–78 credit default swaps (CDSs), 159–60 crisis policy reforms, 262–67 austerity to growth, 263–65 debt restructuring and, 265–67 Croatia, 46, 331, 338 currency crises, 349 currency pegs, xii current account, 333–34 current account deficits, 19, 88, 108, 110, 120–121, 221, 294 and exit from euro, 273, 285–89 see also trade deficit Cyprus, 16, 30, 140, 177, 331, 386 capital controls in, 390 debt-to-GDP ratio of, 231 “haircut” of, 350, 367 Czech Republic, 46, 331 debit cards, 39, 49 debtors’ prison, 204 debt restructuring, 201, 203–6, 265–67, 290–92, 372, 390 of private debt, 291 debts, xx, 15, 93, 96, 183 corporate, 93–94 crisis in, 110–18 in deflation, xii and exit from eurozone, 273 with foreign currency, 115–18 household, 93–94 increase in, 18 inherited, 134 limits of, 42, 87, 122, 141, 346, 367 monetization of, 42 mutualization of, 242–43, 263 place-based, 134, 242 reprofiling of, 32 restructuring of, 259 debt-to-GDP ratio, 202, 210–11, 231, 266, 324 Declaration of Independence, 319 defaults, 102, 241, 338, 348 and debt mutualization, 243 deficit fetishism, 96 deficits, fiscal, xx, 15, 20, 93, 96, 106, 107–8, 122, 182, 384 and balanced-budget multiplier, 188–90, 265 constitutional amendment on, 339 and exit from euro, 273, 289–90 in Greece, 16, 186, 215, 233, 285–86, 289 limit of, 42, 87, 94–95, 122, 138, 141, 186, 243, 244, 265, 346, 367 primary, 188 problems financing, 110–12 structural, 245 deficits, trade, see trade deficits deflation, xii, 147, 148, 151, 166, 169, 277, 290 Delors, Jacques, 7, 332 democracy, lack of faith in, 312–14 Democracy in America (Tocqueville), xiii democratic deficit, 26–27, 35, 57–62, 145 democratic participation, xix Denmark, 45, 307, 313, 331 euro referendum of, 58 deposit insurance, 31, 44, 129, 199, 301, 354–55, 386–87 common in eurozone, 241, 242, 246, 248 derivatives, 131, 355 Deutsche Bank, 283, 355 devaluation, 98, 104–6, 254, 344 see also internal devaluation developing countries, and Washington Consensus, xvi discretion, 262–63 discriminatory lending practices, 283 disintermediation, 258 divergence, 15, 123, 124–44, 255–56, 300, 321 in absence of crisis, 128–31 capital flight and, 126–34 crisis policies’ exacerbation of, 140–43 free mobility of labor and, 134–36, 142–44, 242 in public investment, 136–38 reforms to prevent, 243 single-market principle and, 125–26 in technology, 138–39 in wealth, 139–40 see also capital flows; labor movement diversification, of production, 47 Dodd-Frank Wall Street Reform and Consumer Protection Act, 355 dollar peg, 50 downsizing, 133 Draghi, Mario, 127, 145, 156, 158, 165, 269, 363 bond market supported by, 127, 200, 201 Drago, Luis María, 371 drug prices, 219 Duisenberg, Willem Frederik “Wim,” 251 Dynamic Stochastic Equilibrium model, 331 East Asia, 18, 25, 95, 102–3, 112, 123, 202, 364, 381 convergence in, 138 Eastern Europe, 10 Economic Adjustment Programme, 178 economic distortions, 191 economic growth, xii, 34 confidence and, 232 in Europe, 63–64, 69, 73–74, 74, 75, 163 lowered by inequality, 212–13 reform of, 263–65 and structural reforms, 232–35 economic integration, xiv–xx, 23, 39–50 euro and, 46–47 political integration vs., 51–57 single currency and, 45–46 economic rents, 226, 280 economics, politics and, 308–18 economic security, 68 economies of scale, 12, 39, 55, 138 economists, poor forecasting by, 307 education, 20, 76, 344 investment in, 40, 69, 137, 186, 211, 217, 251, 255, 300 electricity, 217 electronic currency, 298–99, 389 electronics payment mechanism, 274–76, 283–84 emigration, 4, 68–69 see also migration employment: central banks and, 8, 94, 97 structural reforms and, 257–60 see also unemployment Employment Act (1946), 148 energy subsidies, 197 Enlightenment, 3, 318–19 environment, 41, 257, 260, 323 equality, 225–26 equilibrium, xviii–xix Erasmus program, 45 Estonia, 90, 331, 346 euro, xiv, 325 adjustments impeded by, 13–14 case for, 35–39 creation of, xii, 5–6, 7, 10, 333 creation of institutions required by, 10–11 divergence and, see divergence divorce of, 272–95, 307 economic integration and, 46–47, 268 as entailing fixed exchange rate, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 143, 193, 215–16, 240, 244, 249, 252, 254, 286, 297 as entailing single interest rate, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 and European identification, 38–39 financial instability caused by, 131–32 growth promised by, 235 growth slowed by, 73 hopes for, 34 inequality increased by, xviii interest rates lowered by, 235 internal devaluation of, see internal devaluation literature on, 327–28 as means to end, xix peace and, 38 proponents of, 13 referenda on, 58, 339–40 reforms needed for, xii–xiii, 28–31 risk of, 49–50 weakness of, 224 see also flexible euro Eurobond, 356 euro crisis, xiii, 3, 4, 9 catastrophic consequences of, 11–12 euro-euphoria, 116–17 Europe, 151 free trade area in, 44–45 growth rates in, 63–64, 69, 73–74, 74, 75, 163 military conflicts in, 196 social models of, 21 European Central Bank (ECB), 7, 17, 80, 112–13, 117, 144, 145–73, 274, 313, 362, 368, 380 capture of, 158–59 confidence in, 200–201 corporate bonds bought by, 141 creation of, 8, 85 democratic deficit and, 26, 27 excessive expansion controlled by, 250 flexibility of, 269 funds to Greece cut off by, 59 German challenges to, 117, 164 governance and, 157–63 inequality created by, 154–55 inflation controlled by, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 250, 256, 266 interest rates set by, 85–86, 152, 249, 302, 348 Ireland forced to socialize losses by, 134, 156, 165 new mandate needed by, 256 as political institution, 160–62 political nature of, 153–56 quantitative easing opposed by, 151 quantitative easing undertaken by, 164, 165–66, 170, 171 regulations by, 249, 250 unemployment and, 163 as unrepresentative, 163 European Commission, 17, 58, 161, 313, 332 European Court of Human Rights, 45 European Economic Community (EEC), 6 European Exchange Rate Mechanism (ERM), 30, 335 European Exchange Rate Mechanism II (ERM II), 336 European Free Trade Association, 44 European Free Trade Association Court, 44 European Investment Bank (EIB), 137, 247, 255, 301 European Regional Development Fund, 243 European Stability Mechanism, 23, 246, 357 European Union: budget of, 8, 45, 91 creation of, 4 debt and deficit limits in, 87–88 democratic deficit in, 26–27 economic growth in, 215 GDP of, xiii and lower rates of war, 196 migration in, 90 proposed exit of UK from, 4 stereotypes in, 12 subsidiarity in, 8, 41–42, 263 taxes in, 8, 261 Euro Summit Statement, 373 eurozone: austerity in, see austerity banking union in, see banking union counterfactual in, 235–36 double-dip recessions in, 234–35 Draghi’s speech and, 145 economic integration and, xiv–xx, 23, 39–50, 51–57 as flawed at birth, 7–9 framework for stability of, 244–52 German departure from, 32, 292–93 Greece’s possible exit from, 124 hours worked in, 71–72 lack of fiscal policy in, 152 and move to political integration, xvi, 34, 35, 51–57 Mundell’s work on dangers of, 87 policies of, 15–17 possible breakup of, 29–30 privatization avoided in, 194 saving, 323–26 stagnant GDP in, 12, 65–68, 66, 67 structure of, 8–9 surpluses in, 120–22 theory of, 95–97 unemployment in, 71, 135, 163, 177–78, 181, 331 working-age population of, 70 eurozone, proposed structural reforms for, 239–71 common financial system, see banking union excessive fiscal responsibility, 163 exchange-rate risks, 13, 47, 48, 49–50, 125, 235 exchange rates, 80, 85, 288, 300, 338, 382, 389 of China, 251, 254, 350–51 and competitive devaluation, 105–6 after departure of northern countries, 292–93 of euro, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 215–16, 240, 244, 249, 252, 254, 286, 297 flexible, 50, 248, 349 and full employment, 94 of Germany, 254–55, 351 gold and, 344–45 imports and, 86 interest rates and, 86 quantitative easing’s lowering of, 151 real, 105–6 and single currencies, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 stabilizing, 299–301 and trade deficits, 107, 118 expansionary contractions, 95–96, 208–9 exports, 86, 88, 97–99, 98 disappointing performance of, 103–5 external imbalances, 97–98, 101, 109 externalities, 42–43, 121, 153, 301–2 surpluses as, 253 extremism, xx, 4 Fannie Mae, 91 farmers, US, in deflation, xii Federal Deposit Insurance Corporation (FDIC), 91 Federal Reserve, US, 349 alleged independence of, 157 interest rates lowered by, 150 mandate of, 8, 147, 172 money pumped into economy by, 278 quantitative easing used by, 151, 170 reform of, 146 fiat currency, 148, 275 and taxes, 284 financial markets: lobbyists from, 132 reform of, 214, 228–29 short-sighted, 112–13 financial systems: necessity of, xix real economy of, 149 reform of, 257–58 regulations needed by, xix financial transaction system, 275–76 Finland, 16, 81, 122, 126, 292, 296, 331, 343 growth in, 296–97 growth rate of, 75, 76, 234–35 fire departments, 41 firms, 138, 186–87, 245, 248 fiscal balance: and cutting spending, 196–98 tax revenue and, 190–96 Fiscal Compact, 141, 357 fiscal consolidation, 310 fiscal deficits, see deficits, fiscal fiscal policy, 148, 245, 264 in center of macro-stabilization, 251 countercyclical, 244 in EU, 8 expansionary, 254–55 stabilization of, 250–52 fiscal prudence, 15 fiscal responsibility, 163 flexibility, 262–63, 269 flexible euro, 30–31, 272, 296–305, 307 cooperation needed for, 304–5 food prices, 169 forbearance, 130–31 forecasts, 307 foreclosure proposal, 180 foreign ownership, privatization and, 195 forestry, 81 France, 6, 14, 16, 114, 120, 141, 181–82, 331, 339–40, 343 banks of, 202, 203, 231, 373 corporate income tax in, 189–90 euro creation regretted in, 340 European Constitution referendum of, 58 extreme right in, xi growth in, 247 Freddie Mac, 91 Freefall (Stiglitz), 264, 335 free mobility of labor, xiv, 26, 40, 125, 134–36, 142–44, 242 Friedman, Milton, 151, 152–53, 167, 339 full employment, 94–97, 379 G-20, 121 gas: import of, 230 from Russia, 37, 81, 93 Gates Foundation, 276 GDP-indexed bonds, 267 German bonds, 114, 323 German Council of Economic Experts, 179, 365 Germany, xxi, 14, 30, 65, 108, 114, 141, 181–82, 207, 220, 286, 307, 331, 343, 346, 374 austerity pushed by, 186, 232 banks of, 202, 203, 231–32, 373 costs to taxpayers of, 184 as creditor, 140, 187, 267 debt collection by, 117 debt in, 105 and debt restructuring, 205, 311 in departure from eurozone, 32, 292–93 as dependent on Russian gas, 37 desire to leave eurozone, 314 ECB criticized by, 164 EU economic practices controlled by, 17 euro creation regretted in, 340 exchange rate of, 254–55, 351 failure of, 13, 78–79 flexible exchange of, 304 GDP of, xviii, 92 in Great Depression, 187 growing poverty in, 79 growth of, 78, 106, 247 hours worked per worker in, 72 inequality in, 79, 333 inflation in, 42, 338, 358 internal solidarity of, 334 lack of alternative to euro seen by, 11 migrants to, 320–21, 334–35, 393 minimum wage in, 42, 120, 254 neoliberalism in, 10 and place-based debt, 136 productivity in, 71 programs designed by, 53, 60, 61, 202, 336, 338 reparations paid by, 187 reunification of, 6 rules as important to, 57, 241–42, 262 share of global employment in, 224 shrinking working-age population of, 70, 78–79 and Stability and Growth Pact, 245 and structural reforms, 19–20 “there is no alternative” and, 306, 311–12 trade surplus of, 117, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 “transfer union” rejected by, 22 US loans to, 187 victims blamed by, 9, 15–17, 177–78, 309 wages constrained by, 41, 42–43 wages lowered in, 105, 333 global financial crisis, xi, xiii–xiv, 3, 12, 17, 24, 67, 73, 75, 114, 124, 146, 148, 274, 364, 387 and central bank independence, 157–58 and confidence, 280 and cost of failure of financial institutions, 131 lessons of, 249 monetary policy in, 151 and need for structural reform, 214 originating in US, 65, 68, 79–80, 112, 128, 296, 302 globalization, 51, 321–23 and diminishing share of employment in advanced countries, 224 economic vs. political, xvii failures of, xvii Globalization and Its Discontents (Stig-litz), 234, 335, 369 global savings glut, 257 global secular stagnation, 120 global warming, 229–30, 251, 282, 319 gold, 257, 275, 277, 345 Goldman Sachs, 158, 366 gold standard, 148, 291, 347, 358 in Great Depression, xii, 100 goods: free movement of, 40, 143, 260–61 nontraded, 102, 103, 169, 213, 217, 359 traded, 102, 103, 216 Gordon, Robert, 251 governance, 157–63, 258–59 government spending, trade deficits and, 107–8 gravity principle, 124, 127–28 Great Depression, 42, 67, 105, 148, 149, 168, 313 Friedman on causes of, 151 gold standard in, xii, 100 Great Malaise, 264 Greece, 14, 30, 41, 64, 81, 100, 117, 123, 142, 160, 177, 265–66, 278, 307, 331, 343, 366, 367–68, 374–75, 386 austerity opposed by, 59, 60–62, 69–70, 207–8, 392 balance of payments, 219 banks in, 200–201, 228–29, 231, 270, 276, 367, 368 blaming of, 16, 17 bread in, 218, 230 capital controls in, 390 consumption tax and, 193–94 counterfactual scenario of, 80 current account surplus of, 287–88 and debt restructuring, 205–7 debt-to-GDP ratio of, 231 debt write-offs in, 291 decline in labor costs in, 56, 103 ECB’s cutting of funds to, 59 economic growth in, 215, 247 emigration from, 68–69 fiscal deficits in, 16, 186, 215, 233, 285–86, 289 GDP of, xviii, 183, 309 hours worked per worker in, 72 inequality in, 72 inherited debt in, 134 lack of faith in democracy in, 312–13 living standards in, 216 loans in, 127 loans to, 310 migrants and, 320–21 milk in, 218, 223, 230 new currency in, 291, 300 oligarchs in, 16, 227 output per working-age person in, 70–71 past downturns in, 235–36 pensions in, 16, 78, 188, 197–98, 226 pharmacies in, 218–20 population decline in, 69, 89 possible exit from eurozone of, 124, 197, 273, 274, 275 poverty in, 226, 261, 376 primary surplus of, 187–88, 312 privatization in, 55, 195–96 productivity in, 71, 342 programs imposed on, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 renewable energy in, 193, 229 social capital destroyed in, 78 sovereign spread of, 200 spread in, 332 and structural reforms, 20, 70, 188, 191 tax revenue in, 16, 142, 192, 227, 367–368 tools lacking for recovery of, 246 tourism in, 192, 286 trade deficits in, 81, 194, 216–17, 222, 285–86 unemployment in, xi, 71, 236, 267, 332, 338, 342 urgency in, 214–15 victim-blaming of, 309–11 wages in, 216–17 youth unemployment in, xi, 332 Greek bonds, 116, 126 interest rates on, 4, 114, 181–82, 201–2, 323 restructuring of, 206–7 green investments, 260 Greenspan, Alan, 251, 359, 363 Grexit, see Greece, possible exit from eurozone of grocery stores, 219 gross domestic product (GDP), xvii decline in, 3 measurement of, 341 Growth and Stability Pact, 87 hedge funds, 282, 363 highways, 41 Hitler, Adolf, 338, 358 Hochtief, 367–68 Hoover, Herbert, 18, 95 human capital, 78, 137 human rights, 44–45, 319 Hungary, 46, 331, 338 hysteresis, 270 Iceland, 44, 111, 307, 354–55 banks in, 91 capital controls in, 390 ideology, 308–9, 315–18 imports, 86, 88, 97–99, 98, 107 incentives, 158–59 inclusive capitalism, 317 income, unemployment and, 77 income tax, 45 Independent Commission for the Reform of International Corporate Taxation, 376–377 Indonesia, 113, 230–31, 314, 350, 364, 378 industrial policies, 138–39, 301 and restructuring, 217, 221, 223–25 Industrial Revolution, 3, 224 industry, 89 inequality, 45, 72–73, 333 aggregate demand lowered by, 212 created by central banks, 154 ECB’s creation of, 154–55 economic performance affected by, xvii euro’s increasing of, xviii growth’s lowering of, 212 hurt by collective action, 338 increased by neoliberalism, xviii increase in, 64, 154–55 inequality in, 72, 212 as moral issue, xviii in Spain, 72, 212, 225–26 and tax harmonization, 260–61 and tax system, 191 inflation, 277, 290, 314, 388 in aftermath of tech bubble, 251 bonds and, 161 central banks and, 153, 166–67 consequences of fixation on, 149–50, 151 costs of, 270 and debt monetization, 42 ECB and, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 255, 256, 266 and food prices, 169 in Germany, 42, 338, 358 interest rates and, 43–44 in late 1970s, 168 and natural rate hypothesis, 172–73 political decisions and, 146 inflation targeting, 157, 168–70, 364 information, 335 informational capital, 77 infrastructure, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 inheritance tax, 368 inherited debt, 134 innovation, 138 innovation economy, 317–18 inputs, 217 instability, xix institutions, 93, 247 poorly designed, 163–64 insurance, 355–356 deposit, see deposit insurance mutual, 247 unemployment, 91, 186, 246, 247–48 integration, 322 interest rates, 43–44, 86, 282, 345, 354 in aftermath of tech bubble, 251 ECB’s determination of, 85–86, 152, 249, 302, 348 and employment, 94 euro’s lowering of, 235 Fed’s lowering of, 150 on German bonds, 114 on Greek bonds, 4, 114, 181–82 on Italian bonds, 114 in late 1970s, 168 long-term, 151, 200 negative, 316, 348–49 quantitative easing and, 151, 170 short-term, 249 single, eurozone’s entailing of, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 on Spanish bonds, 114, 199 spread in, 332 stock prices increased by, 264 at zero lower bound, 106 intermediation, 258 internal devaluation, 98–109, 122, 126, 220, 255, 388 supply-side effects of, 99, 103–4 International Commission on the Measurement of Economic Performance and Social Progress, 79, 341 International Labor Organization, 56 International Monetary Fund (IMF), xv, xvii, 10, 17, 18, 55, 61, 65–66, 96, 111, 112–13, 115–16, 119, 154, 234, 289, 309, 316, 337, 349, 350, 370, 371, 381 and Argentine debt, 206 conditions of, 201 creation of, 105 danger of high taxation warnings of, 190 debt reduction pushed by, 95 and debt restructuring, 205, 311 and failure to restore credit, 201 global imbalances discussed by, 252 and Greek debts, 205, 206, 310–11 on Greek surplus, 188 and Indonesian crisis, 230–31, 364 on inequality’s lowering of growth, 212–13 Ireland’s socialization of losses opposed by, 156–57 mistakes admitted by, 262, 312 on New Mediocre, 264 Portuguese bailout of, 178–79 tax measures of, 185 investment, 76–77, 111, 189, 217, 251, 264, 278, 367 confidence and, 94 divergence in, 136–38 in education, 137, 186, 211, 217, 251, 255, 300 infrastructure in, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 lowered by disintermediation, 258 public, 99 real estate, 199 in renewable energy, 229–30 return on, 186, 245 stimulation of, 94 in technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 investor state dispute settlement (ISDS), 393–94 invisible hand, xviii Iraq, refugees from, 320 Iraq War, 36, 37 Ireland, 14, 16, 44, 113, 114–15, 122, 178, 234, 296, 312, 331, 339–40, 343, 362 austerity opposed in, 207 debt of, 196 emigrants from, 68–69 GDP of, 18, 231 growth in, 64, 231, 247, 340 inherited debt in, 134 losses socialized in, 134, 156–57, 165 low debt in, 88 real estate bubble in, 108, 114–15, 126 surplus in, 17, 88 taxes in, 142–43, 376 trade deficits in, 119 unemployment in, 178 irrational exuberance, 14, 114, 116–17, 149, 334, 359 ISIS, 319 Italian bonds, 114, 165, 323 Italy, 6, 14, 16, 120, 125, 331, 343 austerity opposed in, 59 GDP per capita in, 352 growth in, 247 sovereign spread of, 200 Japan, 151, 333, 342 bubble in, 359 debt of, 202 growth in, 78 quantitative easing used by, 151, 359 shrinking working-age population of, 70 Java, unemployment on, 230 jobs gap, 120 Juncker, Jean-Claude, 228 Keynes, John Maynard, 118, 120, 172, 187, 351 convergence policy suggested by, 254 Keynesian economics, 64, 95, 108, 153, 253 King, Mervyn, 390 knowledge, 137, 138–39, 337–38 Kohl, Helmut, 6–7, 337 krona, 287 labor, marginal product of, 356 labor laws, 75 labor markets, 9, 74 friction in, 336 reforms of, 214, 221 labor movement, 26, 40, 125, 134–36, 320 austerity and, 140 capital flows and, 135 see also migration labor rights, 56 Lamers, Karl, 314 Lancaster, Kelvin, 27 land tax, 191 Latin America, 10, 55, 95, 112, 202 lost decade in, 168 Latvia, 331, 346 GDP of, 92 law of diminishing returns, 40 learning by doing, 77 Lehman Brothers, 182 lender of last resort, 85, 362, 368 lending, 280, 380 discriminatory, 283 predatory, 274, 310 lending rates, 278 leverage, 102 Lichtenstein, 44 Lipsey, Richard, 27 liquidity, 201, 264, 278, 354 ECB’s expansion of, 256 lira, 14 Lithuania, 331 living standards, 68–70 loans: contraction of, 126–27, 246 nonperforming, 241 for small and medium-size businesses, 246–47 lobbyists, from financial sector, 132 location, 76 London interbank lending rate (LIBOR), 131, 355 Long-Term Refinancing Operation, 360–361 Lucas, Robert, xi Luxembourg, 6, 94, 142–43, 331, 343 as tax avoidance center, 228, 261 luxury cars, 265 Maastricht Treaty, xiii, 6, 87, 115, 146, 244, 298, 339, 340 macro-prudential regulations, 249 Malta, 331, 340 manufacturing, 89, 223–24 market failures, 48–49, 86, 148, 149, 335 rigidities, 101 tax policy’s correction of, 193 market fundamentalism, see neoliberalism market irrationality, 110, 125–26, 149 markets, limitations of, 10 Meade, James, 27 Medicaid, 91 medical care, 196 Medicare, 90, 91 Mellon, Andrew, 95 Memorandum of Agreement, 233–34 Merkel, Angela, 186 Mexico, 202, 369 bailout of, 113 in NAFTA, xiv Middle East, 321 migrant crisis, 44 migration, 26, 40, 68–69, 90, 125, 320–21, 334–35, 342, 356, 393 unemployment and, 69, 90, 135, 140 see also labor movement military power, 36–37 milk, 218, 223, 230 minimum wage, 42, 120, 254, 255, 351 mining, 257 Mississippi, GDP of, 92 Mitsotakis, Constantine, 377–78 Mitsotakis, Kyriakos, 377–78 Mitterrand, François, 6–7 monetarism, 167–68, 169, 364 monetary policy, 24, 85–86, 148, 264, 325, 345, 364 as allegedly technocratic, 146, 161–62 conservative theory of, 151, 153 in early 1980s US, 168, 210 flexibility of, 244 in global financial crisis, 151 political nature of, 146, 153–54 recent developments in theory of, 166–73 see also interest rates monetary union, see single currencies money laundering, 354 monopolists, privatization and, 194 moral hazard, 202, 203 mortgage rates, 170 mortgages, 302 multinational chains, 219 multinational development banks, 137 multinationals, 127, 223, 376 multipliers, 211–12, 248 balanced-budget, 188–90, 265 Mundell, Robert, 87 mutual insurance, 247 mutualization of debt, 242–43, 263 national development banks, 137–38 natural monopolies, 55 natural rate hypothesis, 172 negative shocks, 248 neoliberalism, xvi, 24–26, 33, 34, 98–99, 109, 257, 265, 332–33, 335, 354 on bubbles, 381 and capital flows, 28 and central bank independence, 162–63 in Germany, 10 inequality increased by, xviii low inflation desired by, 147 recent scholarship against, 24 Netherlands, 6, 44, 292, 331, 339–40, 343 European Constitution referendum of, 58 New Democracy Party, Greek, 61, 185, 377–78 New Mediocre, 264 New World, 148 New Zealand, 364 Nokia, 81, 234, 297 nonaccelerating inflation rate of unemployment (NAIRU), 379–80 nonaccelerating wage rate of unemployment (NAWRU), 379–80 nongovernmental organizations (NGOs), 276 nonperforming loans, 241 nontraded goods sector, 102, 103, 169, 213, 217, 359 North American Free Trade Agreement (NAFTA), xiv North Atlantic Treaty Organization (NATO), 196 Norway, 12, 44, 307 referendum on joining EU, 58 nuclear deterrence, 38 Obama, Barack, 319 oil, import of, 230 oil firms, 36 oil prices, 89, 168, 259, 359 oligarchs: in Greece, 16, 227 in Russia, 280 optimal currency area, 345 output, 70–71, 111 after recessions, 76 Outright Monetary Transactions program, 361 overregulate, 132 Oxfam, 72 panic of 1907, 147 Papandreou, Andreas, 366 Papandreou, George, xiv, 60–61, 184, 185, 220, 221, 226–27, 309, 312, 366, 373 reform of banks suggested by, 229 paradox of thrift, 120 peace, 34 pensions, 9, 16, 78, 177, 188, 197–98, 226, 276, 370 People’s Party, Portugal, 392 periphery, 14, 32, 171, 200, 296, 301, 318 see also specific countries peseta, 14 pharmacies, 218–20 Phishing for Phools (Akerlof and Shiller), 132 physical capital, 77–78 Pinochet, Augusto, 152–53 place-based debt, 134, 242 Pleios, George, 377 Poland, 46, 333, 339 assistance to, 243 in Iraq War, 37 police, 41 political integration, xvi, 34, 35 economic integration vs., 51–57 politics, economics and, 308–18 pollution, 260 populism, xx Portugal, 14, 16, 64, 177, 178, 331, 343, 346 austerity opposed by, 59, 207–8, 315, 332, 392 GDP of, 92 IMF bailout of, 178–79 loans in, 127 poverty in, 261 sovereign spread of, 200 Portuguese bonds, 179 POSCO, 55 pound, 287, 335, 346 poverty, 72 in Greece, 226, 261 in Portugal, 261 in Spain, 261 predatory lending, 274, 310 present discount value, 343 Price of Inequality, The (Stiglitz), 154 prices, 19, 24 adjustment of, 48, 338, 361 price stability, 161 primary deficit, 188, 389 primary surpluses, 187–88 private austerity, 126–27, 241–42 private sector involvement, 113 privatization, 55, 194–96, 369 production costs, 39, 43, 50 production function, 343 productivity, 71, 332, 348 in manufacturing, 223–24 after recessions, 76–77 programs, 17–18 Germany’s design of, 53, 60, 61, 187–88, 205, 336, 338 imposed on Greece, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 of Troika, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 202, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 346, 366, 379, 392 progressive automatic stabilizers, 244 progressive taxes, 248 property rights, 24 property taxes, 192–93, 227 public entities, 195 public goods, 40, 337–38 quantitative easing (QE), 151, 164, 165–66, 170–72, 264, 359, 361, 386 railroads, 55 Reagan, Ronald, 168, 209 real estate bubble, 25, 108, 109, 111, 114–15, 126, 148, 172, 250, 301, 302 cause of, 198 real estate investment, 199 real exchange rate, 105–6, 215–16 recessions, recovery from, 94–95 recovery, 76 reform, 75 theories of, 27–28 regulations, 24, 149, 152, 162, 250, 354, 355–356, 378 and Bush administration, 250–51 common, 241 corporate opposition to, xvi difficulties in, 132–33 of finance, xix forbearance on, 130–31 importance of, 152–53 macro-prudential, 249 in race to bottom, 131–34 Reinhardt, Carmen, 210 renewable energy, 193, 229–30 Republican Party, US, 319 research and development (R&D), 77, 138, 217, 251, 317–18 Ricardo, David, 40, 41 risk, 104, 153, 285 excessive, 250 risk markets, 27 Rogoff, Kenneth, 210 Romania, 46, 331, 338 Royal Bank of Scotland, 355 rules, 57, 241–42, 262, 296 Russia, 36, 264, 296 containment of, 318 economic rents in, 280 gas from, 37, 81, 93, 378 safety nets, 99, 141, 223 Samaras, Antonis, 61, 309, 377 savings, 120 global, 257 savings and loan crisis, 360 Schäuble, Wolfgang, 57, 220, 314, 317 Schengen area, 44 schools, 41, 196 Schröeder, Gerhard, 254 self-regulation, 131, 159 service sector, 224 shadow banking system, 133 shareholder capitalism, 21 Shiller, Rob, 132, 359 shipping taxes, 227, 228 short-termism, 77, 258–59 Silicon Valley, 224 silver, 275, 277 single currencies: conflicts and, 38 as entailing fixed exchange rates, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 external imbalances and, 97–98 and financial crises, 110–18 integration and, 45–46, 50 interest rates and, 8, 86, 87–88, 92, 93, 94 Mundell’s work on, 87 requirements for, 5, 52–53, 88–89, 92–94, 97–98 and similarities among countries, 15 trade integration vs., 393 in US, 35, 36, 88, 89–92 see also euro single-market principle, 125–26, 231 skilled workers, 134–35 skills, 77 Slovakia, 331 Slovenia, 331 small and medium-sized enterprises (SMEs), 127, 138, 171, 229 small and medium-size lending facility, 246–47, 300, 301, 382 Small Business Administration, 246 small businesses, 153 Smith, Adam, xviii, 24, 39–40, 41 social cohesion, 22 Social Democratic Party, Portugal, 392 social program, 196 Social Security, 90, 91 social solidarity, xix societal capital, 77–78 solar energy, 193, 229 solidarity fund, 373 solidarity fund for stabilization, 244, 254, 264, 301 Soros, George, 390 South Dakota, 90, 346 South Korea, 55 bailout of, 113 sovereign risk, 14, 353 sovereign spreads, 200 sovereign wealth funds, 258 Soviet Union, 10 Spain, 14, 16, 114, 177, 178, 278, 331, 335, 343 austerity opposed by, 59, 207–8, 315 bank bailout of, 179, 199–200, 206 banks in, 23, 186, 199, 200, 242, 270, 354 debt of, 196 debt-to-GDP ratio of, 231 deficits of, 109 economic growth in, 215, 231, 247 gold supply in, 277 independence movement in, xi inequality in, 72, 212, 225–26 inherited debt in, 134 labor reforms proposed for, 155 loans in, 127 low debt in, 87 poverty in, 261 real estate bubble in, 25, 108, 109, 114–15, 126, 198, 301, 302 regional independence demanded in, 307 renewable energy in, 229 sovereign spread of, 200 spread in, 332 structural reform in, 70 surplus in, 17, 88 threat of breakup of, 270 trade deficits in, 81, 119 unemployment in, 63, 161, 231, 235, 332, 338 Spanish bonds, 114, 199, 200 spending, cutting, 196–98 spread, 332 stability, 147, 172, 261, 301, 364 automatic, 244 bubble and, 264 central banks and, 8 as collective action problem, 246 solidarity fund for, 54, 244, 264 Stability and Growth Pact, 245 standard models, 211–13 state development banks, 138 steel companies, 55 stock market, 151 stock market bubble, 200–201 stock market crash (1929), 18, 95 stock options, 259, 359 structural deficit, 245 Structural Funds, 243 structural impediments, 215 structural realignment, 252–56 structural reforms, 9, 18, 19–20, 26–27, 214–36, 239–71, 307 from austerity to growth, 263–65 banking union, 241–44 and climate change, 229–30 common framework for stability, 244–52 counterproductive, 222–23 debt restructuring and, 265–67 of finance, 228–29 full employment and growth, 256–57 in Greece, 20, 70, 188, 191, 214–36 growth and, 232–35 shared prosperity and, 260–61 and structural realignment, 252–56 of trade deficits, 216–17 trauma of, 224 as trivial, 214–15, 217–20, 233 subsidiarity, 8, 41–42, 263 subsidies: agricultural, 45, 197 energy, 197 sudden stops, 111 Suharto, 314 suicide, 82, 344 Supplemental Nutrition Assistance Program (SNAP), 91 supply-side effects: in Greece, 191, 215–16 of investments, 367 surpluses, fiscal, 17, 96, 312, 379 primary, 187–88 surpluses, trade, see trade surpluses “Swabian housewife,” 186, 245 Sweden, 12, 46, 307, 313, 331, 335, 339 euro referendum of, 58 refugees into, 320 Switzerland, 44, 307 Syria, 321, 342 Syriza party, 309, 311, 312–13, 315, 377 Taiwan, 55 tariffs, 40 tax avoiders, 74, 142–43, 227–28, 261 taxes, 142, 290, 315 in Canada, 191 on capital, 356 on carbon, 230, 260, 265, 368 consumption, 193–94 corporate, 189–90, 227, 251 cross-border, 319, 384 and distortions, 191 in EU, 8, 261 and fiat currency, 284 and free mobility of goods and capital, 260–61 in Greece, 16, 142, 192, 193–94, 227, 367–68 ideal system for, 191 IMF’s warning about high, 190 income, 45 increase in, 190–94 inequality and, 191 inheritance, 368 land, 191 on luxury cars, 265 progressive, 248 property, 192–93, 227 Reagan cuts to, 168, 210 shipping, 227, 228 as stimulative, 368 on trade surpluses, 254 value-added, 190, 192 tax evasion, in Greece, 190–91 tax laws, 75 tax revenue, 190–96 Taylor, John, 169 Taylor rule, 169 tech bubble, 250 technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 and new financial system, 274–76, 283–84 telecoms, 55 Telmex, 369 terrorism, 319 Thailand, 113 theory of the second best, 27–28, 48 “there is no alternative” (TINA), 306, 311–12 Tocqueville, Alexis de, xiii too-big-to-fail banks, 360 tourism, 192, 286 trade: and contractionary expansion, 209 US push for, 323 trade agreements, xiv–xvi, 357 trade balance, 81, 93, 100, 109 as allegedly self-correcting, 98–99, 101–3 and wage flexibility, 104–5 trade barriers, 40 trade deficits, 89, 139 aggregate demand weakened by, 111 chit solution to, 287–88, 290, 299–300, 387, 388–89 control of, 109–10, 122 with currency pegs, 110 and fixed exchange rates, 107–8, 118 and government spending, 107–8, 108 of Greece, 81, 194, 215–16, 222, 285–86 structural reform of, 216–17 traded goods, 102, 103, 216 trade integration, 393 trade surpluses, 88, 118–21, 139–40, 350–52 discouragement of, 282–84, 299–300 of Germany, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 tax on, 254, 351, 381–82 Transatlantic Trade and Investment Partnership, xv, 323 transfer price system, 376 Trans-Pacific Partnership, xv, 323 Treasury bills, US, 204 Trichet, Jean-Claude, 100–101, 155, 156, 164–65, 251 trickle-down economics, 362 Troika, 19, 20, 26, 55, 56, 58, 60, 69, 99, 101–3, 117, 119, 135, 140–42, 178, 179, 184, 195, 274, 294, 317, 362, 370–71, 373, 376, 377, 386 banks weakened by, 229 conditions of, 201 discretion of, 262 failure to learn, 312 Greek incomes lowered by, 80 Greek loan set up by, 202 inequality created by, 225–26 poor forecasting of, 307 predictions by, 249 primary surpluses and, 187–88 privatization avoided by, 194 programs of, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 197–98, 202, 204, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 348, 366, 379, 392 social contract torn up by, 78 structural reforms imposed by, 214–16, 217, 218–23, 225–38 tax demand of, 192 and tax evasion, 367 see also European Central Bank (ECB); European Commission; International Monetary Fund (IMF) trust, xix, 280 Tsipras, Alexis, 61–62, 221, 273, 314 Turkey, 321 UBS, 355 Ukraine, 36 unemployment, 3, 64, 68, 71–72, 110, 111, 122, 323, 336, 342 as allegedly self-correcting, 98–101 in Argentina, 267 austerity and, 209 central banks and, 8, 94, 97, 106, 147 ECB and, 163 in eurozone, 71, 135, 163, 177–78, 181, 331 and financing investments, 186 in Finland, 296 and future income, 77 in Greece, xi, 71, 236, 267, 331, 338, 342 increased by capital, 264 interest rates and, 43–44 and internal devaluation, 98–101, 104–6 migration and, 69, 90, 135, 140 natural rate of, 172–73 present-day, in Europe, 210 and rise of Hitler, 338, 358 and single currency, 88 in Spain, 63, 161, 231, 235, 332, 338 and structural reforms, 19 and trade deficits, 108 in US, 3 youth, 3, 64, 71 unemployment insurance, 91, 186, 246, 247–48 UNICEF, 72–73 unions, 101, 254, 335 United Kingdom, 14, 44, 46, 131, 307, 331, 332, 340 colonies of, 36 debt of, 202 inflation target set in, 157 in Iraq War, 37 light regulations in, 131 proposed exit from EU by, 4, 270 United Nations, 337, 350, 384–85 creation of, 38 and lower rates of war, 196 United States: banking system in, 91 budget of, 8, 45 and Canada’s 1990 expansion, 209 Canada’s free trade with, 45–46, 47 central bank governance in, 161 debt-to-GDP of, 202, 210–11 financial crisis originating in, 65, 68, 79–80, 128, 296, 302 financial system in, 228 founding of, 319 GDP of, xiii Germany’s borrowing from, 187 growing working-age population of, 70 growth in, 68 housing bubble in, 108 immigration into, 320 migration in, 90, 136, 346 monetary policy in financial crisis of, 151 in NAFTA, xiv 1980–1981 recessions in, 76 predatory lending in, 310 productivity in, 71 recovery of, xiii, 12 rising inequality in, xvii, 333 shareholder capitalism of, 21 Small Business Administration in, 246 structural reforms needed in, 20 surpluses in, 96, 187 trade agenda of, 323 unemployment in, 3, 178 united currency in, 35, 36, 88, 89–92 United States bonds, 350 unskilled workers, 134–35 value-added tax, 190, 192 values, 57–58 Varoufakis, Yanis, 61, 221, 309 velocity of circulation, 167 Venezuela, 371 Versaille, Treaty of, 187 victim blaming, 9, 15–17, 177–78, 309–11 volatility: and capital market integration, 28 in exchange rates, 48–49 Volcker, Paul, 157, 168 wage adjustments, 100–101, 103, 104–5, 155, 216–17, 220–22, 338, 361 wages, 19, 348 expansionary policies on, 284–85 Germany’s constraining of, 41, 42–43 lowered in Germany, 105, 333 wage stagnation, in Germany, 13 war, change in attitude to, 38, 196 Washington Consensus, xvi Washington Mutual, 91 wealth, divergence in, 139–40 Weil, Jonathan, 360 welfare, 196 West Germany, 6 Whitney, Meredith, 360 wind energy, 193, 229 Wolf, Martin, 385 worker protection, 56 workers’ bargaining rights, 19, 221, 255 World Bank, xv, xvii, 10, 61, 337, 357, 371 World Trade Organization, xiv youth: future of, xx–xxi unemployment of, 3, 64, 71 Zapatero, José Luis Rodríguez, xiv, 155, 362 zero lower bound, 106 ALSO BY JOSEPH E.

Firefighting
by Ben S. Bernanke , Timothy F. Geithner and Henry M. Paulson, Jr.
Published 16 Apr 2019

But in 2009, the economy badly needed more help, and in early March, the Fed launched an aggressive monetary stimulus experiment known as “quantitative easing,” buying mortgage securities and then Treasury bonds to try to bring down long-term interest rates and fight the Great Recession. The initial round, “QE1,” would expand to $1.75 trillion in Fed purchases and send a confidence-inducing message that the Fed would not stand by and let the economy stagnate. Ben and his colleagues would announce QE2 and QE3 in 2010 and 2012, eventually expanding the Fed’s balance sheet to more than $4.5 trillion, nearly five times its pre-crisis peak. A wide range of academic studies have found that quantitative easing lowered long-term Treasury and mortgage rates and helped support the economic recovery; it also encouraged other central banks to adopt similar programs to support global growth.

…

It lowered rates to the zero lower bound during the darkest days of the fall, and it kept them there to support the economic recovery for seven years. The Fed’s three rounds of quantitative easing also provided significant fuel for growth, helping the economy weather a series of negative events, including a sovereign debt crisis in Europe, without lapsing back into recession. And its purchases of mortgage-backed securities were crucial to the recovery of the housing market. Ben’s successors at the Federal Reserve, Janet Yellen and Jerome Powell, have begun a gradual process of unwinding the $4.5 trillion book of securities the Fed accumulated through quantitative easing, while slowly nudging interest rates above 2 percent as we write these words.

…

Department of Housing and Urban Development Libor-OIS London Interbank Offered Rate–Overnight Indexed Swap rate MBS mortgage-backed securities MLEC Master Liquidity Enhancement Conduit MMF money market fund NBER National Bureau of Economic Research PDCF Primary Dealer Credit Facility PPIP Public-Private Investment Program QE Quantitative Easing SAAR seasonally adjusted annual rate SBA 7(a) Small Business Administration 7(a) Securities Purchase Program SCAP Supervisory Capital Assessment Program SDR special drawing right SPSPAs Senior Preferred Stock Purchase Agreements TAF Term Auction Facility TAGP Transaction Account Guarantee Program TALF Term Asset-Backed Securities Loan Facility TARP Troubled Assets Relief Program TLGP Temporary Liquidity Guarantee Program TSLF Term Securities Lending Facility CHARTING THE FINANCIAL CRISIS U.S.

What's Next?: Unconventional Wisdom on the Future of the World Economy
by David Hale and Lyric Hughes Hale
Published 23 May 2011

As a result of increasing consumption, robust business investment, and a delayed housing recovery, the odds are high that the economy’s growth rate will rebound to the 3.0–4.0 percent range by the first half of 2011. In such a scenario, quantitative easing will probably end in June 2011. The Fed’s policy will also force other countries to pursue expansionary monetary policies in order to prevent their own currencies from appreciating excessively. Japan has engaged in currency market intervention and announced its own quantitative easing program to stem the appreciation of the yen. Developing countries in both East Asia and Latin America are engaging in currency intervention that could nurture more domestic monetary growth.

…

Since Japan’s economy remained weak over the ensuing dozen years and politicians more or less consistently demanded greater accommodation, the BOJ’s determination not to be pushed around translated into chronically and inappropriately tight monetary policy. Thus, the BOJ, which pioneered quantitative easing in the early 2000s, never employed those unconventional methods boldly enough to overcome the problem of declining prices. To the contrary, its spokesmen stated on several occasions that the agency had done all it possibly could and that deflation simply could not be defeated through monetary means—a notion eventually belied by the success of the United States, the United Kingdom, and other countries in using quantitative easing to combat intense disinflationary pressures in 2008 and 2009 (and again in late 2010 and 2011).

…

This number is unprecedented in the modern era, and explains why firms are boosting investment on productivity-enhancing technology. The great uncertainties in the US outlook center on public policy. As the unemployment rate remained at 9.6 percent during the fourth quarter of 2010, the Federal Reserve embarked upon a program of quantitative easing. The Fed pledged to purchase $600 billion of government securities in the eight months through June. Federal Reserve Chairman Ben Bernanke said that the policy would help to reduce long-term bond yields and bolster the equity market. Finance ministers in Brazil, China, and other developing countries said that the policy was designed to devalue the dollar.

The Corona Crash: How the Pandemic Will Change Capitalism
by Grace Blakeley
Published 14 Oct 2020

Crossborder capital flows declined by 65 per cent between 2007 and 2016.9 Global growth was buoyed only by incredibly cheap credit and public investment undertaken by developmental states in the Global South. Central bankers were forced to keep the economy on life support through ultra-low interest rates and quantitative easing. But even with monetary policy so loose, private investment in fixed capital was not forthcoming. Instead, the main effect of low interest rates was to inflate a debt bubble three times the size of global GDP.10 The problem was clear: capitalism had lost all momentum. Many economists were predicting that a recession would hit the US, the UK and the Eurozone by 2022.11 The yield curve, which shows the returns on US Treasuries of different maturities, had inverted for the first time since 2007 – meaning that short-term government bonds had higher yields than long-term bonds.12 An inverted yield curve has augured every major recession for the last half century.

…

At this point, they threw their weight behind their financial systems with bailouts that saw states becoming significant shareholders in many of the world’s largest financial institutions. Next, the world’s four largest central banks pumped nearly $10 trillion into the financial system by creating new money to buy assets – predominantly their own governments’ debt – leading to a new round of asset-price inflation. Quantitative easing prevented the correction in asset prices that should have ensued in the wake of 2008, instead boosting asset values still further through the portfolio rebalancing channel: by substituting government bonds for cash, central banks drove down bond yields and encouraged investors to purchase other assets.38 Economic stagnation in the Global North, and a slowdown in growth rates elsewhere, constrained productive investment, meaning that much of this capital was directed into the purchase of existing assets such as equities, corporate bonds and property.

…

As Richard Koo argues in The Other Half of Macroeconomics and the Fate of Globalisation, the rich world appeared to be following in the footsteps of Japan after the bursting of its own debt bubble in the 1990s.49 After that debacle, Japan managed to maintain low rates of growth only through extremely loose monetary policy, including continuous quantitative easing that saw the Bank of Japan’s balance sheet reach over 100 per cent of GDP. Such prolonged stagnation is the logical result of an economic model based on the continuous growth of private debt that is used for speculation rather than productive investment. The increase in private debt in the West ultimately dragged down its investment and consumption, too.

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed
by Andrew Jackson (economist) and Ben Dyson (economist)
Published 15 Nov 2012

The central bank can inject these reserves into the system through a variety of channels, including through open market operations and quantitative easing. Here we will restrict ourselves to cases where the central bank lends reserves directly to commercial banks, which it may do in one of three ways: Long term lending: Before the financial crisis the Bank of England ran what was known as a ‘reserves averaging scheme’. This allowed commercial banks to specify at the beginning of each month what quantity of reserves on average they expected to need in order to make their payments. They would then borrow this amount from the central bank using repos. However, as a result of Quantitative Easing, which flooded the banks with reserves, this mechanism is not currently required.

…

When the central bank lowers the interest rate in response to recessionary conditions it benefits borrowers at the expense of savers. Pension funds in particular may suffer: lower interest rates increase the net present value of future liabilities, increasing the need for higher current fund contributions. Financial crises may also lead to unorthodox monetary policy (such as Quantitative Easing). Because quantitative easing pushes up the price of bonds it also lowers their yield, again increasing required contributions to pension funds. Furthermore by decreasing the yield on bonds, QE increases the desirability of other assets, pushing up their prices. This can have long run effects. By purchasing assets the central bank may prevent prices from falling, and so ‘set a floor’ under their price, implicitly guaranteeing prices and legitimising prior investment decisions.

…

This net worth has come from the purchases of government bonds through issuing bank notes, and the purchase of government bonds through the creation of central bank reserves through the Quantitative Easing scheme. In effect, this £313 billion is seigniorage which has been earned from the creation of money, but which has only been recognised as a result of the fact that this reform does not require backing assets to be held against the state-issued currency (for the reasons discussed in Appendix III). We now need to complete our changes to the balance sheet of the Bank of England by converting the demand deposits of banks into state-issued currency held at the Bank of England. Box 8.A - Dealing with the bonds purchased through Quantitative Easing Quantitative Easing was a scheme set up in response to the financial crisis.

Grave New World: The End of Globalization, the Return of History
by Stephen D. King
Published 22 May 2017

No one would admit such a thing – no one, apparently, was in the business of pursuing 1930s-style ‘beggar-thy-neighbour’ currency devaluations – yet as one central bank after another fired up its printing presses, it became increasingly difficult to think of quantitative easing in any other way. Admittedly, central banks tried their hardest to explain the domestic channels through which quantitative easing was supposed to work – the central bank would purchase existing government debt from investors using newly printed money with the aim of lowering yields, encouraging investors to switch into riskier assets like equities, which would then rise in value, signalling to companies that they should raise funds via the capital markets in order to increase capital spending – but the evidence was mostly unconvincing.

…

The economic and political consequences have not been fully thought through. Among the ‘winners’ in a world of negative interest rates and quantitative easing are, most obviously, governments themselves. Lower borrowing costs enable governments more easily to meet their fiscal ambitions without having to make painful political decisions regarding spending programmes or tax rates. Other winners include those who have large holdings of financial wealth in the form of equities, government bonds or corporate debt. Quantitative easing is designed to increase the value of such assets, making the world’s financial plutocrats even more plutocratic.

…

True, the value of their financial assets initially fell a long way: in the initial stages of the global financial crisis, equities fell much further than housing. Yet the rich had two advantages. First, relative to their assets, they had a lot less debt and so, even as their assets fell in value, they were under no threat of finding themselves financially under the water. Second, they proved to be major beneficiaries of quantitative easing – the supposedly magical monetary medicine where, in effect, a central bank purchases financial assets in a bid to drive their price higher, in the hope that households and companies will spend more. The S&P 500 index peaked before the global financial crisis at 1,557. It then plummeted to a low of 683.

The Scandal of Money
by George Gilder
Published 23 Feb 2016

Or perhaps it would continue its zero-interest-rate policy, maintaining business and household incentives to borrow. Or through some combination of quantitative easing with suitable “twists,” might it do both at once? Experts from Larry Summers to Ben Bernanke cite the failure of previous remedies as the reason to continue them. If zero interest rates have not ignited a recovery yet, perhaps their continuation can prevent a new recession. Perhaps negative interest rates could be contrived, requiring holders of cash to buy stamps every month to attach to their dollars. If five years of quantitative easing—some $4.6 trillion worth of bond purchases—could not reverse the five-year decline in real median incomes, perhaps another year would yield a trickle-down effect.

…

It is justifiable only if the spending on present goods promises a large yield for the future. Debt incurred for near-term stimulus merely depletes the future, bidding up the prices of current assets without improving their yields or creating new assets that can repay the debts. The result is swollen asset values, quantitatively “eased” but qualitatively empty—a bubble. When the prices fall back, the debts remain and weigh down the economy in much the way Piketty describes. But he comically errs in seeing the problem as actual saving and investment rather than government expropriation of the real creators of value. In the United States, the costs of the policy fell first on the pensions of the middle class.

…

Today it handles more than 60 percent of world trade, denominates more than half the market capitalization of world stocks, and partakes in 87 percent of global currency trades.2 To advocates of paper, the lesson seemed unanswerable. Even in a global monetary crisis, exacerbated by wildly loose monetary policy in Washington, with quantitative easing following stimulative buying, and with an explicit zero-interest-rate policy, the full faith and credit of the U.S. government behind the dollar roundly trumped the intrinsic value and scarcity of gold. Paul Krugman gloated mercilessly in his New York Times column. He seemed to have a point.

The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future
by Joseph C. Sternberg
Published 13 May 2019

See GDP (gross domestic product) Gurner, Tim avocado/coffee and, 1, 2, 3 homebuying and, 116 inheritance, 4 Hamilton, Alexander, 147, 147n, 148 Hammond, Darrell, 153 Harris, Kamala, 214 Hawley, Josh, 212 HCAI (Housing Credit Availability Index), 139, 139n health care electronic medical records, 235 See also Affordable Care Act/Obamacare; health insurance health insurance economic security and, 65 employer-based insurance/history, 65, 66 See also Affordable Care Act/Obamacare Hillbilly Elegy (Vance), 45 HOLC (Home Owner Loan Corporation), 119–120 Home Owner Loan Corporation (HOLC), 119–120 housing amortizing mortgage, 120, 120n balloon loans, 119 Boomer ownership, 109, 110, 111 Federal Reserve/mortgage lending and, 61–62 GI Bill and, 120 Great Depression/government response and, 119–121 history, 113–114, 114n, 118–119 Millennial home ownership/education debt and, 94–95 mortgages/taxes and, 120, 126, 127 multigenerational households, 112, 113 ownership value debate, 120n postwar boom and, 121 Housing Credit Availability Index (HCAI), 139, 139n housing/financial crisis bailouts, 130, 130n, 132n bank liquidity and, 129–130 Boomers and, 134, 135 description/consequences, 128–129 foreclosures and, 111, 132, 132n, 135 home equity increase and, 125–128, 126n home equity loss and, 10, 110–111 home ownership decline and, 121, 122 homeowners “lock-in” and, 136 housing debt/policies, 123–127, 125n insolvency crisis and, 129–130 interest rates and, 124–125, 125n, 127–128, 136 managing policies, 129–137 Millennials and, 131, 135–140, 141–143 mobility and, 135–136 mortgage-backed securities (MBS) market and, 124, 125n, 128, 129 mortgage security and, 122–124 press release/beginnings, 128 quantitative easing, 133, 135, 136, 137 quantitative easing dollar amount, 137 regulations following/Millennials and, 137–140 subprime/prime borrowers and, 126–127, 126n housing/Millennial issues economics and, 17, 110, 111, 112–113 expectations, 109–110 living with parents/statistics, 111–113, 114 locations/job locations and, 116, 117–118 multigenerational households, 112, 114n ownership/demographics, 115–116 renting/costs and, 113, 113n, 114, 114n, 141–142, 141n starter homes and, 116, 117 supplies and, 116–118 Howe, Neil, 6–7 HUD (Department of Housing and Urban Development), 123 Iceland and financial crisis, 180 immigration Millennials views, 218, 225–226 Trump, Donald and, 225–226 Immigration and Customs Enforcement (ICE), 211 India, 178, 201 Industrial Revolution, 113 information/computer technology rise, 56, 235 inheritances/Millennials beliefs/estimates, 103–104 Boomers life expectancy/health care finances and, 104–105 feudalism/history and, 106 Fidelity surveys, 105 Millennials retirement and, 107–108 timing and, 105–106 interest rates Bush and, 57 Federal Reserve and, 18, 19, 124 housing/financial crisis and, 124–125, 125n, 127–128, 136 Trump and, 19, 231–232 International Monetary Fund (IMF), 182–183 internships/Millennials numbers, 31 Obama and, 73 overview, 31, 72–73 pay and, 31, 72 work descriptions, 32 investment Boomers childhood and, 49 consumption relationship, 50 costs of labor vs. capital, 63–64, 65–66, 229 during Bush administration, 57 during Reagan administration, 53, 54 fixed investment, 49, 51, 53, 56, 57, 60, 127 growth (mid-twentieth century), 49 need to increase and, 15–17, 51 productivity and, 16, 49 technologies replacing labor and, 62–63 investment-and-productivity boom (1950s/1960s), 49–50 decline (1970s/1980s), 50 Ireland and financial crisis, 180 Italy Millennials and, 184, 201 temporary work, 184 Jackson, Alphonso, 123 Jackson, Andrew, 147 Japan consumption tax, 206 corporate scandals, 202, 202n debt, 205–206 demographic boom, 203n economic growth (1960s/1970s), 201–202 population trend, 207 working mothers and, 209 Japan Millennials delayed marriages/children and, 208–209 economy and, 203, 205, 206–207 inflation and, 207–208 interest rates and, 207–208, 208n job/training investments and, 204–205 lifetime employment deal and, 203–204 regular/nonregular work, 202–203, 202n taxes and, 205 Jeffersonians, 147n job hopping, 37–38 “jobless recovery,” 35, 69 jobs/job market and Millennials age of employee/job losses, 35–39 Boomers vs., 27, 46 company size and, 38–39 economists categories of jobs/job losses and, 33–34 experience requirements and, 37 financial crisis/recession losses distribution, 32–37 “fun/fulfilling” work and, 29 goals/dreams, 31 job losses by skill level, 34 job opportunity losses/time effects, 39–40 jobs replaced by robots, 34, 34n lower-skilled/low-paying employment replacements and, 36–37 mentors vs. bosses, 29–30 overqualification and, 42–43 pay/job losses and, 33–34 recovery from financial crisis and, 35, 59 statistics on white/blue collar jobs, 28 transformed jobs and, 27–29, 27n wants description, 29 See also specific components Johnson, Lyndon, 149 Kander, Jason, 212 Keynes, John Maynard/Keynesian economics, 50n, 58, 163n Kotlikoff, Laurence J., 171–172 labor capital vs. labor costs, 63–64, 65–66, 229 costs, 65–66 costs (by 1990s), 55 replacing labor and, 17, 34, 34n, 62–63 See also union power labor-force participation rate in 1970s, 47 in 1980s, 54 description, 30 Millennials/post-2008 decade, 30–31 labor productivity complementary technologies and, 49 definition, 48n labor hours and, 49 output per hour worked and, 48, 48n, 56, 57 labor share in 1950s/1960s, 47, 50 definition/description, 47 during Clinton presidency, 56 during Reagan presidency, 56 economic theories on, 62 trend past 50 years, 62 Lehman Brothers, 11, 129, 133 Libertarian candidates, 219 McAfee, Andrew, 41 McCain, John, 225 McCain, Meghan, 215 Maloney, Carolyn, 219 Manhattan Institute for Policy Research, 58 ManpowerGroup, 31 manufacturing economy (US) decline, 12, 14 description, 15–16 MBS (mortgage-backed securities) market, 124, 125n, 128, 129 Medicaid Affordable Care Act and, 167 financial problems, 156 role, 149 Medicare for all Americans, 211 financial problems/Millennials and, 153–161 inflation and, 169 insurance comparisons, 154 Millennial resources and, 142 role, 149 See also entitlements for elderly Medicare Part D, 157 Merkel, Angela political party/government and, 197, 200, 200n taxes and, 197 Merrill Lynch, 11, 128–129 Merrill Lynch survey/savings, 78 military spending deficit spending (government) and, 151 generational fairness and, 171 Millennials avocado/coffee debate, 1–3 childhood diseases and, 3–4 definition/description, 5–9, 237 diversity and, 216, 237–238 ethnicity, 9 as immigrants/children of immigrants and, 8–9, 112 material well-being and, 3–5 navigators and, 21–23 numbers, 8 parents/security and, 3–4 as “retirement plans” for parents, 145 second language and, 8 sex and, 217 social questions, 216–217 stereotypes and, 1–3, 29–30, 235 term origins, 6 views of, 1–3, 4–5, 26–27 wars and, 4 minimum wages debates/views on, 185 Europe, 183–184 in US, 183–184 Mondale, Walter, 20 mortgage-backed securities (MBS) market, 124, 125n, 128, 129 Mortgage Servicing Assets (MSAs), 138n Mulligan, Casey B., 165 Murphy, Patrick, 212 National Center for Education Statistics data analysis, 92–93 National Football League union refs lockout (2012), 49n National Home-ownership Strategy (1995), 123 navigator Millennials, 21–23 NEETs (youths “not in employment, education, or training”), 181 Netherlands minimum wage, 184 New Deal/regulations, 52–53, 148–149 Obama, Barack Boomers and, 64 education policy and, 93–94, 97–101 financial crisis/Great Recession and, 129, 131–132, 132n, 137, 162–164, 223–234 Millennials and, 64, 218–219, 224 policies and, 18, 19, 24, 64, 73, 93–94, 97–101 regulation and, 229 unpaid internships and, 73 See also Affordable Care Act/Obamacare Obamacare.

…

The Affordable Care Act, also known as Obamacare, sought to remake a health care system that accounted for around one-sixth of annual economic output. He signed a sweeping overhaul of Wall Street regulations. Other policymakers took unprecedented steps—especially the Federal Reserve, which cut interest rates to levels they’d never been before and rolled out policies such as quantitative easing that most people have heard of but few fully understand. And then, eight years after the crisis, in 2016 Americans embarked on yet another big experiment—some might call it a huge gamble—with Donald J. Trump. We’ve never had a president like him, for better or for worse, and his administration alongside a Republican-controlled Congress for his first two years† refashioned America’s tax code and overhauled economic regulations to an extent most Americans don’t realize.

…

And when that didn’t provide sufficient stimulus, Bernanke’s Fed also started buying financial assets to pour more cash into the economy and reduce borrowing costs even further. Bernanke injected money into the economy by expanding the Fed’s balance sheet with policies collectively known as “quantitative easing,” and by the time the Fed stopped buying bonds and other assets, it had expanded its balance sheet to roughly $4.5 trillion, from around $900 billion before the crisis. The stated goal of these asset purchases was to dramatically reduce long-term interest rates on corporate bonds and mortgages in order to stimulate more investment to lift America out of its slump.

Stolen: How to Save the World From Financialisation
by Grace Blakeley
Published 9 Sep 2019

There seems to be a new corporate scandal every week, with overindebted, extractive, monopolistic companies controlling an increasing share of economic output whilst public services crumble. Interest rates around the world were until recently at record lows and most states are only now – a decade on from the crash – starting to wind up quantitative easing. The extra weight placed on monetary policy means that when the next crisis hits there will be little room for manoeuvre. Economists are at a loss to explain this ongoing malaise. Some have argued that we are living through an era of “secular stagnation” (where secular means long-term). Technological and demographic change mean that the Western world must accustom itself to much lower rates of growth than in the past.18 Others claim that this economic stagnation results from rising government debt, which is a drain on productive economic activity and is scaring off foreign investment.19 Still others argue that this is all down to “economic populism” — governments implementing ill-advised economic policies to please the masses rather than listening to the timeless, objective wisdom of professional economists.20 The lost decade since the financial crisis is living up to that old adage that when you get ten economists in a room, you’ll get eleven opinions.

…

Monetary policy changes pursued by the world’s four major central banks — the Federal Reserve (the Fed), the Bank of England (BoE), the European Central Bank (ECB), and the Bank of Japan (BoJ) — also helped. Interest rates were reduced to historic lows. But with households already heavily indebted, businesses uncertain of the future, and banks unwilling to lend, cutting interest rates wasn’t going to be enough. So, the world’s central banks tried something new: quantitative easing (QE). Since 2009, these four central banks have pumped more than $10trn of digitally-created money into the global financial system by purchasing government bonds, which has pushed up asset prices across the board.22 The Fed’s balance sheet peaked at around $4.5trn in 2015, or a quarter of US GDP — the value of the UK’s programme as a percentage of GDP peaked at a similar level.23 The BoJ’s apparently unending QE programme has seen its assets climb to over $5trn, larger than Japan’s entire economy.24 In many countries, it is hard to see how this expansion in central bank balance sheets will ever be reversed.25 For a time, it looked as though this coordinated action might bring a relatively swift end to the series of overlapping recessions then taking place in the economies of the global North.

…

Some have argued that this can be attributed to a slowdown in technological change.21 Others point to demographic change — falling birth rates and rising life expectancies associated with rising affluence in the global North have led to a fall in the working age population that is depressing long-term growth rates.22 But all those who support the secular stagnation hypothesis converge on one point: without extraordinary interventions from the state such as quantitative easing, many economies in the global North appear to have ground to a halt. Today’s economists have all converged on one burning question: What is going on? Just like the theory of the great moderation itself, the secular stagnation hypothesis takes for granted many of the assumptions of neoclassical economics.

The Production of Money: How to Break the Power of Banks
by Ann Pettifor
Published 27 Mar 2017

Central banks massively expanded their balance sheets by buying up or lending financial and corporate assets (securities) from capital markets, and crediting the accounts of the sellers. In this way the Federal Reserve has added $4.5 trillion to its balance sheet. The Bank of England’s balance sheet is bigger, relative to UK gross domestic product, than ever throughout its long history. But while quantitative easing (QE) may have stabilised the financial system, it inflated the value of assets like property – owned on the whole, by the more affluent. As such, QE contributed to rising inequality and to the political and social instability associated with it. So expanding QE further is probably not politically feasible.

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Andy Haldane, responsible for Financial Stability at the Bank of England, argued once that even if bankers were to compensate society for the losses endured, ‘it is clear that banks would not have deep enough pockets to foot this bill.’8 Despite massive bailouts by taxpayer-backed central banks, it is my contention that, even as I write in 2016, global banks are still effectively insolvent. Government guarantees, cheap finance and quantitative easing, coupled with the manipulation of balance sheets, are all that appear to stand between today’s ‘too big to fail’ banks and insolvency. The deregulated financial system – and liquidity Under our deregulated financial system, and despite the Great Financial Crisis of 2007–09, commercial bankers can create credit or liquidity (i.e. assets that can easily and readily be turned into cash) effectively without limit, and with few regulatory constraints.

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The nationalised Bank of England, the US Federal Reserve as well as the free-standing European Central Bank – all ultimately backed by taxpayers – have, since August 2007, provided the world’s global banks and private financial markets with guarantees against losses, with historically low rates of interest on their borrowing, and with cheap and easy liquidity by way of monetary operations known as quantitative easing. (QE is the process whereby central banks purchase government debt or bonds from capital markets and place the bonds on their balance sheets. This cuts the number of bonds on the market, and because there is demand for ‘safe’ government bonds, the ‘price’ of these bonds rises, while simultaneously the ‘yield’ – comparable to the rate of interest – falls.

Nervous States: Democracy and the Decline of Reason
by William Davies
Published 26 Feb 2019

The best hope for breaking the cycle of cynicism and distrust might be just one or two policies that are so simple, so deliverable that they reconnect the words of elected representatives with the experience of citizens. Had governments introduced a policy of “helicopter money” instead of quantitative easing in 2009, this would have seen the sum in every individual savings account increase by a set figure, using the same technical means as the one employed for quantitative easing. Who knows if this would have worked (who knows if quantitative easing worked?) but it would have had a populist quality with valuable symbolism. Societies have renewed their capacity to make wide-ranging promises in the past, both legal and otherwise.

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These events are typical of some of the confusions and controversies that now surround the political power of experts, which can incite suspicion and resentment. The appearance of quantitative easing coincided with that of the Tea Party movement in the United States, which fixated on the policy as the definitive example of establishment corruption, through which financial and government elites could rip off the public in secret. The sheer complexity of the policy didn’t help, and few of the economists involved in delivering it expressed much confidence in what the outcome was likely to be. After the policy was finished, the Bank of England’s own website admitted that “it is difficult to tell if [quantitative easing] has worked, and how well.” One of the few indisputable features of quantitative easing is that it benefits the wealthy, as it inflates the price of assets (including real estate), adding to the feeling that this was a conspiracy by elites against ordinary people.3 In what sense were economic technocrats really being objective or apolitical any longer?

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As one recurrent metaphor had it, the financial system had suffered the equivalent of a heart attack, and the recuperation was slow, as the mechanisms responsible for pumping money around—namely the banks—remained in a critical state.1 The recovery was overseen by central banks, staffed by unelected experts, whose task it was to prevent the system collapsing all over again. The technique that came to be deployed in Britain and the United States, then later in the eurozone, was “quantitative easing.” This saw central banks purchasing hundreds of billions of pounds’ worth of assets from pension funds. This strategy pushes money through the banking system (where pension funds keep their cash), which is intended to revive bank lending in the process. But the mystery at the heart of this practice is that central banks don’t actually have all that money in the first place: they create it by adding numbers to the bank accounts of the pension companies and adding the same amount as a liability on their own balance sheet.

MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them
by Nouriel Roubini
Published 17 Oct 2022

That’s what caused the Fed to go back for more quantitative easing, and to stop raising rates. They were trapped—they couldn’t stop feeding the beast. Indeed, by January 2019 the Fed reversed its course. Chairman Jerome Powell announced that the Fed would pause rate hikes and quantitative tightening. A few months later the recovery started losing steam. Exotic financial securities that go by names like repurchase agreements (repos, for short) got locked out of capital markets. The Fed braced for a downturn in the usual way. It cut rates below 2 percent and resumed quantitative easing. Almost a year before the COVID-19 crisis changed everything, the Fed could not stomach even a modest dose of policy tightening.

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To reduce long-term borrowing costs for the government—and for private firms and households borrowing to buy homes and other goods—and to accelerate money circulation in an economy that needed a jolt of energy. Used first to try to push Japan out of its doldrums after its economy tanked during the 1990s, quantitative easing, commonly called QE, furnished a lifeline in the West during the financial crisis. Instead of adjusting the price of money, Japan’s central bank elected to adjust the quantity of money in circulation by buying long-term government bonds to push their yield lower. Quantitative easing helped the West recover from the Great Recession, but only very slowly, and only with the additional help of federal spending by Congress and other legislatures.

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“What Is Forward Guidance and How Is It Used in the Federal Reserve’s Monetary Policy?” Federal Reserve. https://www.federalreserve.gov/faqs/what-is-forward-guidance-how-is-it-used-in-the-federal-reserve-monetary-policy.htm. 11. “Size of the Federal Reserve’s Balance Sheet Since Quantitative Easing (QE) Measures Were Introduced from March 2020 to March 2022,” Statista, https://www.statista.com/statistics/1121416/quantitative-easing-fed-balance-sheet-coronavirus/. 12. “The QE Quandary,” Money Talks from The Economist (podcast), April 27, 2021. 13. Robin Harding, “US Quantitative Measures Work in Defiance of Theory,” Financial Times, October 13, 2014, https://www.ft.com/content/3b164d2e-4f03-11e4-9c88-00144feab7de 14.

Unknown Market Wizards: The Best Traders You've Never Heard Of
by Jack D. Schwager
Published 2 Nov 2020

For example, if the Fed wanted to reduce the Fed funds rate, it would “print” (electronically create) money to buy short-term Treasurys, increasing the price of Treasurys, which is equivalent to reducing interest rates. In a sense, quantitative easing is an extension of normal open market operations. When short-term interest rates fall to near zero, the standard tool of buying short-term Treasurys to provide economic stimulus no longer works because short-term interest rates are already near zero. This situation was the dilemma the Fed faced during the financial crisis in 2008 and its aftermath. The Fed responded with quantitative easing, which meant increasing the supply of money, as in normal open market operations, but without the objective of decreasing short-term interest rates, which were already near zero.

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In practical terms, quantitative easing meant the Fed created money to purchase non-traditional assets (i.e., assets other than short-term Treasurys). Specifically, the Fed bought longer-term Treasurys and non-government assets, such as mortgage-backed securities. By purchasing longer-term Treasurys, the Fed reduced longer-term interest rates—an action that could still provide economic stimulus. The Fed’s motivation for buying other types of assets, such as mortgage-backed securities, was to mitigate the meltdown in these other sectors during the financial panic. The Fed’s first quantitative easing move occurred in November 2008 when, to support the mortgage and housing market, it purchased mortgage-related government agency assets and private mortgage-backed securities, a financial asset class for which buyer demand had virtually disappeared.

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At that point, the Fed had still not applied quantitative easing to the purchase of longer-term Treasurys, although there was speculation that it would at some point. Your trading history contains many days with exceptional gains. I counted 34 days in which you made a return above 15%, 15 days with returns above 25%, and five days with returns above 50%. But even with this history of days with huge gains, one day stands out: March 18, 2009, when your return exceeded an unbelievable 800%! How was that even possible? What is the story behind that trade? In November 2008, when the Fed first announced quantitative easing, it purchased mortgage-backed securities to stabilize the markets during the financial meltdown.

Profiting Without Producing: How Finance Exploits Us All
by Costas Lapavitsas
Published 14 Aug 2013

Both the US and UK central banks adopted quantitative easing after the collapse of Lehman Brothers, and further deployed this policy in subsequent years. Quantitative easing implies the systematic over-expansion of reserves held by banks with the central bank, as was shown in Chapter 4. Unlike the BoJ, however, the Federal Reserve and the Bank of England did not adopt quantitative targets for the reserves of commercial banks. Quantitative easing has also included the announcement of intent by the central bank to drive down long-term interest rates.36 Whether as quantitative easing or as plain lending to commercial banks, liquidity provision by central banks also represents a public subsidy to banks since it replaces risky private with safe public credit.

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The abandonment of the central banking shibboleths of the 1990s and 2000s has been quietly acknowledged by the mainstream literature as attention has shifted to the effectiveness of central bank policy.37 Effectiveness in this context appears to refer, first and foremost, to the impact of quantitative easing on interest rates. Bernanke, Reinhart, and Sack observed several years before the crisis that such ‘non-standard’ measures could be effective, a view that has gradually become prevalent.38 There has, however, been debate on the relative importance of the channels through which quantitative easing operates, including the rebalancing of the portfolios of financial institutions and the direct impact of holding reserves. Both the Federal Reserve and the Bank of England consider that quantitative easing has a significant effect on interest rates in the asset markets; the effect on long-term rates, however, might decline with successive expansion programmes.39 The effectiveness of quantitative easing in influencing asset markets is an empirical issue which remains unclear.

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Quantitative easing has also included the announcement of intent by the central bank to drive down long-term interest rates.36 Whether as quantitative easing or as plain lending to commercial banks, liquidity provision by central banks also represents a public subsidy to banks since it replaces risky private with safe public credit. Quantitative easing stands for the abandonment of independent central banking as well as inflation targeting, the hallmarks of the period of Great Moderation discussed in Chapter 7. For, quantitative easing reflects the overlapping of fiscal and monetary policy as the central bank acquires state bonds, thus financing state expenditure. The abandonment of the central banking shibboleths of the 1990s and 2000s has been quietly acknowledged by the mainstream literature as attention has shifted to the effectiveness of central bank policy.37 Effectiveness in this context appears to refer, first and foremost, to the impact of quantitative easing on interest rates.

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems
by Linda Yueh
Published 4 Jun 2018

Their conclusion is that monetary policy was the culprit, specifically the Fed prematurely tightening the money supply, which they argued caused the crash and also led to a second economic downturn, known as a ‘recession within the Depression’, of 1937–38. So, what would Friedman say about the use of ‘unconventional’ monetary policy in the aftermath of the Great Recession with its parallels to the 1930s? Central banks have now deployed a dazzling array of policies, including quantitative easing (cash injections) and even negative interest rates (where commercial bank deposits at the central bank are being charged) to get more money into the economy. What would Friedman make of the activities of central banks which are largely operating in unknown territory? The next pair of authors put forward contrasting views about the fundamental drivers of how an economy grows and develops.

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Fisher had believed that confidence would return the economy to prosperity immediately, but it did not. Nearly a century later, as Japan’s experience shows, it is clear that reflating an economy is not as easy as Fisher thought. Japan has undertaken a number of periods of aggressive monetary policies with the central bank injecting cash through quantitative easing (QE) programmes. It seems that the war against deflation cannot be won simply through robust action from the central bank. Combating deflation requires a change in consumer attitudes and firms’ behaviour, so it’s a more complex process than it appears. In a 2002 speech, Ben Bernanke argued that Japan should consider a ‘helicopter money drop’.18 It would inject money directly into the economy; in essence, a free gift of money to citizens.

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This is the type of unconventional monetary policy that has been adopted by the European Central Bank, the Bank of Japan and others. Even if interest rates are close to zero, there should still be a policy response. Simply running the printing press is always an option. Money could be injected into the economy through asset purchases such as quantitative easing, or even more aggressively via the equivalent of a ‘helicopter drop’. This could work through fiscal policy, say through a tax cut or an increase in government spending funded not by borrowing but through the central bank printing money. Fisher thought that it should always be possible to reflate the economy back to where it ought to be.

The Euro and the Battle of Ideas
by Markus K. Brunnermeier , Harold James and Jean-Pierre Landau
Published 3 Aug 2016

There was a moment of great tension when, under joint pressure from the United States and others, Merkel resisted and said that, after the war, the Allies had given monetary policy autonomy to the Bundesbank and they had to live with it now. Quantitative Easing The differences between German and French attitudes again became very apparent in the fall of 2014 when inflation expectations dropped across Europe, including in Germany. The ECB was considering large-scale purchases of government debt from all member states of the euro area. It had strong support from the French side, while Germans mostly opposed quantitative easing. Further details of this program, which was announced in January 2015, are discussed in chapter 15. Policy Recommendations Solvency and liquidity are difficult to distinguish in practice.

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This happened in May 2010, well before there was any project of quantitative easing in the euro area. The first ECB asset purchase program was the May 2010 Securities Markets Programme (SMP), which for the first time allowed National Central Banks (NCBs) to “conduct outright interventions in the euro-area public and private debt securities markets.”37 The ECB embarked on purchases of some government debt for reasons not directly related to monetary accommodation. The purposes of the first programs were different from quantitative easing. The stated objective was twofold: preserve financial stability and allow efficient implementation of monetary policy in all parts of the euro area.

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At his first summit as president on June 27, 2012, as he set out his “vision of growth,” he was firmly blocked by Merkel, who had said a few days earlier that Eurobonds would never be created “in my lifetime.”25 As she told the German Parliament, “Apart from the fact that instruments like Eurobonds, Eurobills, debt redemption schemes and much more are not compatible with the constitution in Germany, I consider them wrong and counterproductive.”26 Several times during the following year, Hollande kept mentioning Eurobonds, knowing that he was confronting Merkel on an issue on which she could and would never yield. ESM and QE: Eurobond through the Backdoor In a sense, the bonds issued by the European Stability Mechanism (ESM) can be seen as Eurobonds of all euro-member states. Likewise, when the ECB started its quantitative easing (QE) measure in January 2015, several German observers complained prior to the ECB QE announcement that such an intervention would be an introduction of Eurobonds through the backdoor. The ECB did not want to undertake fiscal decisions and hence initially limited joint loss sharing to 20 percent.

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by Guy Standing
Published 13 Jul 2016

CONTENTS Title Page Glossary of Acronyms Preface Chapter 1: The Origins of Our Times Chapter 2: The Shaping of Rentier Capitalism Chapter 3: The Plague of Subsidies Chapter 4: The Scourge of Debt Chapter 5: Plunder of the Commons Chapter 6: Labour Brokers: The Precariat Bears the Strain Chapter 7: The Corruption of Democracy Chapter 8: Rent Asunder: The Precariat’s Revolt Index Copyright GLOSSARY OF ACRONYMS CETA Comprehensive Economic and Trade Agreement ECB European Central Bank EU European Union GDP Gross Domestic Product G20 Group of nineteen major economies and the European Union ILO International Labour Organization IMF International Monetary Fund ISDS Investor–State Dispute Settlement MGI McKinsey Global Institute MPS Mont Pelerin Society NHS National Health Service (UK) OECD Organisation for Economic Cooperation and Development (thirty-four mainly industrialised member countries) ONS Office for National Statistics (UK) PAC Parliamentary Accounts Committee (UK) PFI Private Finance Initiative (UK) QE Quantitative Easing TPP Trans-Pacific Partnership TTIP Transatlantic Trade and Investment Partnership TUC Trades Union Congress (UK) UK United Kingdom UN United Nations USA United States of America WIPO World Intellectual Property Organization WTO World Trade Organization PREFACE This book is about something worse than corruption by individuals or companies.

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Could one imagine a foreigner being appointed to run the US Federal Reserve or France’s national bank? A second feature has been the resort by governments and central banks since the crash to inject cash into the banking system, to bail out failing banks and to pump up the money supply to stimulate growth via ‘quantitative easing’. QE is discussed later in this chapter. Here it is enough to recall the self-serving statement used to justify the bailouts, that the banks were ‘too big to fail’. The cringing justification for giving them vast amounts of public money was that if they went bankrupt due to their recklessness the contagion effects would have sunk the whole economy.

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Asset managers and hedge funds have benefited, too. Owners of property have made out like bandits. In fact, anyone with assets has grown much richer. All of us who work in financial markets owe a debt to QE.’ Paul Marshall, chairman of Marshall Wace, a London-based hedge fund The clunky term quantitative easing, QE, entered the popular lexicon in the wake of the 2008 financial crash. It involves creating money for banks and other financial intermediaries to lend to companies and consumers. The central bank does this by buying government bonds and other debt from the banking sector, giving it low-cost funds to finance investment.

Platform Capitalism
by Nick Srnicek
Published 22 Dec 2016

We have already noted a continuation of low interest rate policies. But, stuck at the zero lower bound, policymakers have been forced to turn toward more unconventional monetary instruments.24 The most important of these has been ‘quantitative easing’: the creation of money by the central bank, which then uses that money to purchase various assets (e.g. government bonds, corporate bonds, mortgages) from the banks. The United States led the way in using quantitative easing in November 2008, while the United Kingdom followed suit in March 2009. The European Central Bank (ECB), due to its unique situation as a central bank of numerous countries, was slower to act, although it eventually began purchasing government bonds in January 2015.

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The European Central Bank (ECB), due to its unique situation as a central bank of numerous countries, was slower to act, although it eventually began purchasing government bonds in January 2015. By the beginning of 2016, central banks across the world had purchased more than $12.3 trillion worth of assets.25 The primary argument for using quantitative easing is that it should lower the yields of other assets. If traditional monetary policy operates primarily by altering the short-term interest rate, quantitative easing seeks to affect the interest rates of longer term and alternative assets. The key idea here is a ‘portfolio balance channel’. Given that assets are not perfect substitutes for one another (they have different values, different risks, different returns), taking away or restricting supply of one asset should have an effect on demand for other assets.

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In particular, reducing the supply of government bonds should increase the demand for other financial assets. It should both lower the yield of bonds (e.g. corporate debt), thereby easing credit, and raise the asset prices of stocks (e.g. corporate equities) and subsequently create a wealth effect to spur spending. While the evidence is still preliminary, it does seem that quantitative easing has had an effect in this way: corporate yields have declined and stock markets have surged upwards.26 It may have had an effect on the non-financial sectors of the economy as well, by making much of the economic recovery dependent on $4.7 trillion of new corporate debt since 2007.27 Most important for our purpose is the fact that the generalised low interest rate environment built by central banks has reduced the rate of return on a wide range of financial assets.

The Left Case Against the EU
by Costas Lapavitsas
Published 17 Dec 2018

That step signalled a significant relaxation of the rule that the central bank would not purchase the public debt of its member states.8 However, the policy was never tested in practice as the pressure on the Eurozone abated soon after the announcement of the policy of Outright Monetary Transactions was made by the ECB. The greatest increase in liquidity provision actually took place after 2015 in the form of quantitative easing that witnessed the ECB buying public bonds of all member states, though still in secondary markets. The balance sheet of the central bank expanded greatly and its liabilities rose to more than 3 trillion euros by 2016. Quantitative easing, quite apart from the vital support it gave to banks, also supported a gradual economic recovery across the EU, eventually allowing a return to mild growth by 2017. But the policies of the ECB created tensions with the Bundesbank since they have involved by-passing the rule that the central bank of the EMU would not purchase public debt, even if the purchases of the ECB were still not made in the primary markets.

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For Greece in particular the collapse of investment led to a historic retrogression of the economy. Given the austerity measures and the downward pressure on wages and pensions, consumption also came under acute pressure. The only boost to aggregate demand in the Eurozone during this period was provided by the ECB, particularly after quantitative easing began in 2015.14 Even so, it took years before the effect of quantitative easing was actually observed in growth rates. Only in 2017 did the economy of the Eurozone as a whole begin to register significantly positive growth. Moreover, the fundamental imbalances of the Eurozone have not been addressed. Figure 1 shows that wage repression in Germany has not been substantially lifted, even though nominal wage growth has accelerated compared to the 2000s.

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He also seemed to lay great store by a possible Greek threat unilaterally to write off some of the country’s (proportionately negligible) debt to the ECB. Apparently that unilateral action would have created insuperable legal complications in Germany, potentially forcing the ECB to abandon quantitative easing. There is no need to weigh these arguments any further, however, as events speak for themselves. At the first Eurogroup meeting attended by the new government, held on 11 February 2015, the lenders were implacable and demanded full compliance with the existing bail-out conditions. The SYRIZA side did not just lose the battle, it suffered a complete rout.39 In an agreement signed on 20 February, Varoufakis agreed fully to honour the country’s obligations with regard to debt and to desist from unilateral actions.

Paper Promises
by Philip Coggan
Published 1 Dec 2011

Or it could result from a plunge in the dollar, leading to inflationary fears. Indeed, quantitative easing could go horribly wrong, as it did in the Weimar Republic. Suddenly, all the newly created money (much of which is sitting idly in the banking system) could wash back into the global economy, driving up prices. Remember also that Western countries have used up a lot of their policy options. In the middle of 2011, interest rates were 1 per cent or below almost across the board. Further fiscal stimulus looked unlikely. And the potential impact of quantitative easing was far from clear. In a speech in October 2010, Mervyn King, the governor of the Bank of England, called for a ‘grand bargain’ between the major players in the world economy.8 ‘The risk is that unless agreement on a common path of adjustment is reached, conflicting policies will result in an undesirably low level of world output, with all countries worse off as a result,’ he said.

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Paper or electronic money is always a claim on someone else, whether a bank or a government. Modern money is debt and debt is money. It is no coincidence that debt levels have exploded in the last forty years, culminating in the credit crisis of 2007 and 2008 from which the world is still recovering. In response to that crisis, new money was created via a tactic called quantitative easing (QE) – central bankers created money to buy government bonds (and other assets). The creation of money to finance government deficits is something that would have horrified the sound-money men of Bryan’s era. But such tactics are hardly a surprise, now that governments and not just farmers have huge debts.

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Mankind has tried to find that balance in many different ways. Some politicians and voters have been tempted by money creation in the same way that the French regent was tempted by John Law. Modern economists mostly agree that monetary stimulus can be effective in reviving the economy. The twenty-first-century tactic of quantitative easing is a high-tech version of the same theory. Imagine, however, that you are a creditor or a merchant selling goods. Your debtor or customer offers to pay you back, not in pounds or dollars, but in Monopoly money. You might not regard this as payment at all. The fundamental worry of creditors is that governments can issue as much money as they like.

The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
Published 7 Apr 2014

Since real growth is anemic, the central banks must cause inflation to have any hope of increasing nominal growth and reducing these debt-to-GDP ratios. When policy interest-rate cuts are no longer possible because the rates are effectively zero, quantitative easing, designed in part to import inflation through currency devaluation, is the central bankers’ preferred technique. The Bank of England (BOE) has engaged in four rounds of quantitative easing (QE), beginning in March 2009. Subsequent rounds were launched in October 2011, February 2012, and July 2012. Increased asset purchases have ceased for the time being, but the BOE’s near-zero-interest-rate policy has continued.

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Gold had been supplied to the Roman Empire since ancient times from sources near the Upper Nile and Anatolia. However, Islam’s rise in the seventh century, and losses in Italy to the Byzantine Empire, cut off trade routes between East and West. This resulted in a gold shortage and tight monetary conditions in Charlemagne’s western empire. He engaged in an early form of quantitative easing by switching to a silver standard, since silver was far more plentiful than gold in the West. He also created a single currency, the livre carolinienne, equal to a pound of silver, as a measure of weight and money, and the coin of the realm was the denire, equal to one-twentieth of a sou. With the increased money supply and standardized coinage, along with other reforms, trade and commerce thrived in the Frankish Empire.

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Japan and the U.K. are part of a global monetary experiment orchestrated by the U.S. Federal Reserve and articulated by former Fed chairman Ben Bernanke in two speeches, one given in Tokyo on October 14, 2012, and one given in London on March 25, 2013. In his 2012 Tokyo speech, Bernanke stated that the United States would continue its loose monetary policy through quantitative easing for the foreseeable future. Trading partners therefore had two choices. They could peg their currencies to the dollar, which would cause inflation—exactly what the GCC was experiencing. Or, according to Bernanke, those trading partners could allow their currencies to appreciate—the desired outcome under his cheap-dollar policy—in which case their exports would suffer.

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
by Stephanie Kelton
Published 8 Jun 2020

The Great Recession changed the way the Federal Reserve conducts monetary policy. In November 2008, the Fed launched the first of three rounds of a massive bond-buying program called quantitative easing.52 Among other things, the Fed hoped its program would help stimulate the US economy by lowering long-term interest rates. By the time it was over, the Fed had gobbled up some $4.5 trillion in bonds, including nearly $3 trillion in US Treasuries.53 In addition to using quantitative easing to push longer-term interest rates lower, the Fed also changed the way it managed its short-term interest rate. Instead of buying and selling Treasuries to add and subtract reserves, the Fed switched to a “more direct and more efficient method of interest rate support.”54 It simply started paying interest on reserve balances.

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In addition to buying US Treasuries, the Fed also purchased mortgage-backed securities (MBS) and bonds issued by government-sponsored mortgage enterprises Fannie Mae and Freddie Mac. 53. The Fed officially ended its quantitative easing program in 2014. At that point, the Fed held $2.8 trillion in US Treasuries on its balance sheet. That was 22 percent of the $12.75 trillion in federal debt held by the public. 54. For a very detailed look at this, see Scott T. Fullwiler, “Paying Interest on Reserve Balances: It’s More Significant than You Think,” Social Science Research Network, December 1, 2004, papers.ssrn.com/sol3/papers.cfm?abstract_id=1723589. 55. Although they were used to carry out quantitative easing, Fed chair Janet Yellen said she hoped the Fed would never have to do it again.

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Out of the mouths of babes, as they say. Amy sees problems that need solving. Underfunded schools and a National Health Service that desperately needs more public investment. She also witnessed the Bank of England cranking up its digital printing press to manufacture £435 billion out of thin air, as part of its quantitative easing program following the financial crisis. To Amy, the solution seems obvious—forget about taxes and just run the printing press for the people! The hosts of the podcast were intrigued, and they reached out to me with the following question: The government can create money. So, what’s the point of taxes?

Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic---And Prevented Economic Disaster
by Nick Timiraos
Published 1 Mar 2022

With the interest-rate tool maxed out (officials weren’t willing to push the fed-funds rate below zero) but the economy still hobbled by the wreckage from the housing bust, Bernanke moved to deliver more stimulus with a tool dubbed quantitative easing, or QE. Buying and selling short-term Treasury bills was a well-tested practice for expanding or shrinking the money supply to set interest rates. Quantitative easing went a step further: instead of just buying ultra-safe Treasury bills, the Fed bought riskier assets such as longer-dated Treasury bonds and government-guaranteed mortgage-backed securities. QE fueled lots of scaremongering in the financial press, but it was just another way to increase the money supply and encourage lending and investment.

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When the Fed fended off those efforts and dived into negotiations over the regulatory overhaul that became the Dodd-Frank Act, Republicans saw a central bank too eager to collaborate with Democrats. Wasn’t the Fed supposed to be independent? But the fiercest political battles cropped up around quantitative easing. The tool was controversial because it wasn’t well understood, and it stepped outside the parameters of traditional monetary policy. To some, QE seemed to encroach on the fiscal policy—changes to spending and taxes—that is traditionally the domain of Congress, by making it cheaper to run bigger deficits.

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But once he settled inside the grand Beaux Arts hall, he found Bernanke’s Fed was still licking its wounds from 2008. The biggest issue facing the Fed that spring was how to shore up a still-lackluster economy. By 2010, the Fed’s asset portfolio had ballooned—from $900 billion before the crisis to $2.3 trillion in March 2010, at the end of the first round of quantitative easing. A hoped-for “V-shaped” economic recovery never materialized; the economy was limping toward restored health. On November 3, 2010, with unemployment still well above 9 percent, Bernanke had led his colleagues in launching a second round of bond buying, or “QE2.” Easy money, Republicans howled, would obscure the cost of exploding federal deficits and ease any impetus for spending cuts.

The End of Growth
by Jeff Rubin
Published 2 Sep 2013

Central banks are running printing presses almost nonstop to kick-start economic growth. In the United States, the Fed calls this tactic “quantitative easing”—a fancy way of saying the Fed is finding ways to pour as much new money into the system as it can. Typically, the Fed sticks to using its control over short-term interest rates to help strengthen the economy. But with those interest rates already at zero, Bernanke and Co. have needed to reach further into their bag of tricks. Under its program of quantitative easing, the Fed is buying longer-term government bonds in an attempt to inject new life into the economy. It works like this: By buying up US Treasury bonds, the Fed is trying to bring down long-term interest rates.

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Higher interest rates pricked the housing bubble, and the rest of the world was dragged down when the bubble burst. The Fed’s new chairman, Ben Bernanke, appears to be undeterred by the policy failures of his predecessor. His efforts to stimulate economic growth with rock-bottom interest rates and trillion-dollar quantitative easing programs will prove just as unsuccessful as Greenspan’s attempts to keep the economy afloat. Bernanke believes that holding interest rates near zero will encourage Americans to spend money, particularly on new homes. But what’s holding back the housing market isn’t the cost of taking out a mortgage, but a lack of jobs and economic growth.

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A lower rate of return on long-term government bonds, considered a relatively safe haven in times of financial uncertainty, makes other investments more attractive by comparison. Investors typically park huge sums of cash in long-term US bonds in an attempt to ride out a financial storm. By lowering the returns on those bonds, the Fed is trying to steer money into other parts of the financial system where it can do more good for the economy. As part of its quantitative easing program, the Fed also entered the market for mortgage-backed securities. Buying these securities allows the Fed to effectively lower mortgage rates, which reduces borrowing costs for potential homeowners, a move the Fed hopes will help to stimulate the housing market. By engineering a more modest return on government bonds, the Fed is also trying to curb the giant appetite for US dollars among global bond investors.

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal
by Ludwig B. Chincarini
Published 29 Jul 2012

Some have argued that this policy was successful in stimulating Japan’s output for a period of two and a half years.4 The quantitative easing in the United States continued further when on November 3, 2010, the Fed announced that it would purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.5 This was called QE2 (quantitative easing 2). There have been both critics and supporters of the quantitative easing programs. Ultimately, it is hard to determine whether or not these policies helped stabilize the financial markets since there were so many other factors present.

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This was another example of the Fed using unconventional measures to provide liquidity to the system, since banks were not funding the short-term borrowing needs of U.S. corporations. On November 25, 2008, the Federal Reserve created the Term Asset-Backed Securities Lending Facility (TALF), which allowed the Fed to lend up to $200 billion on a nonrecourse basis to holders of AAA-rated asset-backed securities. Quantitative Easing On November 25, 2008, the Fed announced perhaps its most unusual program of quantitative easing.3 Rather than simply manipulate the short-term Fed Funds rate, the Federal Reserve announced that it would purchase directly mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae. This was the Fed’s second big innovation.

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The Fed also bought $200 billion in agency debt. They also announced the second phase of their quantitative easing technique. Instead of just buying mortgage securities, they agreed to begin buying up to $300 billion of longer-term Treasury securities over the next six months. They split up this buying among Treasury securities ranging from a 2-year maturity to a 10-year maturity. This program of buying long-dated securities to try and force their yields down has become known as QE1 (quantitative easing 1). Although it was innovative, it was not only not a new idea, but had already been put into practice by the Japanese between 2001 and 2004.

Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America
by Danielle Dimartino Booth
Published 14 Feb 2017

Even during her swearing-in: FRB: Janet Yellen, “Remarks at the Ceremonial Swearing-In,” March 5, 2014, www.federalreserve.gov/newsevents/speech/yellen20140305a.htm. Yellen neglected to mention: Jon Hilsenrath, “Janet Yellen’s Human Message Gets Clouded,” Wall Street Journal, April 1, 2014. “I don’t think there is any doubt”: Phalguni Soni, “Why Richard Fisher Says Quantitative Easing Has Enabled the Rich,” MarketRealist.com, April 7, 2014, marketrealist.com/2014/04/richard-fisher-says-quantitative-easing-enabled-rich/. To justify her inaction: Adriene Hill, “Fed Stops Targeting 6.5% Unemployment,” MarketPlace.org, March 18, 2014, www.marketplace.org/2014/03/18/economy/fed-stops-targeting-65-unemployment. In March, I reported: From Investopedia: “The P/E 10 ratio uses smoothed real earnings to eliminate the fluctuations in net income caused by variations in profit margins over a typical business cycle.

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But the Fed’s academic models never addressed one basic question: What happens to everyone else? In the decade following that fateful day, everyday Americans began to suffer the aftereffects of the Fed’s decision. By 2016, the interest rate still sat at the zero bound and the Fed’s balance sheet had ballooned to $4.5 trillion, thanks to the Fed’s “quantitative easing” (QE), the label given its continuing purchases of Treasuries and mortgage-backed securities. To what end? All around are signs of an economy frozen in motion thanks to the Fed’s bizarre manipulations of monetary policy, all intended to keep the economy afloat. The direct damage inflicted on our citizenry begins with our youngest minds and scales up to every living generation in our country’s midst.

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As hedge funds tanked and credit markets trembled, Bernanke pulled a handful of top Fed officials into an empty conference room to talk about a possible Fed response. In the room: Geithner, Governors Kohn and Warsh, Dudley, and board secretary Brian Madigan. With these core supporters, Bernanke outlined his theories on the zero bound and quantitative easing. Geithner would later call the game plan the “Bernanke Doctrine.” (This meeting is absent from Bernanke’s memoir, perhaps because he knew it was less than kosher.) Though no action was taken at the time, substantive policy strategies were predetermined, to be fleshed out a year later at the Jackson Hole symposium in August 2008.

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
by Meghnad Desai
Published 15 Feb 2015

In the United States Paul Krugman was arguing strongly for a massive fiscal boost, while the New Classical economists of Chicago and Minnesota were skeptical of the need for, or the effectiveness of, any stimulus. Only among the central bankers of the United States and the United Kingdom was there agreement that the money supply had to be boosted by quantitative easing. Four years later and with hindsight, we can see that the crisis was severe – one of the deepest ever. We also know that the recovery is fragile, at best, in the UK and the US, and non-existent in the eurozone. With the possibility that the recovery may be destabilized by the slightest wrong turn, now is an opportune time to reflect on what went wrong.

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For its actual value is largely governed by the prevailing view as to what its value is expected to be.”2 The monetary authorities might try to pump more money into the system but people would prefer to leave the money idle, earning zero interest, than exchange it for bonds. There was a liquidity trap where the rate of interest reached a floor, and no further fall could be engineered by the monetary authorities. Recent policies of quantitative easing have seen Central Banks buying bonds and other assets on the open market to lower the rate of interest, both short term and long run. The short rate has reached a floor of below 0.5 percent and that is what a liquidity trap looks like. The novelty of terms such as consumption function and the marginal propensity to consume attracted the younger generation of economists.

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This policy originates from Milton Friedman and Anna Schwartz’s Monetary History of the United States.9 They blamed the severity of the Great Depression on the Fed’s policy of restricting the money supply. Ben Bernanke, the Fed Chairman who studied the Great Depression as his Ph.D. topic, took the lesson to heart. The policy of quantitative easing has been the norm for five years in the US and the UK. Japan has also joined the ranks. The European Central Bank is also contemplating adopting this strategy as the rate of inflation has fallen below 1 percent in the eurozone area. Keynes was skeptical about the efficacy of monetary policy to stimulate the economy out of depression.

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money
by Steven Drobny
Published 18 Mar 2010

We have huge deflationary forces that up until recently were self-reinforcing. These forces were only mitigated by record government interventions with liquidity provisions, interest rate cuts, quantitative easing, and fiscal stimulus. Now we have two enormous forces struggling against each other: one deflationary—the economy and the financial system—and one reflationary—stimulus of various types. We haven’t got a clue how these will play out, and it’s rather difficult balancing them. Quantitative easing, probably the correct course for central banks, is a difficult beast to control if market psychology turns quickly or if the real economy improves faster than expected.

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I am sure that one of these alternatives will indeed become very important fundamentally, but many will be bubbles. When you mention the end of fiat money, what do you mean? Regarding the end of fiat money, there is understandable concern about that concept. The global response to this crisis is massive reflation. Quantitative easing is now ubiquitous enough to be on CNN Headline News, whereas just two years ago, it was an arcane economics term. Quantitative easing is the budgetization of monetary policy—essentially printing money—and the examination of global central bank balance sheets confirms that it is global in scope and massive in scale. We all know that (1) money is ultimately a confidence trick, so policy credibility is very important; and (2) inflation unequivocally erodes savings and capital in the long term, which is one of the main reasons that price stability became such a focal point the past two decades and one of the standards for judging convergence.

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From 2003 to 2007, it appeared to have worked as easy money helped fuel another leg to the property and asset boom. I underestimated the potency of easy money when asset deflation emerges, perhaps because there was still another asset to inflate: property (see Figure 2.2). The hyper-experiment today, which includes the use of quantitative easing (QE) and bailouts, is a renewed attempt to prevent a cascade of defaults and preempt a deepening recession and possibly a prolonged depression. Figure 2.2 U.S. Home Prices and S&P 500 Index, 2000-2009 SOURCE: Bloomberg. It is very important, however, not to neglect the role of fiscal policy.

The Ministry for the Future: A Novel
by Kim Stanley Robinson
Published 5 Oct 2020

But also, it could rise above that floor as people get a sense of its value, in the usual way of currencies in the currency exchange markets. Mary said, So really this is just a form of quantitative easing. Yes. But directed, targeted. Meaning the creation, the first spending of the new money, would have been specifically aimed at carbon reduction. That reduction is what makes the new money in the first place. The Chen papers sometimes call it CQE, carbon quantitative easing. Mary said, So anyone could get issued one of these coins after sequestering a ton of carbon? Yes. Or also a fraction of a coin. There would have to be a whole monitoring and certification industry, which could be public-private in nature, like the bond rating agencies are now.

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The Bank of England leaders were coolly unappreciative of her plan. Likely to cause inflation; could expose the central banks to currency-trading pirates; would create exposure to market pressure. Not sure how that could be avoided. When Mary reminded them that they had quantitatively eased trillions of pounds into existence when needed to save the banks, they nodded; their job was to save the banks. To quantitatively ease trillions of pounds into existence to save the world: not their job. That would take legislation. The following week Mary went to Brussels. The European Central Bank, a much younger institution than the Bank of England, founded in the late twentieth century as a financial instrument of the European Union, offered to her representatives who were if anything even worse than the English.

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MMT also reiterated Keynes’s point that governments did not experience debt like individuals did, because governments made money in the first place, and could create new money without automatically causing inflation; the quantitative easing (QE) after the 2008 crash demonstrated this price stability despite major infusions of new money. So MMT recommended robust stimulus spending in the form of carbon quantitative easing (CQE) as well as a job guarantee. Both were to be directed to the effort to decarbonize civilization and to get in a sustainable balance with the biosphere, humanity’s one and only support system. Critics of MMT, who sometimes called it “Magic Money Tree,” pointed out that Keynes had advocated deficit spending during economic contractions, but also the reverse in times of expansion, governments gathering in enough in taxes to fund things through the next crisis.

The Global Minotaur
by Yanis Varoufakis and Paul Mason
Published 4 Jul 2015

While QE can be branded ineffectual, for reasons outlined below, the assertion that the Fed’s QE will push America into another 1970s-like period of ever accelerating prices is ludicrous. Yet truth is not the currency in which the recalcitrant Right trades: terrifying impressions (that can be employed further to boost private appropriation of publically produced wealth) are! Quantitative easing as the most complex form of wishful thinking At the time of writing, the third round of quantitative easing, QE3, was in the air. It is worthwhile taking a look at what it means, because a great number of false accounts circulate whose profound error is particularly instructive regarding the nature of our Crisis. According to the Fed’s own announcement, every month (until further notice) America’s central bank will be buying $40 billion of paper titles backed by mortgages (so-called mortgage backed securities, or MBS).

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See Vandana Shiva (2005) Earth Democracy: Justice, sustainability, and peace, Cambridge, MA: South End Press. 5. Quantitative easing is usually referred to as a species of printing money. This is not strictly true. What the Fed is doing is purchasing from banks and other institutions all sorts of paper assets (US government bonds plus private companies’ bonds). It does this by creating overdraft facilities for these institutions, on which they can draw for the purposes of lending to others. But if these institutions do not lend to others (because they cannot find clients willing to borrow), the result is zilch. This is why I say that quantitative easing is an attempt to create money.

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With the government no longer able to pump-prime the economy with fiscal stimuli, the lonely task of tilting at the slow-burning Crisis has fallen on Ben Bernanke’s Fed. So the Fed, unhappily, is still desperately trying to increase the quantity of money circulating in the American economy by buying hundreds of billions of dollars’ worth of paper assets (quantitative easing is the name of the game).5 Bernanke knows that this is far from an ideal situation, but is left with no choice at a time of stalemate between the White House and Congress. In Europe, the Crisis has set in train centrifugal forces that are tearing the eurozone apart, setting the surplus economies, with Germany at the helm, against the stragglers, whose structural deficits cannot be cured, no matter how much belt-tightening goes on.

How to Speak Money: What the Money People Say--And What It Really Means
by John Lanchester
Published 5 Oct 2014

It is supposed to be banned by the forthcoming Volcker rule. quantitative easing (QE) An “unconventional” technique used by governments and central banks when interest rates are too low to go down any further, but the need for economic stimulus still exists. QE involves a government buying back its own bonds using money that doesn’t actually exist. It’s like borrowing money from somebody and then paying her back with a piece of paper on which you’ve written the word “Money”—and then, magically, it turns out that the piece of paper with “Money” on it is actually real money. Another way of describing quantitative easing would be if, when you look up your bank balance online, you had the further ability to add to it just by typing numbers on your keyboard.

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But these digital ones and zeros measure the value of our labor and define a large part of our being, not just externally in terms of the work we do and where we live and what we own, but in terms of what we think, how we see our interests, with whom we identify, how we define our goals and ambitions, and often, perhaps too often, even what we think of ourselves in our deepest and innermost private being. And yet they’re just ones and zeros. And these ones and zeros are willed into being by governments, which can create more of them just by running a printing press; in fact, thanks to the miracle of quantitative easing, they don’t even need to do that, but instead can merely announce that there is now more electronic money. We’re inclined to think of money as a physical thing, an object, but that’s not really what it is. Modern money is mainly an act of faith—an act of credit, of belief. One of the lessons of the credit crunch was that this credit, this belief, can be vulnerable.

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Although much of the coverage of the stock market focuses on how the price of shares goes up and down, history shows that about half the value of stocks has always come from the dividends they pay. dove A term often used in regard to inflation: an inflation dove is someone who thinks that the economy needs as much stimulus as it can get and that to raise interest rates would be a disaster. Inflation doves love quantitative easing and any other associated loose monetary policy. The opposite of a dove is a hawk. downgrade When a ratings agency lowers its rating on the debt issued by a company or country, that is a downgrade. Ratings agencies do that because they think the bond has grown in risk. A downgrade can have important consequences, because some types of investors, such a municipalities and public pension funds, are by law allowed to invest only in specific grades of debt: if a bond is downgraded, that can mean that some investors have no choice but to sell their bonds.

The City
by Tony Norfield

This shows how much financial business was, and remains, central to the economics of British imperialism, no matter which political party is in power. Being outside EMU, the UK government was free to decide on its own rescue operations during the recent financial crisis. In particular, the Bank of England was able to introduce a policy of ‘quantitative easing’ independently of any decision by the European Central Bank. Between 2009 and 2012, the Bank bought a massive £375bn of UK government bonds and pushed official interest rates down towards zero.20 While the ECB also cut interest rates and bought huge amounts of government bonds from weaker countries in crisis, including Greece and Spain, the countries receiving assistance had strict economic policy measures imposed upon them.

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Instead, huge levels of debt, which in earlier crisis resolutions would have been either written off or devalued, still remain in place. As a result, one of the classic mechanisms for resolving a crisis, the destruction of capital values, has not, at the time of writing (mid-2015), yet come into play. The major central banks have done their best to prevent this outcome with successive ‘quantitative easing’ policies and historically low interest rates; weaker countries have more directly borne the brunt of the economic damage. Another key way of trying to restore profitability is to increase the exploitation of the workforce, by cutting real wages and imposing onerous new conditions. So far in the rich countries, this has only been attempted in a piecemeal fashion.

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What is one to think about buoyant private sector profitability shown in the data that has been sustained only by aggressive action, otherwise known as a bailout, from the central bank? After 2008, the Fed bought many hundreds of billions of dollars’ worth of both US Treasury securities and private mortgage-backed securities from banks in its ‘quantitative easing’ programmes. This forced securities’ prices higher and yields lower, and, at the same time, gave the owners cash for their securities. The stated rationale was to boost spending, by encouraging consumption and investment as interest rates on borrowing fell and there was more room for banks to lend out funds.

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future
by Jeff Booth
Published 14 Jan 2020

They knew every decision would be put under a microscope and questioned for generations. That said, they made a choice that changed capitalism by gifting many of the engineers of the chaos with risk-free returns at the taxpayers’ expense. Using quantitative easing in the United States and other monetary easing around the world, central banks and governments decided who won and who lost. And it is the second- and third-order effects of that decision that are sowing the seeds of discontent around the world. Quantitative easing refers to the act of injecting liquidity into an economy by a central bank. In order to inject liquidity, new dollars need to be created and they need to be delivered into the economy.

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Without this opportunity, many of the banks and investments banks would have merged, been bought at pennies on the dollar, or collapsed outright. By nature, though, quantitative easing also causes currency devaluation, even if that’s not what it’s specifically intended to do. The government doesn’t actually have more assets; it’s just representing its assets with more units of currency, which means each unit of currency is worth less—like cutting a pizza into twelve slices instead of eight, or dividing an estate between ten heirs rather than nine. Immediately following the announcement of the first round of quantitative easing, the US dollar lost value, and other currencies where easing was prominent also fell and remained in equilibrium to the US dollar.

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As the US currency became weaker, asset prices around the world rose in lockstep. Oil prices are a good example to demonstrate this, because oil is an asset with limited supply. If a country’s currency loses value and the country needs to import oil, it needs to use more of that currency to buy the same amount of oil. Through three rounds of quantitative easing in the United States, oil prices rose from $30 a barrel to more than $100. Countries with strong natural resource sectors that are in limited supply saw their currencies’ value rise in tandem with the easing in the United States. For example, in my own country, Canada, natural resources are abundant; oil, gold, lumber, and other commodities are major drivers of the economy.

Shutdown: How COVID Shook the World's Economy
by Adam Tooze
Published 15 Nov 2021

Speech by I. Schnabel, “The Shadow of Fiscal Dominance: Misconceptions, Perceptions and Perspectives,” European Central Bank, September 11, 2020. 64. Stubbington and Giles, “Investors Sceptical over Bank of England’s QE Programme.” 65. Bank of England, “Quantitative Easing”; www.bankofengland.co.uk/monetary-policy/quantitative-easing. 66. B. Braun, “Central Banking and the Infrastructural Power of Finance: The Case of ECB Support for Repo and Securitization Markets,” Socio-Economic Review 18, no. 2 (2020): 395–418. 67. On Lerner’s incomplete revolution, see M. Buchanan and Richard E.

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He favored a tight labor market as the best way to address inequality and inherited a Fed organization that under both Bernanke and Yellen had recognized that it could not ignore America’s stark social disparities.29 Powell was supported in key operational positions by a Fed team staffed with veterans of 2008. Lorie Logan had been in the front line of the first generation of quantitative easing (QE) at the New York Fed. She knew how to do asset purchases. In December 2019, Logan took overall charge of the Fed’s portfolio.30 At the policymaking level, Powell was supported by an activist generation, of which Lael Brainard, formerly of the Obama Treasury, was the leading exponent.31 As Fed chair, Powell would suffer fewer dissenting votes than any of his recent predecessors.32 The Fed was a competent, high-functioning piece of the U.S. state apparatus.

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Emerging market central banks that had previously to worry about the strength of the dollar relative to their local currencies were now free to act as well.50 By the end of the third week of March, thirty-nine central banks from Mongolia to Trinidad had lowered interest rates, eased banking regulations, and set up special lending facilities.51 Would it be enough? Powell had activated all the basic elements of the 2008 repertoire—interest rate cuts, quantitative easing, support for money markets, swap lines. These familiar tools had worked to calm the acute stress in Treasury markets. As demand recovered, yields came down, but it was not enough to calm stock markets or the corporate debt market. So long as instability continued there, the ripples would reverberate throughout the entire system.

Limitless: The Federal Reserve Takes on a New Age of Crisis
by Jeanna Smialek
Published 27 Feb 2023

The goal each time was to soothe markets and help to pull a flagging economy back from the brink by lowering interest rates on all kinds of debt, from business loans to mortgages, in hopes of prodding companies and consumers to borrow and spend. But the effects and side effects of the policy remain hotly debated. While fans of the post-2008 program have credited it with supporting an economy in need at a time when Congress was failing to pass legislation to jump-start growth, critics have blamed bond buying, often called quantitative easing, or QE, for fueling excess on Wall Street and worsening wealth inequality. Even so, when 2020 threatened a repeat disaster, the Fed rolled out bond buying again on an even bigger—for a brief time, literally unbounded—scale. The Fed under Jerome Powell was not just a powerful force in markets and society.

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During the 2007–2009 recession, Ben Bernanke’s Fed had slashed interest rates all the way to zero, then had bought unprecedented sums of government bonds to try to provide more help to the economy by lowering longer-term interest rates and by pushing money out of safe bonds and into riskier and more active uses. As of 2018, the jury was still out on how effective those so-called quantitative easing (or QE) programs had been. Economic progress had mostly been plodding, with surprising consequences. Fed policy makers had spent the 1970s and 1980s trying to wrestle inflation lower, but as growth came up short, prices had begun to climb extremely slowly, languishing below the Fed’s target for 2 percent annual gains.

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In the wake of the downturn, as the Fed’s bond buying kept the system awash in central bank cash all of the time, such purchases could no longer work as well to guide interest rates. Instead, the funds rate was set by paying banks a certain rate to park money at the Fed. The markets desk still bought securities as part of quantitative easing programs and other operations. *2 TARP was later reduced in value to $475 billion. It would also ultimately be used to inject capital directly into banks and financial institutions, given the complexity of buying troubled assets. *3 Kashkari worked as an aerospace engineer after graduating from the University of Illinois at Urbana–Champaign.

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

He also listed $2.1tn in ‘guarantees’, $3.7tn in ‘insurance’ and $0.7tn in ‘capital infusions’ (from the TARP), all of which came from the government. The total came to $10.5tn. 43. International Monetary Fund, Fiscal Monitor, April 2012, www.imf.org, Table 7. 44. Quantitative easing was first used by the Bank of Japan in 2001. See http://en.wikipedia.org/wiki/Quantitative_easing. 45. Bank for International Settlements, 83rd Annual Report 2013, Basel, 23 June 2013, http://www.bis.org/publ/arpdf/ar2013e.pdf, Figure VI.3, p. 69. 46. Fiscal data are from the IMF’s World Economic Outlook database, except where otherwise indicated. 47.

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It was little surprise that this official largesse to banks, not matched by comparable largesse from banks to their own borrowers – indeed accompanied by foreclosures on a grand scale in some countries – became a source of significant popular resentment. In addition, central banks adopted a wide range of ‘unconventional’ policies, including, notably, the policy known as ‘quantitative easing’ – expansion of the monetary base and central-bank purchases of longer-term assets.44 Such unconventional policies were aimed at financing banks, lowering yields on government bonds, increasing the money supply and easing credit supply. In domestic currency, the balance sheet of the ECB increased roughly threefold between 2007 and mid-2012, before shrinking modestly, while that of the Federal Reserve rose three and a half times and that of the Bank of England more than fourfold between 2007 and early 2013.45 To take the most important example, the US monetary base rose by $2.8tn between August 2008 and November 2013 – a sum equal to 17 per cent of annualized US gross domestic product in the third quarter of 2013.

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Both monetarists and most adherents of the contemporary orthodoxy argued that monetary policy could still work effectively, either by expanding the quantity of money or lowering the yield on other securities, particularly long-term bonds. One policy, it was thought, would achieve both those outcomes: quantitative easing, by which was meant the expansion of the monetary base. By using newly created central-bank money to buy bonds, the central bank could, it was believed, both expand the money supply and lower yields. Figure 37 shows what happened to US M2, the broadest measure of money the Federal Reserve publishes, after 1980.46 M2 consists of currency held by the public, plus deposit liabilities of financial institutions principally belonging to households.

Rethinking the Economics of Land and Housing
by Josh Ryan-Collins , Toby Lloyd and Laurie Macfarlane
Published 28 Feb 2017

‘Why You Can’t Afford a Home in the UK’. Medium. 16 February. https://medium.com/@neweconomics/why-you-can-t-afford-a-home-in-the-uk-44347750646a#.3xvhkhoi4. Ryan-Collins, Josh, Tony Greenham, R. A. Werner, and Giovanni Bernardo. 2013. Strategic Quantitative Easing. London: New Economics Foundation. http://www.neweconomics.org/publications/entry/strategic-quantitative-easing . Ryan-Collins, Josh, Tony Greenham, Richard Werner, and Andrew Jackson. 2012. Where Does Money Come From? A Guide to the UK Monetary and Banking System. 2nd ed. London: The New Economics Foundation. Ryan-Collins, Josh, Richard A. Werner, and Jennifer Castle. 2016.

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ABBREVIATIONS ARLA Association of Residential Letting Agents BSA Building Societies Association BTL buy-to-let CAP Common Agricultural Policy CLT community land trust CMU Capital Markets Union CPI consumer price inflation CRE commercial real estate FPC Financial Policy Committee GDP gross domestic product HEW home equity withdrawal IHT inheritance tax IMF International Monetary Fund ISA Individual Savings Account LBTT land and buildings transaction tax LTI loan-to-income (ratio) LTV loan-to-value (ratio) LVT land value tax MBS mortgage-backed security MIRAS mortgage interest relief at source NIMBY not-in-my-back-yard OECD Organisation for Economic Co-operation and Development OPEC Organization of the Petroleum Exporting Countries QE quantitative easing RMBS residential mortgage-backed security SDLT stamp duty land tax SMEs small and medium sized enterprises SPV special purpose vehicle GLOSSARY Bank capital – Bank capital can be considered as a bank’s ‘own funds’. For banks, capital mainly consists of common shares (also known as common equity) and retained earnings which can easily absorb losses and therefore protect them from insolvency.

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For example, if a household has savings of £50,000, owns a home worth £250,000 and has mortgage and credit card debts of £100,000, its net wealth will be £200,000. Property – In this book, property will be understood to refer to a spatially defined area of land and the structures on top of it that is legally owned by an individual or firm. Quantitative easing – An unconventional form of monetary policy where a central bank creates new money electronically to buy financial assets like government bonds from commercial banks and other financial institutions. Real estate – Property consisting of land or buildings. Residential mortgage-backed security (RMBS) – A type of asset-backed security that is secured by a collection of domestic mortgages.

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity
by Joseph E. Stiglitz
Published 28 Jan 2020

In its attempt to compensate for the absence of effective instruments with which to respond to asymmetric shocks (notably greater government spending) and with the short-term interest rate already at zero (even as most European countries had unacceptably high interest rates), the ECB got creative. First, it undertook aggressive quantitative easing, the name given to monetary stimulus that goes beyond lowering benchmark short-term rates to zero. It means buying not just short-term notes (the conventional approach of monetary policy), but also long-term bonds, and in some cases, bonds that were issued by the private sector. The bonds purchased via quantitative easing amounted to an average monthly pace of more than €60 billion from 2015 to 2017. The policy did lower long-term borrowing costs, especially for the countries that had been facing a debt crisis.

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* Part of the reason is that private debts quickly morphed into public debts, which suggests that surveillance of an economy should include not just a look at the government debt-to-GDP ratio but also the private-sector debt-to-GDP ratio. † When short-term interest rates hit zero, there was still some room for monetary policy through “unconventional measures,” such as quantitative easing. These, too, had only limited impact—not enough to restore Europe to full employment quickly. ‡ Ironically, one of the reasons that reunification was so costly was that Germany made a critical mistake in setting the exchange between East and West German marks at the wrong rate. Germany paid a high price for misguided exchange rate policies after 1990 and forced the crisis countries to do the same nearly 20 years later

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Germany paid a high price for misguided exchange rate policies after 1990 and forced the crisis countries to do the same nearly 20 years later. § Of course, some may claim that the reason that the ECB did not give in to political pressure to monetize the debt of profligate governments was that strong strictures had been imposed on the ECB. But even in the United States, where in effect the national debt was monetized in quantitative easing, there was not inflation, largely because there was so much excess supply of goods and labor. Chapter 2 Monetary Policy: Prioritizing Employment Before the euro, Europe had not shared a single currency since Emperor Charlemagne’s coinage around the end of the eighth century. It is unsurprising, then, that the euro became a symbol of modern European integration.

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker
Published 21 Apr 2018

The discussion is structured around whether or not an operation entails transactions in risky securities, with liquidity reinsurance facilities deferred to the next chapter since they come into their own during disasters and emergencies. APPLYING THE BALANCE-SHEET PRINCIPLES TO OPERATIONS IN DEFAULT-FREE GOVERNMENT INSTRUMENTS This section, on default-free operations, covers quantitative easing (QE), “helicopter money,” and operationalizing negative interest rates.12 The running theme is around where cooperation or coordination with the fiscal authority might be needed. Quantitative Easing and Government Debt Management The most basic operation is quantitative easing, which involves the central bank buying long-term government bonds with the dual purpose of injecting money into the economy and lowering long-bond yields.

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3 Buchanan, “Constitutionalization of Money,” p. 255. 4 Smith, Rationale of Central Banking; Hayek, Denationalisation of Money; and Dowd, Private Money, which contains a short section entitled “Abolishing the Bank of England,” possibly explaining why Eddie George asked for a summary (Buchanan, “Constitutionalization”). 5 With thanks to Nellie Liang, Brookings Institution and former director for financial stability at the Fed Board, for comments on late drafts of this and the next chapter, which discusses whether a stability regime can meet the Design Precepts. 6 George, “Approach to Macroeconomic Management,” makes clear that the 1990s’ Bank of England leadership felt much more comfortable gaining operational independence after supply-side reforms in the 1980s had made the real economy more flexible, as that reduced the burden on demand management in accommodating shocks to the economy. 7 That story is broadly captured in Diamond and Dybvig, “Bank Runs.” 8 This is how Mervyn King persuaded the UK that quantitative easing was not inherently inflationary: we were addressing a problem of “not enough money” threatening deflation. By contrast, the Fed tends not to highlight the monetary part of quantitative easing (or of monetary policy more generally), which left it exposed to accusations that it risked runaway inflation by creating too much money. 9 Under the Hayek proposal, there would be competition between different standards chosen by the issuing banks themselves.

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A committee is needed because, with a single decision maker, it would be too easy for those making the appointment (the president or prime minister) to choose someone with their own preferences (an ally) rather than society’s preferences as framed in the objective. Thus, the committee should not be a rubber stamp for its chair. The members’ long terms should, for the same reason, be staggered. As a concrete example, when faced with the criticism that quantitative easing (QE) was a plot for central banks to finance governments cheaply by buying their bonds, and that independence had willingly but surreptitiously been surrendered, I found that the most persuasive argument, at least in the UK, was to point out that the Monetary Policy Committee contained four “external” members who were not part of the Bank of England’s senior executive.

How Will Capitalism End?
by Wolfgang Streeck
Published 8 Nov 2016

By comparison with the 1970s, when it was the coincidence of inflation and unemployment that left economists clueless, now it is very cheap money coexisting with deflationary pressures, raising the spectre of ‘debt deflation’ and of a collapse of a pyramid of accumulated debt by far exceeding in size that of 2008. How much of a mystery the present phase of the long crisis of contemporary capitalism presents to its would-be management24 is nowhere more visible than in the practice of ‘quantitative easing’, adopted, under different names, by the leading central banks of the capitalist world. Since 2008, central banks have been buying up financial assets of diverse kinds, handing out new cash, produced out of thin air, to private financial firms. In return they receive titles to future income streams from debtors of all sorts, turning private debt into public assets, or better: into assets of public institutions with the privilege unilaterally to determine an economy’s money supply.

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In the process, central banks, in their dual roles as public authorities and guardians of the health of private financial firms, have become the most important, and indeed effectively the only, players in economic policy, with governments under strict austerity orders and excluded from monetary policymaking. Although quantitative easing has completely failed to counter the deflationary pressures in an economy like Japan – where it has been relied upon for a decade or more on a huge scale – it is steadfastly pursued for lack of alternatives, and nobody knows what would happen if cash-production by debt-purchasing was ended.

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Meanwhile in Europe, banks sell their no-longer-secure securities, including government papers, to the European Central Bank, either letting the cash they get in return sit with it on deposit, even if they have to pay negative interest on it, or they lend it to cash-strapped governments in countries where central banks are not allowed to finance governments directly, collecting interest from them at a rate above what they could earn in the private credit market. To this extent, quantitative easing at least serves to rescue, if nothing else, the financial sector.25 Decoupling Democracy As the crisis sequence took its course, the post-war shotgun marriage between capitalism and democracy came to an end.26 Again this was a slow, gradual development. There was no putsch:27 elections continue to take place, opposition leaders are not sent to prison, and opinions can still by and large be freely expressed in the media, both old and new.

End This Depression Now!
by Paul Krugman
Published 30 Apr 2012

Unfortunately, Chairman Bernanke hasn’t followed Professor Bernanke’s advice. To be fair, the Fed has moved to some extent on the first bullet point above: under the deeply confusing name of “quantitative easing,” it has bought both longer-term government debt and mortgage-backed securities. But there has been no hint of Rooseveltian resolve to do whatever is necessary: rather than being aggressive and experimental, the Fed has tiptoed up to quantitative easing, doing it now and then when the economy looks especially weak, but quickly ending its efforts whenever the news picks up a bit. Why has the Fed been so timid, given that its chairman’s own writings suggest that it should be doing much more?

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Three other points are worth mentioning. First, in early 2011 alarmists had a favorite excuse for the apparent contradiction between their dire warnings of imminent catastrophe and the persistence of low interest rates: the Federal Reserve, they claimed, was keeping rates artificially low by buying debt under its program of “quantitative easing.” Rates would spike, they said, when that program ended in June. They didn’t. Second, the preachers of imminent debt crisis claimed vindication in August 2011, when Standard & Poor’s, the rating agency, downgraded the U.S. government, taking away its AAA status. There were many pronouncements to the effect that “the market has spoken.”

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Why has the Fed been so timid, given that its chairman’s own writings suggest that it should be doing much more? One answer may be that it has been intimidated by political pressure: Republicans in Congress went wild over quantitative easing, accusing Bernanke of “debasing the dollar”; Rick Perry, the governor of Texas, famously warned that something “ugly” might happen to Bernanke if he visited the Lone Star State. But that may not be the whole story. Laurence Ball of Johns Hopkins University, a distinguished macroeconomist in his own right, has studied the evolution of Bernanke’s views over the years as revealed by the minutes of Federal Reserve meetings.

Bitcoin: The Future of Money?
by Dominic Frisby
Published 1 Nov 2014

The third is by actually creating money – printing it and creating it by other means such as quantitative easing. The fourth is by manipulating money – inflation. We have just seen how insidious this is. Let’s be idealistic for a moment and imagine that Bitcoin and other independent monies become the globally preferred means to make and receive payment. I do not see this as at all likely in the short term. But in the longer term, I do – and the implications are enormous. In a flash, the ability for a government to fund itself through the manipulation of money disappears. You can’t obfuscate bitcoin supply – inflation is transparent. You can’t ‘quantitatively ease’ bitcoins.

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Then, under immense pressure from the world of finance, governments and central banks reacted dramatically. They created money and credit on a scale unprecedented in human history. Banks were bailed out, interest rates were slashed to levels never seen before and the process of creating money electronically known as quantitative easing was begun. The result? The financial system was saved. Central bankers were hailed as heroes. The idea spread that governments and central banks really can operate an economy. Even those who would normally oppose such interventions seemed to think the right thing had been done. A few dissenters argued that the few were being bailed out at the expense of the many, that enormous problems in the financial system were simply being deferred when they needed to be faced, and that these problems would only come back on a far greater scale.

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In issuing the mortgage (for which they took the deeds of the house as collateral), the lending bank created money, which was then paid to me. The funds didn’t come from investors or from the deposits of others. The money did not previously exist. Thus modern electronic money – dollars, pounds and euros – is created through lending. Of course, governments create money through such processes as quantitative easing, but, even so, most money is lent into existence. This power to ‘create’ money through lending is what has made the worlds of banking and finance so large, powerful and rich. Modern money could thus be defined as ‘electronic debt-based fiat currency’. Research by UK think tank Positive Money shows that since 1989, money creation has been growing by 11.5% per annum.

Inequality and the 1%
by Danny Dorling
Published 6 Oct 2014

The richest fifth of all households hold the smallest share of their wealth in the form of their main residence – just 50 per cent for the richest fifth of Europeans – whereas almost 30 per cent of their wealth is held as other real estate, leaving 20 per cent in other forms such as stocks, shares and gold.108 As noted above, in the US the richest hold an even lower share of their vast wealth in the form of their main residence. The current ‘quantitative easing’ policies of central banks have had the effect of making the rich richer. The Financial Times, quoting the chief executive of the finance and insurance firm Legal and General, has described the policy as ‘designed by the rich for the rich’. Even the Financial Times has now insisted that enough is enough.109 Quantitative easing has been described as printing money to prevent prices falling when wages fall and the economy slumps. However, if it were that simple then the money should at least have been evenly distributed among the population.

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This compares to a roughly three-fold increase in the price of gold. Quantitative easing has, in the short term, allowed the very rich to get much richer simply by owning assets that rise in value as the not-quite-so-rich stop buying bonds. More of the 1 per cent have then spent their money on luxury collectables.110 Imaginary money has created imaginary extra value in luxury goods. The Bank of England itself has noted that Britain’s richest 5 per cent own almost half of all the assets that have increased most in value due to quantitative easing.111 Beneath them, the not-quite-so-rich traditional savers have seen the real value of their savings decline.

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A progressive government would have given more to those who had least – especially since all of the money would then have been spent, rather than hoarded, and might have then boosted demand (see the illustration on the previous page). Priced out of London: wealth, prices, rent, housing and Occupy, 2013 What quantitative easing has actually entailed is the buying back of government bonds or other assets using government money created out of thin air. Financial institutions and individuals normally buy government bonds and wait to get their money back, plus interest, after a fixed period, but the bonds can be sold on.

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

That nothing like this occurred, and that the Treasury’s endorsement of quantitative easing initially elicited little critical comment, was a strong measure of the recognition on the part of global capital—and of the other capitalist states—of the central role of the American state in keeping the system going. The ultimate aim of quantitative easing was to try to get the banks to lend so as to stimulate the economy at a time when, despite continued high unemployment, the balance of Congressional forces was shifting against any further fiscal stimulus. Quantitative easing essentially involved an audacious printing of US dollars, and thus relied on the willingness of foreign investors and central banks to continue to hold dollars; it served as the strongest reminder to date of the special ongoing attractiveness of the dollar.

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But given these states’ structural positions within global capitalism, and their economic ambitions, they saw no option but to continue to hold and even increase their dollar holdings. Although there was no little handwringing at home and abroad about the potentially inflationary effects of quantitative easing, inflation was not a problem in the US, especially given the continuing weakness of American labor, and this was reinforced by high unemployment. As for Europe, although quantitative easing did provide additional liquidity for European banks, inflation was also not a serious problem there. This was because European governments had already been forced to move so far in the direction of austerity by the toll financial markets had exacted on the bond sales that many of them needed to cover fiscal deficits following the bailouts of their banks and decline in tax revenue.

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And as we do it, we will bring the world with us.”5 The response of the Treasury and the Fed to the first global capitalist crisis of the twenty-first century demonstrated not only the range of their interventionist capacities, but also that they had learned the lessons of the early 1930s. Their dramatic actions to save the banks and other financial institutions, followed by the largest peacetime fiscal stimulus in US history as well as the monetary policy of “quantitative easing,” would have real effects in halting the economic crash. The stimulus coordination with the G20, combined with the room for maneuver provided by the international rush to hold Treasury bonds for safety in the global storm, confirmed the importance of the political infrastructure of global capitalism that had been developed over the previous decades.

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
by Kwasi Kwarteng
Published 12 May 2014

The ease with which credit could be issued with paper money has already been observed. More paradoxically, the paper money which had been responsible in large part for the explosive increase in credit was now seen to provide the solution. It was in this period that the phrase ‘quantitative easing’ first entered into everyday speech, at least in the newspapers. If anything symbolized the power of the government to conjure money out of thin air it was quantitative easing. Quantitative easing (QE) was said to be ‘an ugly name for a simple idea’. Central banks ‘buy long-term government bonds with newly printed money’.56 The theory was that this purchase of government debt, by which the central bank was effectively printing money and lending it to its own government, would keep bond prices high.

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In his own words, very simply put, ‘A greater Quantity [of money] employs more People than a lesser Quantity.’13 Another central component of Law’s thinking was that more economic activity would lead to an export surplus. This latter conclusion has not been endorsed by modern economists, but Law’s suggestion that the level of output, or ‘trade’ in his terminology, was related to the quantity of money is an idea which has been persistently espoused by later economists. Indeed, the modern advocates of ‘quantitative easing’, whereby a central bank prints more money to sustain economic activity, are the intellectual descendants of John Law. Unlike most gamblers, and even most monetary theorists, Law, by a series of improbable circumstances, managed to put his theories into practice on a national stage. He spent much of his late thirties and early forties travelling around the ‘principal cities of Italy’, where he continued ‘his speculations, playing at all sorts of games, betting, and engaging in the public funds and banks’.

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A slick and committed public servant, he had earned plaudits from Britain’s Alistair Darling, who found him ‘unpretentious and easy going’, with a ‘quiet style’ which ‘belied a steely determination’.59 He and most of the other leading figures in both the United States and the West generally were committed to printing and spending large sums of money to avert recession. Such policies as quantitative easing and the running of enormous budget deficits could be applied only in a world which had been totally removed from the constraints imposed by a gold standard. Central bankers like Bernanke remained committed to providing liquidity and supporting bond prices by means of printing more money. Some drastic spending cuts did occur in some countries in Europe such as Greece, Ireland and Portugal.

EuroTragedy: A Drama in Nine Acts
by Ashoka Mody
Published 7 May 2018

Coming after a “stunning” 150-​basis-​point cut by the Bank of England (BOE) earlier that day, the ECB’s limited move disappointed financial markets. December 16, 2008: Fed reduces interest rates to near zero, begins forward guidance, and announces quantitative easing. The Fed lowered its interest rate to the 0.0–​0.25 percent range, publicly committed itself to keeping interest rates low for “some time” (forward guidance), and initiated quantitative easing (QE), which is the purchase by the central bank of long-​ term bonds and other securities to bring down long-​term interest rates. March 5, 2009: BOE reduces interest rates and launches QE. With the BOE reducing its interest rate to 0.5 percent, British rates had fallen by 450 basis points since the coordinated rate cut of October 2008.

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“Asymmetric Shocks: Regional Non-​ Adjustment and Fiscal Policy.” Economic Policy, April: 206–​259. Occorsio, Eugenio. 2016. “La Ue dica sì al piano italiano” [Let the EU Say Yes to the Italian Plan”]. La Repubblica, April 20. Odendahl, Christian. 2014. “Quantitative Easing Alone Will Not Do the Trick.” Centre for European Reform, April 28. http://​www.cer.org.uk/​ insights/​quantitative-​easing-​alone-​will-​not-​do-​trick#sthash.YWU9YtaD. dpuf. O’Donnell, John, and Angeliki Koutantou. 2015. “Draghi Ties ECB’s Greek Funding to Bailout Compliance.” Reuters News, March 5. OECD. 2008. “Ageing OECD Societies” Paris. https://​www.oecd.org/​berlin/​ 41250023.pdf.

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acknowledgments xv L IST O F ABBR EV IATIONS ABCP AfD AIB AIG ARRA BBC BDI BIS BNP BOE BOJ BRRD CAP CDU CSU D-​mark EBA EC ECB ECJ ECSC ECU EDC EEC Asset-​backed commercial paper Alternative für Deutschland Allied Irish Bank American International Group American Recovery and Reinvestment Act British Broadcasting Corporation Bundesverband der Deutschen Industrie (Federation of German Industries) Bank for International Settlements BNP Paribas Bank of England Bank of Japan Bank Recovery and Resolution Directive Common Agricultural Policy Christian Democratic Union Christian Social Union Deutschmark European Banking Authority European Community (see also EEC) European Central Bank European Court of Justice European Coal and Steel Community European Currency Unit European Defense Community European Economic Community EFSF EFSM ELA EMS EMU EONIA ERM ESM ESRI EU EURIBOR FDIC FDP FOMC GDP GFSR IKB IMF KfW LIBOR LREM LTCM LTROs MEP MPS NATO NPL OECD OIS OMTs PASOK PISA QE R&D S&P SEA SGP SMP SPD xviii   l i s t European Financial Stability Facility European Financial Stability Mechanism Emergency Liquidity Arrangement European Monetary System European Monetary Union Euro Overnight Index Average Exchange Rate Mechanism European Stability Mechanism Economic and Social Research Institute European Union European Interbank Offered Rate Federal Deposit Insurance Corporation Free Democratic Party Federal Open Market Committee Gross Domestic Product Global Financial Stability Report IKB Deutsche Industriebank AG International Monetary Fund Kreditanstalt für Wiederaufbau London Interbank Offered Rate La République En Marche Long-​Term Capital Management Longer-​Term Refinancing Operations Member of the European Parliament Monte dei Paschi di Siena North Atlantic Treaty Organization Non-​Performing Loan Organisation for Economic Co-operation and Development Overnight Index Swap Outright Monetary Transactions Panhellenic Socialist Movement Programme for International Student Assessment Quantitative easing Research and development Standard and Poor’s Single European Act Stability and Growth Pact Securities Markets Programme Social Democratic Party of abbreviations SRB SRM SSM TAF TARP UKIP VIX WAMU WEO Single Resolution Board Single Resolution Mechanism Single Supervisory Mechanism Term Auction Facility Troubled Asset Relief Program UK Independence Party Measure of expected volatility in the US stock market Washington Mutual “World Economic Outlook” list of abbreviations xix Introduction Europe Ends Up Someplace Else T he euro—​the single currency shared by nineteen European nations—​ is unique in human history.

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough
by Peter Barnes
Published 31 Jul 2014

Though they quarrel over details, most economists agree that when recession strikes, government should rekindle the economy by adding money to it. Democrats prefer to do this through direct spending, Republicans through tax cuts. The Federal Reserve often plays along by lowering interest rates or printing money through a process called “quantitative easing.” Such fiscal and monetary pump-priming often perks up the economy for a while, but it doesn’t fix the causes of middle-class decline. As we’re seeing nowadays, it’s easy for GDP and corporate profits to grow without more income flowing to the middle class. Job creation. Listen to any politician and you’ll hear bold promises to spur job creation.

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The International Monetary Fund has argued that other measures might work better.7 With regard to new money creation: from 2001 to 2008 (before the financial crisis), the average yearly increase in what the Federal Reserve calls M2 was $244 billion.8 I use this figure (which is adjusted to 2013 dollars) to calculate the low end of the range in figure 7.1. For the high end I use the average annual change in M2 from 2001 to 2013, which includes several years of “quantitative easing.” That figure, translated into 2013 dollars, is $323 billion. The middle figure is halfway between. Intellectual-Property Protection Intellectual property (IP) rights owned by private corporations include patents, copyrights, and trademarks granted and enforced by the federal government.

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See Jobs; Unemployment Energy and Commerce Committee, 109 England, textile machinery in, 18 Environmental Defense Fund, 99 Environmental movement, 134–135 Epstein, Joshua, 31–33 Equity leverage, 47–48 European carbon trading system, 99, 104–105 European Union (EU) universal guaranteed income ideas in, 129–130 value added taxes (VATs) and, 140–141 Euthanasia of the rentier, 56 Everyone-gets-a-share capitalism, 3–4, 42, 126 Externalities, 63–64, 98–99 Extracted rent, 43, 45–57 recycled rent compared, 60 Extreme inequality, 33–34 ExxonMobil, 102 F Facebook, 48 Fair market value, 52 Fallacy of composition, 24–25 Family Assistance Plan, 80–81 Federal Reserve on new money creation, 144 quantitative easing, 22 shared market economy and, 83 FedEx, 26 Fee and dividend program, 115 Financial derivatives, global value of, 57 Financial infrastructure. See also Banks; Stocks and bonds as co-owned wealth, 61 rent from, 142–145 Financial leverage, 47–48 Financial Times (Kay), 53 Financial transaction taxes, 143 Fisher, Irving, 91 Ford, Henry, 8, 19 Ford Motor Company, 18 Foreign Affairs, 130–131 Foreign exchange transitions, value of, 57 Foreign manufacturing, 16 Fossil fuels, 115–116 401(k) plans, 123 Foxconn, 25 Fractional reserve banking, 54, 90 Friedman, Milton, 80–81, 85–87, 91, 119 Fuller, Buckminster, 66 Future scenarios, 135–136 G Galbraith, John Kenneth, 34, 80 Gates, Bill, 48–49, 84 General Motors, jobs at, 23 George, Henry, 4, 51, 66 Germany, 19, 37–38 GI Bill, 16 Glass-Steagall Act of 1933, 54–55 Globalization, 17 Global Warming Solutions, 117 God Bless You, Mr.

The Great Economists: How Their Ideas Can Help Us Today
by Linda Yueh
Published 15 Mar 2018

Their conclusion is that monetary policy was the culprit, specifically the Fed prematurely tightening the money supply, which they argued caused the crash and also led to a second economic downturn, known as a ‘recession within the Depression’, of 1937–38. So, what would Friedman say about the use of ‘unconventional’ monetary policy in the aftermath of the Great Recession with its parallels to the 1930s? Central banks have now deployed a dazzling array of policies, including quantitative easing (cash injections) and even negative interest rates (where commercial bank deposits at the central bank are being charged) to get more money into the economy. What would Friedman make of the activities of central banks which are largely operating in unknown territory? The next pair of authors put forward contrasting views about the fundamental drivers of how an economy grows and develops.

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Fisher had believed that confidence would return the economy to prosperity immediately, but it did not. Nearly a century later, as Japan’s experience shows, it is clear that reflating an economy is not as easy as Fisher thought. Japan has undertaken a number of periods of aggressive monetary policies with the central bank injecting cash through quantitative easing (QE) programmes. It seems that the war against deflation cannot be won simply through robust action from the central bank. Combating deflation requires a change in consumer attitudes and firms’ behaviour, so it’s a more complex process than it appears. In a 2002 speech, Ben Bernanke argued that Japan should consider a ‘helicopter money drop’.18 It would inject money directly into the economy; in essence, a free gift of money to citizens.

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This is the type of unconventional monetary policy that has been adopted by the European Central Bank, the Bank of Japan and others. Even if interest rates are close to zero, there should still be a policy response. Simply running the printing press is always an option. Money could be injected into the economy through asset purchases such as quantitative easing, or even more aggressively via the equivalent of a ‘helicopter drop’. This could work through fiscal policy, say through a tax cut or an increase in government spending funded not by borrowing but through the central bank printing money. Fisher thought that it should always be possible to reflate the economy back to where it ought to be.

Basic Income And The Left
by henningmeyer
Published 16 May 2018

Basic Income And the Left: A European Debate 2. How To Combat Inequalities Produced By Global Capitalism 3. Basic Income And Social Democracy 4. Why Basic Income Can Never Be A Progressive Solution - A Response To Van Parijs 5. The Euro-Dividend 6. Basic Income Pilots: A Better Option Than Quantitative Easing 7. Why The Universal Basic Income Is Not The Best Public Intervention To Reduce Poverty Or Income Inequality 8. The Worldwide March To Basic Income: Thank You Switzerland! 9. Universal Basic Income: A Disarmingly Simple Idea – And Fad 10. Unconditional Basic Income Is A Dead End 11. Basic Income Is A Tonic Catalyser: A Response To Anke Hassel 12.

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certain is that these benefits are distributed very Others are likely to object that each of the four func‐ tions listed above could be served better through some more complicated, more sophisticated device. 34 unequally in the European population, depending on whether they are movers or stay-at-homes, depending on whether or not the situation created 35 by European integration happened to make their consumption cheaper or their skills more valuable. A modest Euro-dividend is simply a straightforward and efficient way of guaranteeing that some of these 6 benefits will reach each European in a tangible way. Is this not utopian? Of course it is, in the sense in BASIC INCOME PILOTS: A BETTER OPTION THAN QUANTITATIVE EASING which the European Union itself was utopian until BY GUY STANDING (9 FEBRUARY 2015) not so long ago, and also in the sense in which the social security system was utopian before Bismarck put together its first building blocks. But Bismarck did not create his pension system out of the kind‐ ness of his heart.

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He did so because people started mobilizing in favour of radical reforms across the whole of the Reich he was trying to unify. What are we waiting for? With much fanfare, Mario Draghi announced on 22 January 2015 that the European Central Bank (ECB) would be pumping €60bn a month into the financial markets until September 2016, in what is euphemistically called ‘quantitative easing’ (QE). This amounts to 10% of Eurozone GDP and 10% of its gross public debt. Many observers guess the flow will go on for longer than the promised 19 months. The ECB President is described as ‘independent’, i.e., he can do this without democratic consent. Indeed, the country whose population will be required to contribute most is vehemently opposed to the policy.

Crashed: How a Decade of Financial Crises Changed the World
by Adam Tooze
Published 31 Jul 2018

See Freddie Mac Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 47 Federal Reserve AIG bailout and, 178 China’s yuan panic of 2015 and, 606–7 CHOICE Act and, 589–90 Comprehensive Capital Analysis and Review, 310–11 Dodd-Frank Act and, 304, 305 dual mandate of, 366 interest rate hikes, 2015-2018, 590, 608 Lehman collapse and, 176–77 as liquidity providers of last resort to global banking system, 9–10, 11–12, 202–3, 206–21 low interest rate policy, investment climate created by, 472–75 quantitative easing (See quantitative easing (QE)) short-term interest rate policy of, 2000–2006, 37–38, 55–56, 69–70 stress tests, 298–301 Volcker shock, 11, 37, 43–44, 46, 50, 68 Fekter, Maria, 404 Ferguson, Niall, 35, 346–47, 368 FIAT, 123 financial crisis of 2007–2009, 1–4, 143–69, 609–10, 613, 614 ABCP market, implosion of, 146–47 AIG and, 150–52, 178–79 automobile industry and, 157–59, 449–50 Bear Stearns collapse and, 147–48 bursting of housing bubble and initial mortgage lender failures, 143–45 China and, 7, 242–54 credit default swaps and, 150–51 dollar-funding shortage for European banks and, 8, 154–55, 203–6 in East and Southeast Asia, 257–61 in Eastern Europe, 220–38 election of 2016, impact on, 566–67, 574–75 European banks funding crisis and, 8, 154–55, 203–6 European banks US mortgage market exposure, 73–75 Federal Reserve as liquidity provider to global banking system, 9–10, 11–12, 202–3 G20 and, 261–75 global nature of, 5–6, 159–60 household wealth lost in, 156–57 Keynesian macroeconomics as inadequate to understanding, 8–9 Lehman Brothers collapse and, 149, 176–77 lending, collapse in, 155–56 liquidity crisis (See liquidity crisis) money market mutual funds (MMF) and, 152–53 Northern Rock collapse and, 145–46 Rajan’s warning of financial risks and, 67–68 regulatory changes and, 69 repo market, run on, 146–50 syndicated loans, drop in, 153–54 Wall Street versus Main Street in, 164–65 financial reform, 301–17 Basel III accord, 311–14 Dodd-Frank Act of 2010, 302–9 entanglement of regulators, law firms and banks, 309–11 Larosière committee recommendations, 314–15 Financial Services Authority (FSA), 81, 541 Financial Services Modernization Act of 1999, 68, 82 Financial Stability Board, 269–70, 311 Financial Stability Forum (FSF), 89 Financial Stability Oversight Council, 303, 309 Financial Times, 481, 525, 526, 587 Fink, Larry, 481 Finland, 105, 421 fiscal compact.

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Among technical experts it is commonly agreed that the swap lines with which the Fed pumped dollars into the world economy were perhaps the decisive innovation of the crisis.30 But in public discourse these actions have remained far below the radar. They have been displaced from discussion by controversies surrounding the bailouts of individual banks and subsequent waves of central bank intervention that went by the name of quantitative easing. Even in the memoirs of Ben Bernanke, for instance, the transatlantic liquidity measures of 2008 receive little more than a passing mention by comparison with the fraught politics of the AIG takeover or mortgage credit relief.31 The technical and administrative complexities of the Fed’s actions no doubt contribute to their obscurity.

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The busiest week of purchases was the third week of April 2009, and holdings (net of sales) peaked in June 2010 at $1.129 trillion. Crucially, what the Fed was doing was not just pumping liquidity into the system. It was also absorbing onto its balance sheet the maturity mismatch, which had done such damage in markets like ABCP. The Fed took the long-term asset in exchange for immediate liquidity. Quantitative easing, or QE, is generally thought of as the quintessential “American” policy, the symbol of the Fed’s adventurousness. It would earn Bernanke regular scolding by conservative policy makers in Europe. But after what we have already said, it will come as no surprise that 52 percent of the mortgage-backed securities sold to the Fed under QE were sold by foreign banks, with Europeans far in the lead.

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy
by Mehrsa Baradaran
Published 5 Oct 2015

Increasing the reserve requirement (forcing banks to hold on to more money) contracts the money available to lend and decreasing the reserve requirement increases it. Finally, the Federal Reserve has recently engaged in a controversial strategy called quantitative easing (QE) to get a slow economy moving when the above measures have failed to increase lending. Quantitative easing entails the Fed’s purchase of a large quantity of securities in the open market to pump even more money into the banks—hence “quantitative easing.” Under QE, the Fed purchases U.S. Treasury notes and mortgage-backed securities using newly created electronic cash, which increases bank reserves. In theory, this provides banks with more money to lend so they will lower interest rates and make more loans.

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McLeay, Radia, and Thomas, “Money Creation,” 16. 14. See Peter Conti-Brown, The Structures of the Federal Reserve Independence (Princeton, NJ: Princeton University Press, 2015). 15. See Kimberly Amadeo, “What is Quantitative Easing: How the Federal Reserve Created Massive Amounts of Money,” About News, October 14, 2014, accessed March 13, 2015, useconomy.about.com/od/glossary/g/Quantitative-Easing.htm; “What is Quantitative Easing?,” Economist, January 14, 2014, accessed March 13, 2015, www.economist.com/blogs/economist-explains/2014/01/economist-explains-7. 16. “No one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”

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Because the central bank controls the supply of currency, the cost of credit circulating through the economy at any given moment is largely a policy decision made by the government’s central bank. Our central bank in the United States, the Federal Reserve, uses four levers to shape the economy and control monetary supply: (1) the federal fund rate, (2) the discount rate, (3) reserve requirements, and (4) “quantitative easing.” The central bank uses all of these measures, which are only possible with the help of the banking system, to influence the economy.14 The federal fund rate is the rate at which banks lend to each other, which influences the interest rate for all lending. Given the state of the economy and the Fed’s policy goals, it sets a target interest rate that it believes will be optimal.

Samuelson Friedman: The Battle Over the Free Market
by Nicholas Wapshott
Published 2 Aug 2021

When in November 2010 this proved inadequate, the Fed launched a second round of security buying, known as QE2, followed by a third round, QE3, in November 2012. While some conservative economists questioned whether Friedman would have approved of quantitative easing, for Bernanke the lesson of Friedman’s Great Depression research was clear. The Fed chair was not going to be found guilty of starving the economy of funds. Despite the wailing and gnashing of teeth from conservative politicians, and the noticeable silence from conservative economists, quantitative easing had proved its worth during the financial freeze, heading off a full-scale Depression. What is more, and contrary to all warnings from conservative Cassandras, the pumping of such vast amounts of borrowed cash into the economy did not result in a surge in inflation.

…

However, Bernanke argued that, notwithstanding Keynes’s notion that “you cannot push on a string,” a central bank still retained “considerable power to expand aggregate demand3 and economic activity even when its accustomed policy rate is at zero.” This included the wholesale printing of money through credit swaps—the Fed buying back its own debt and relending at a lower rate—a policy that would become known as “quantitative easing.” He reassured Friedman and the other economists in his audience that “the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound.”4 In his office at the Fed, Bernanke kept a signed copy of Samuelson’s Economics textbook and considered him “a titan of economics.”

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But whether they do so or not, the money supply will increase. … Higher monetary growth will have the same effect as always. After a year or so, the economy will expand more rapidly; output will grow, and after another delay, inflation will increase moderately.23 The Bank of Japan had duly adopted a policy of quantitative easing (QE), buying government securities and other financial assets on the open market. The effect was to increase the price of those securities and assets, thereby reducing the interest that they paid to investors. Bernanke also deployed QE, increasing the Fed’s pre–Great Recession holdings of $800 billion in Treasury notes to a peak of $2.1 trillion in June 2010.

Not Working: Where Have All the Good Jobs Gone?
by David G. Blanchflower
Published 12 Apr 2021

To do this would require further monetary and fiscal stimuli. It would mean that central banks such as the Fed would have to stop raising rates and possibly turn them negative, although it is yet to be established that that is even feasible. This could well mean more quantitative easing. The idea that the ECB should stop doing quantitative easing when the unemployment rates in the Eurozone are high and underemployment remains high makes no sense. Japan is the precedent. Central bankers have focused like a laser beam on nonexistent inflation, which was a story of the 1970s when unions were stronger. We know that even if inflation gets to 5 percent or so it isn’t hard to stop it from going higher by raising rates.

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There has never been a situation in anyone’s memory when central banks, including the European Central Bank, the Bank of Japan, and those in Sweden and Switzerland, continue to have negative interest rates. At the time of writing both the European Central Bank (ECB) and the Bank of Japan are still buying assets as part of an ongoing quantitative easing program.8 This is unprecedented in our lifetime. It may be that we will have to look at what happened in the 1930s in the years after the Great Crash. Some of my economist friends continue to call this “the crisis that keeps on giving.” It is likely to keep on giving for many years to come.

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Between 2007–8 at the start of the recession and 2015–16, real disposable income of retired households rose 13 percent. In contrast, that of non-retired households fell by 1.1 percent.22 Retired households have benefited from government policies on uprating state pensions and from rises in equity values and house prices, as well as all the fruits of quantitative easing. If we do the same calculation by quintile, the lowest quintile saw its real incomes rise by 13.2 percent; the second by 6.6 percent; the third by 3.9 percent; and the fourth by 4 percent; the top quintile real incomes fell 3.3 percent. This is of interest given that the poor, the retired, and older folks disproportionately voted for Brexit.

Alpha Trader
by Brent Donnelly
Published 11 May 2021

This will be one of the most insane trading days of his career. It has been a frustrating year so far. The Eurozone Crisis has been smoldering for months but the trader’s attempts to sell the euro have been met with massive countertrend rallies as the Fed embarks on another round of USD-negative quantitative easing (QE). They call EURUSD a collision of two garbage trucks. The trader struggles to steer clear of the wreckage. His strongest view recently has been lower USDJPY. There is risk aversion popping up all over the place as markets worry about a domino effect where Greece crashes out of the Eurozone, followed by Spain, Portugal, Ireland and then finally Italy.

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I knew very well by that point in my career (I started in 1995) that when there is a major economic or policy shift, positioning doesn’t matter, but for some reason I had a mental block and struggled to go with the trend. I had seen enough times where positioning didn’t matter for extended periods, so I should have known better. For example, in 2008 (the global financial crisis, most people were short stocks most of the way down), 2010 (US quantitative easing, the market went short USD and cleaned up) and 2011 (the Eurozone crisis, the market was short EUR all the way down though punters did get badly rinsed when EURUSD finally bottomed). Eventually, positioning always matters but in the early and middle stages of watershed economic and policy changes, the macro is much bigger than any concern about positions.

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Instead, I was playing retracements and “big levels” and trying to top tick one of the biggest economic stories of my lifetime. I still don’t have a good sense of why I could not get myself to trade the Abenomics trend successfully. I have various excuses but no good understanding of where the mental block came from. But when a similar trade showed up in 2015 (ECB quantitative easing, which drove EURUSD from 1.40 to 1.05 in pretty much a straight line) … I was ready. I recognized the similarity of the setup and was strict about trading EUR only from the short side until after the pair had already dropped massively lower. A hedge fund PM told me about how the founder of his fund (and the firm’s biggest risk taker) put a Post-It note on his monitor in 2009 that said: LONG OR FLAT.

The End of Growth: Adapting to Our New Economic Reality
by Richard Heinberg
Published 1 Jun 2011

The cycle must sooner or later play itself out. There may be a few more arrows in the quiver of economic policy makers: central bankers could try to drive down the value of domestic currencies to stimulate exports; the Fed could also engage in more quantitative easing. But these measures will sooner or later merely undermine currencies (we will return to this point in Chapter 6). Further, the way the Fed at first employed quantitative easing in 2009 was minimally productive. In effect, QE1 (as it has been called) amounted to adding about a trillion dollars to banks’ balance sheets, with the assumption that banks would then use this money as a basis for making loans.29 The “multiplier effect” (in which banks make loans in amounts many times the size of deposits) should theoretically have resulted in the creation of roughly $9 trillion within the economy.

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However, some argue that limits to government debt (due to snowballing interest payments) need not be a hard constraint — especially for a large nation, like the US, that controls its own currency.16 The United States government is constitutionally empowered to create money, including creating money to pay the interest on its debts. Or, the government could in effect loan the money to itself via its central bank, which would then rebate interest payments back to the Treasury (this is in fact what the Treasury and Fed are doing with Quantitative Easing 2, discussed below).17 The most obvious complication that might arise is this: If at some point general confidence that external US government debt (i.e., money owed to private borrowers or other nations) will be repaid with debt of equal “value” were deeply and widely shaken, potential buyers of that debt might decide to keep their money under the metaphorical mattress (using it to buy factories or oilfields instead), even if doing so posed its own set of problems.

…

Documents released by the Fed on December 1, 2010 showed that more than $9 trillion in total had been supplied to Wall Street firms, commercial banks, foreign banks, and corporations, with Citigroup, Morgan Stanley, and Merrill Lynch borrowing sums that cumulatively totaled over $6 trillion. The collateral for these loans was undisclosed but widely thought to be stocks, CDSs, CDOs, and other securities of dubious value.27 In one of its most significant and controversial programs, known as “quantitative easing,” the Fed twice expanded its balance sheet substantially, first by buying mortgage-backed securities from banks, then by purchasing outstanding Federal government debt (bonds and Treasury certificates) to support the Treasury debt market and help keep interest rates down on consumer loans. The Fed essentially created money on the spot for this purpose (though no money was literally “printed”).

The End of Alchemy: Money, Banking and the Future of the Global Economy
by Mervyn King
Published 3 Mar 2016

Financing more government spending by printing money is equivalent, in economic terms, to a combination of (a) additional government spending financed by issuing more government debt and (b) the creation of money by the central bank to buy government debt (the process known as quantitative easing). Equally, helicopter drops of money are equivalent to a combination of debt-financed tax cuts and quantitative easing – the only difference being that the size of spending or tax cuts is decided by government and the amount of money created is decided by the central bank. Since both elements of the combination have been tried on a large scale and have run into diminishing returns, it is hard to see how even more of both, producing a short-run boost to demand that will soon peter out, will resolve the paradox of policy.

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So they reduced spending. And central banks then had to cut interest rates yet again to bring more spending forward from the future to the present, and to create more money by purchasing large quantities of assets from the private sector – the practice known as unconventional monetary policy or quantitative easing (QE). There is in fact nothing unconventional about such a practice – as I will explain in Chapter 5, so-called QE was long regarded as a standard tool of monetary policy – but the scale on which it has been implemented is unprecedented. Even so, it has become more and more difficult to persuade households and businesses to bring spending forward once again from an ever bleaker future.

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It is ironic, therefore, that economists who believe that money matters (for example, Milton Friedman) argue that ‘the demand for money is highly stable’, whereas Keynesian economists argue that money does not matter because its demand is unstable.27 Both groups are wrong – money really matters when there are large and unpredictable jumps in the demand for it. The method used to create money was to buy government bonds from the private sector in return for money.28 Those bond purchases were described by many commentators as ‘unconventional’ monetary policies and became known as ‘quantitative easing’, or QE. They were regarded as newfangled and untried. If history is what happened before you were born, then many of the commentators must be extremely young. For open market operations to exchange money for government securities have long been a traditional tool of central banks, and were used regularly in the UK during the 1980s, when they were given the descriptions ‘overfunding’ and ‘underfunding’.29 What was new in the crisis was the sheer scale of the bond purchases – £375 billion by the Bank of England, almost 20 per cent of GDP, and $2.7 trillion by the Federal Reserve, around 15 per cent of GDP.

Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least
by Antti Ilmanen
Published 24 Feb 2022

In practice it means that government bonds have hedged investors against the equity risk that dominates most portfolios.32 Supply-demand conditions include many aspects, during the past decade likely most importantly the quantitative easing (large-scale asset purchases) by central banks. For example, the Fed's assets on the balance sheet rose from $0.8 trn before the 2008 GFC to $4.5 trn by 2015. Assets fell somewhat before the Covid crisis but then doubled to $8 trn by mid-2021. However, the mechanical impact of quantitative easing was initially offset by fiscal policy and Treasury debt management. Growing Treasury issuance and extended Treasury durations brought more absolute interest rate risk to the market in the early 2010s than quantitative easing removed from it (see Greenwood et al. (2014)).

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Even if the expected cash flows and risk premia were near historical norms, the very low common (riskless) part of the discount rate can make everything expensive. The fundamental backdrop to low yields is of course the persistent slow growth, low-inflation environment after the GFC, which has left major central banks battling deflationary forces with loose monetary policies (near-zero policy rates and quantitative easing). Attempts to tighten monetary policies have been quashed, most recently by the Covid crisis. Loose central bank policies are less an active choice and more a response to “wet logs economies” (where any tightening can cause recession or crashes) and to fundamental trends in demographics, globalization, and technology (which have caused lower inflation and natural real rates).

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Yet, Table 2.1 shows that this is not something you should expect on every decade and perhaps least of all after a decade of a US large-tech–led bull market. The 2020s may turn out very differently. Time will tell if we are in for a Covid-scarred decade, another roaring 20s, or inflationary 70s, or something new. Easy central bank policies (both low rates and quantitative easing) supported continued richening of already rich bonds, stocks, and all risky assets – whether liquid or illiquid. “The Fed put” became available to an increasingly broad range of assets whenever markets looked shaky, as the alternative of fast pain was too unbearable for policymakers. This also meant that any macro trends were cut short, which hurt trend-followers and macro traders.

The Social Life of Money
by Nigel Dodd
Published 14 May 2014

Federal Reserve has made commitments totaling some $29 trillion, lending $7 trillion to banks during the course of one single fraught week. The Bank of England has spent around £325 billion on quantitative easing alone—a figure that could yet rise to £600 billion—while the U.K. government has committed a total of £1.162 trillion to bank rescues. The European Central Bank has made low-interest loans directly to banks worth at least €1.1 trillion. These measures are not addressing the crisis alone. In April 2013, the Bank of Japan embarked on a quantitative easing program worth some $1.3 trillion, designed to end more than a decade of deflation. The social costs of the crisis, too, have been devastating.

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More recently, however, the bankers did not oppose the significant levels of money creation ($13 trillion of debt to rescue bad loans and other obligations) that went into the bailout and the quantitative easing (QE) program. QE began in March 2009, when the U.S. Federal Reserve bought $1,750 billion of government bonds and mortgage-related and agency securities, and the Bank of England purchased £200 billion ($308 billion) of (mostly) government debt. Despite this, and several subsequent episodes of QE, deflation, not inflation, still appears to be the prevailing concern. Technically, quantitative easing consists of temporary bond purchases, but there is a view, increasingly predominant, that these purchases will turn out to be forever.57 This would be helicopter money,58 or what is otherwise known as direct (or overt) monetary financing.59 Monetary theory is at the heart of this idea.

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Gold’s price broke the $1,000 an ounce barrier in 2009, reaching a little more than $1,700 by early 2012. To sympathizers of Menger, this rise provides all the evidence necessary for the declining purchasing power of money once it is untethered from gold. Central banks would never have been able to pursue policies like quantitative easing, for example, if the supply of money was fixed to the supply of a reliable commodity, such as gold. Moreover, money would be worth considerably more as a result. To others, who sympathize with Keynes’s famous description of gold as a “barbarous relic,” linking the supply of money to a commodity with a finite supply spells disaster because it stifles the supply of investment that the economy needs.

Big Debt Crises
by Ray Dalio
Published 9 Sep 2018

Around this time, most of the world’s central banks and governments were slowing their aggressive rates of stimulus. The Fed ended the first round of quantitative easing in March after purchasing $1.25 trillion in mortgage-backed securities. The pace of fiscal stimulus from programs like the America Recovery and Reinvestment Act were set to peak later in the year. Abroad, there were pockets of tightening as countries like China increased interest rates. Importantly, at this point it wasn’t clear to investors that merely slowing or ending quantitative easing was equivalent to tightening—and not that different from raising interest rates. Some thought it was enough to simply pump a lot of money into the economy to stimulate it—and the Fed had certainly done that, printing over $2 trillion.

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–New York Times August 24, 2010 Wall Street Hit Again, This Time by Housing Data -New York Times September 1, 2010 Wall Street Surges After Good Reports -New York Times September 7, 2010 Renewed European Worry Hurts Shares -New York Times September 21, 2010 Fed Stands Pat and Says It Is Still Ready to Buy Debt -New York Times September 21, 2010 Another Step Toward More Quantitative Easing “We suspect the Fed will end up having to push much harder than anyone currently expects, as it is likely that the currently planned quantitative easing will not be nearly as effective per dollar as the last stage of QE was. This is because the economic impact of the Fed printing and spending money (QE) depends on who gets the money and what they do with it.” –BDO September 24, 2010 Signs of Stability Help Extend September’s Rally -New York Times October 1, 2010 In Comments, Fed Officials Signal New Economic Push -New York Times October 14, 2010 ECB Policy “We see overall growth rates decelerating, debt problems on the periphery that at a minimum remain an intense weight on growth and a fiscal policy of austerity that is clearly a drag.

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When central banks reduce interest rates, they stimulate the economy by a) producing a positive wealth effect (because the lower interest rate raises the present value of most investments); b) making it easier to buy items on credit (because the monthly payments decline), raising demand—especially for interest-rate-sensitive items like durable goods and housing; and c) reducing debt-service burdens (which improves cash flows and spending). MP1 is typically the first approach to a debt crisis, but when short-term interest rates hit around 0 percent, it no longer works effectively, so central banks must go to the second type. Monetary Policy 2 “Quantitative easing” (QE) as it is now called (i.e., “printing money” and buying financial assets, typically debt assets), is Monetary Policy 2. It works by affecting the behavior of investors/savers as opposed to borrowers/spenders, because it is driven by purchases of financial assets, typically debt assets that impact investors/savers the most.

Getting Back to Full Employment: A Better Bargain for Working People
by Dean Baker and Jared Bernstein
Published 14 Nov 2013

And it would have prevented the world from recognizing that the economics profession was wrong, since its estimate of the structural rate of unemployment would otherwise never have been tested.[14] As the unemployment rate falls in the years ahead we will face similar controversies. Indeed, prominent voices in the profession claim that the unemployment rates we are now seeing are consistent with the structural rate of unemployment in the economy.[15] From this perspective, efforts by the Fed to boost the economy with low interest rates and quantitative easing, or by Congress to use spending and tax cuts to increase demand, are foolhardy, since they will primarily have the effect of raising the inflation rate while having little impact on output and employment. Their argument is that the downturn represents a fundamental shift in the economy. In their view, the bursting of the housing bubble left a huge pool of workers with capabilities in construction and manufacturing; when the economy recovers we are not likely to see as much employment in these sectors as before, and so millions of former construction and manufacturing workers will be structurally unemployed.[16] While this is a minority view in the profession, as evidenced in part by the fact that the Fed’s Open Market Committee has overwhelmingly supported expansionary policy, more moderate voices have argued that the NAIRU is considerably higher than it was before the downturn.

…

As a result of the low inflation rate in the economy going into the downturn, the Fed lacked the tools necessary to bring the economy back to full employment. The Fed can get around this limitation with unconventional monetary policy, which is why it has been buying up large amounts of long-term bonds in its policy of “quantitative easing,” hoping to directly lower long-term interest rates. This is a second-best solution. The effects of buying up large amounts of government bonds and mortgage-backed securities are not well understood or predictable. The process of unwinding this policy as the Fed sells off these assets is also not entirely predictable or without risk.

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Given the costs of a sustained period of unemployment, the Fed’s policy is certainly worth the risk, but it would be better if conventional monetary policy could be more effective. (Conventional monetary policy would also raise fewer political objections of the sort that have limited the use of quantitative easing). The obvious way to give monetary policy more power would be to have a higher initial inflation rate. If the inflation rate had been 4.0 percent going into the downturn, then the Fed could have sustained a real interest rate of -4.0 percent by pushing the federal funds rate to zero. This would have been a large enough negative interest rate to provide the boost implied by Mankiw’s version of the Taylor Rule.

Sacred Economics: Money, Gift, and Society in the Age of Transition
by Charles Eisenstein
Published 11 Jul 2011

The Federal Reserve Board can go beyond its quantitative easing program to a policy of explicitly targeting a moderate rate of inflation (e.g., 3–4 percent) thereby making the real rate of interest negative. This would also have the benefit of reducing the huge burden of mortgage debt facing tens of millions of homeowners as a result of the collapse of the housing bubble.22 The problem is, in a deflationary environment when banks aren’t lending, how can the Fed create inflation? This is the biggest problem with the inflation solution in a situation of overleveraging and overcapacity. Quantitative easing exchanges a highly liquid asset (base money, reserves) for less liquid assets (e.g., various financial derivatives), but that won’t cause price or wage inflation if the new money doesn’t reach people who will spend it.23 Even if the Fed monetized all debt, public and private, the essential problem would remain.

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The magic talisman by which the pronouncement “An airport shall be built here” crystallizes into material reality has lost its power. Human hands, minds, and machinery retain all their capacities, yet we can no longer do what we once could do. The only thing that has changed is our perceptions. We can therefore see the bailouts, quantitative easing, and the other financial measures to save the economy as further exercises in perception management, but on a deeper, less conscious level. Because what is money, anyway? Money is merely a social agreement, a story that assigns meaning and roles. The classical definition of money—a medium of exchange, a store of value, a unit of account—describes what money does, but not what it is.

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If there is a system-wide insufficiency of reserves, then the Fed expands the monetary base through open-market operations. That is why M0 growth typically lags behind M1 and M2 by many months—the opposite of what one would expect from the multiplier effect if we lived in a fractional reserve system (see Keen, “The Roving Cavaliers of Credit”). That is also why recent “quantitative easing” by the Fed and other central banks has done little to increase the money supply. 5. This in fact happened many times; during the Great Depression it happened in nearly every country. Holders of currency demanded gold from banks and ultimately central banks, which eventually said no. In the United States in the 1930s it actually became illegal under Roosevelt’s Executive Order 6102 to hold more than a small amount of gold.

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Published 11 Mar 2024

But when Japan’s housing boom had ended in a similar way in the 1990s, policymakers encountered a problem. The crash had been so dramatic that cutting interest rates wasn’t enough to stimulate the economy. Even if the central bank made credit very cheap, people still didn’t want to borrow.93 So, the Bank of Japan came up with a new way to transfer money to the financial sector: quantitative easing (QE). And after the crisis of 2008, banks all over the world followed suit. While it worked differently from country to country, the underlying logic of QE was the same: central banks would create new money and use it to purchase assets from the private sector. At first, central banks limited their purchases to long-term government bonds, but eventually they started to buy all sorts of assets—from corporate bonds to the mortgage-backed securities that helped cause the financial crisis in the first place.

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Streek, Buying Time. 93. Richard C. Koo, The Other Half of Macroeconomics and the Fate of Globalization (Hoboken, NJ: John Wiley & Sons, 2018). 94. Durand, Fictitious Capital. 95. Ibid. 96. Ibid. 97. Benjamin S. Braun, “Speaking to the People? Money, Trust, and Central Bank Legitimacy in the Age of Quantitative Easing,” Review of International Political Economy 23, no. 6 (November 2016): 1064–92, https://doi.org/10.1080/09692290.2016.1252415. 98. They have, in Braun’s words, “made the long-term interest rate a policy variable.” Benjamin S. Braun, “Central Bank Planning: Unconventional Monetary Policy and the Price of Bending the Yield Curve,” in Jens Beckert and Richard Bronk (eds.), Uncertain Futures: Imaginaries, Narratives, and Calculation in the Economy (Oxford: Oxford University Press, 2018). 99.

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Madoff Investment Securities LLC, 120–21 Bevins, Vincent, 191 Bezos, Jeff, 75–77, 80–81, 132 Biden, Joe, 69, 70–71, 136, 140–42 Big Three asset managers, 133, 135, 137 biopolitics (Foucault), 105 BlackRock, 69, 132–37, 257 Blackstone Financial Management, 44, 133 “black swan” events, 50, 114 Blackwater, 104 Bodie, Matthew, 254 Boeing, 3–10, 86, 87, 96, 225 agreements with Southwest Airlines, 5, 10, 16 Boeing 737 MAX, 3–9, 17, 218–19 Boeing 787 Dreamliner, 4–5, 8 capitalism and, 16–17 corporate welfare and, 7–8, 29 MCAS (Maneuvering Characteristics Augmentation System), 4, 5–7 merger with McDonnell Douglas, 4, 8–9 shareholder distributions, 6 Bolsonaro, Jair, 251 BP, 64 Braithwaite, Michael, 163–64 Braun, Benjamin, 129–30 Braverman, Harry, 99–100 Brazil Amazon environmental protections, 251 Fordlândia in, 22–23, 186 Porto Alegre model for participatory budgeting (PB), 232–33, 247 Bregman, Rutger, 224 Bretton Woods, 51 British Business Bank (BBB), 156–57 Brook House (UK), 102 Brown, Matthew, 237–38, 247 Brown, Wendy, 33, 34, 143, 167 Buffett, Warren, 95 Builders Labourers Federation (BLF, Australia), 227–29 Bukharin, Nikolai, 182 bureaucratization, 34–35, 147 Burke, Edmund, 103 Bush, George W., 140 C Calhoun, David, 9 Cameron, David, 54, 154–56, 162 campaign finance reform, 259 Canada COVID-19 aid to corporations, 46, 136 Ethyl Corp. lawsuit and, 197 resistance to the labor movement, 78 Toronto Community Housing Corporation (THTC) participatory budgeting, 232–33 Canada Infrastructure Bank, 136 Capita, 164 Capital (Marx), vii capitalism, 11–17 alliances among capitalists in, 13–14 centralization of power in, xvi–xvii, 92, 136–37 central vs. corporate planning and, x–xiv, xvi, xix–xx, 14–16 class divisions in, x, xix, 11–14, 38–39, 82–84, 108, 151, 158–60, 216–18, 252, 259, 268 democracy and, xiv–xv, 147, see also democratic planning dialectic/creative tension between markets and planning, xvi–xvii, 37, 53, 123, 126 distinction between capital and labor, 30–39 feudalism vs., 12–13, 266, 269–71 foundations of, 264–66, 268–71 free markets and competition and, ix, 11–14, 15–17, 30, 36–39, 97–98, 137, 221, 268–70 fusion of political and economic power in, xviii, 10, 13–15, 33, 80, 82–84, 95–96, 104–8, 183–85, 190, 264–65 fusion of public and private power in, 142–43, 159–60 human capital and, 33, 148, 166–67 as hybrid system of competitive pressure and centralized control, ix, 16, 37, 47, 123, 269 imperialism as highest stage of, 183 international finance system as time lords of, 109, 113–14 investor-capitalists, 118, 148 Keynes and, see Keynes, John Maynard Marx and, see Marx, Karl means of production in, 12–13, 247, 264 “mini-capitalists” and, 33, 118, 122–23 nature of capital and, 11, 12–13 need for business firms in, 81–85 negative externalities, 88–89 new industrial capitalism (Galbraith), 37 pursuit of profit in, xiii–xiv, 25, 29 rewards for competitiveness, 225–26 as rule by capital vs. free markets, 10–11, 36–39, 137 socialism vs., 221 socialized capitalism (Galbraith), 97–98 social relationships in, 11, 13, 143, 157–59, 164, 170, 172, 265–66 stakeholder capitalism, 35–36, 135–36, 148 state vs. markets and, 220–22 surveillance capitalism, 27, 54–58, 94, 98–100, 155 see also disaster capitalism CARES Act (2020), 9–10 Cayman Islands, as tax haven, 42, 132 central banks, 124–32 bank bailouts in the United Kingdom and, 31–32 BlackRock and, 136 democratizing, 258 emergence of central banking, 124–25 legitimacy questions, 129–32 loanable funds model and, 114–18 quantitative easing (QE) and, 127–28, 129, 136 swap lines among, 209–10 US dollar and, 178, 209–10 see also specific central banks Central Intelligence Agency (CIA, US), 175, 189, 241 centralized planning by Amazon, 75–81 in capitalist economies, 14–16, 24, 66–71, 98, 143, 266 collective action problem and, 47–48, 67, 70, 159–61, 166–67, 248–49, 253 corporatism/corporate planning vs., x–xiv, 14–16, 27, 30, 84 democratic, see democratic planning empires and, see empire planning financial crisis of 2008 and, 49–50 at Ford Motor Company, 19–24 Galbraith on, 97–98 Gramsci on, 24 Hayek on, x–xii international finance system and, 113–14 neoliberal revolution vs., 24–26 resisting, 71–72 by states, see state planning by Walmart, 88, 264, 265 Chamayou, Grégoire, 27, 30 Chan, Jackie, 168 Chang, Ha-Joon, 146, 180, 182 Chao, Elaine, 42–43 ChemChina, 90, 91, 124 Chemring Group, 46 Chevron, 64, 194–96, 205 Chicago School, 150–51, 199 Chile democratic socialism in, 241–46 National Telecommunications Enterprise, 245 Project Cybersyn, 245–46, 247, 265, 266 State Development Corporation (CORFO), 244–45 violence of the neoliberal state in, 34 Chiluba, Frederick, 206 China Belt and Road Initiative, 171–72, 182–83 COVID-19 surveillance and, 57–58 developmentalism and, 137, 170–72 Evergrande Group implosion, 167–69, 171 state planning in, 167–72 China CITIC Bank International, 124 Chiquita (formerly United Fruit Company, UFC), 186–89 Christophers, Brett, 136 Chrysler, 29 Citigroup, 120, 124 Civil War, 144 climate breakdown, viii, 66–71 Amazon and, 79 decarbonization efforts, 67, 69–71, 78, 135, 140–41, 250–51, 256, 263 economic power of capital and, 15 Extinction Rebellion and Fridays for Future, 251 fossil-fuel sector and, 66, 69, 139–43 Global North and, 263 Global South and, 263 Green New Deal proposal, 69, 248 need for cooperation and, 66–71, 216, 247–52 Climate Leviathan (Wainwright and Mann), 70 Coase, Ronald, 81, 83–85 Coca-Cola, 81 Cold War, ix, xx collective action problems, 47–48, 66–71, 159–61, 166–67, 248–49, 253, see also democratic planning Collins Aerospace, 219 Colombia, surveillance of Teleperformance workers, 99 Communist Manifesto (Marx), 152 Communist Party of China, 171 of Guatemala, 188 of Indonesia, 191 community wealth building (CWB), 237–38 comparative advantage (Ricardo), 179–81 computer technology ARPANET, 244 coop app platforms, 154–55, 254–55 data protection and privacy, 27, 54–58, 94, 99, 155 in democratizing the future, 264–66 dot-com bubble (1997–2001), 110–11, 120, 133 intellectual property rights and, 262 Project Cybersyn (Chile) and, 245–46, 247, 265, 266 surveillance capitalism and, 27, 54–58, 94, 98–100, 155 Walmart centralized planning and, 88, 264, 265 Connolly, James, 59, 61 conspiracy theories, xvi, 38, 43–44, 53 Cooley, Mike, 216–20 Coons, Chris, 141 COP26 (UN Climate Change Conference, 2021), 70–71 Coral Island, The (Ballantyne), 222–24 Corbyn, Jeremy, 250 Cornered (Lynn), 21 corporations central vs. corporate planning, x–xiv corporate crime and, 106–7, 119–24, 156–57, 220–21 corporate sovereignty, xiv, 22–23, 25, 80, 103–8, 143 corporatism and, x–xiv, 14–16, 27, 30, 84 COVID-19 pandemic programs, 9–10, 41–49, 59–60, 141–42, 155–56 democratic planning and, see democratic planning expanding collective ownership of, 253–55, 257 fusion of political and economic power of, xviii, 10, 13–15, 33, 80, 82–84, 95–96, 104–8, 183–85, 190, 264–65 lobbying by, 105–6, 140, 141–42, 151, 159, 259 managerialism and, 34–35, 84, 100, 108, 216 profit maximization by, xiii–xiv, 25, 29 see also taxes and taxation COVID-19 pandemic airline industry and, 9 BlackRock and, 136 call center workers and, 98–99 CARES Act (2020) and, 9–10 corporate beneficiaries of, 9–10, 41–49, 59–60, 141–42, 155–56 cost-of-living crisis, 48, 58, 63–66, 129 Evergrande (China) implosion and, 167–69, 171 fossil-fuel industry and, 64, 141–42 frauds and scams in, 156–57 housing crisis and, 43, 44–45 inflation and, 63–66 McKinsey & Company and, 53–58, 155 mortality measures during, 105 shareholder distributions/share buybacks during, 45–47, 59–60, 64 shipping companies and, 62–63, 64 state economic programs in, 41–48 supply chain financing and, 153–54 surveillance programs, 57–58, 98–99 UK responses to, 45–46, 53–61, 155–57, 162–63 US responses to, 41–45 WeWork business model and, 112 worker loss of income and poverty, 60, 63, 98–99 zoonotic disease and, 68 creative destruction (Schumpeter), 86, 95, 96 Credit Suisse, 52, 123–24, 153–54 crony capitalism, 34 Crothers, Bill, 155–56 Crown Commercial Service (CCS, UK), 155–56 Crown Prosecution Service (CPS, UK), 102 Cunningham, Ceri, 239–40 Curaçao, as tax haven, 45 D Dalton, David, 155 Danone, 46 Dark Waters (2019 film), 91 data protection and privacy, 27, 54–58, 94, 99, 155 Davis, Mike, 68 Dawn of Everything, The (Wengrow and Graeber), 224–25 Dayen, David, 89 Debt (Graeber), 125 Debt Collective (US), 249–50 Decree 900 (Guatemala), 188 de Guzman, Leody, 177 Delinquent Genius (Cooley), 217 democracy capitalism and, xiv–xv, 147 democratizing the state, 257–61 planning and, see democratic planning as synonymous with socialism (Meiksins Wood), xviii “unfreedom” and, xiv–xv Democratic Party (US) fossil-fuel industry and, 140–41, 142 in Mississippi, 236 democratic planning, 215–66 Argentina, Ciudad Futura, 234–35, 255 Australia, green bans, 227–29 Brazil, participatory budgeting, 232–33, 247 in Chile, 241–46 for the future, 264–66 human nature and, 222–26 Iceland, Better Reykjavik program, 235–36, 258–59 India, Kerala people’s planning, 233–34 international finance system and, 255–57 international institutions and, 261–64 Mississippi, Cooperation Jackson program, 236–37, 247, 251–52, 255 participatory budgeting (PB), 232–33, 235–36, 258–59 people-powered planning, 226–40, 247–52 Spain, Marinaleda workers’ collective, 229–30 state-level, 241–46, 257–61 UK, Blaenau Ffestiniog program (Wales), 238–40 UK, Greater London Enterprise Board, 216–17, 219–20 UK, Lucas Plan/Lucas Aerospace Corporation, xix, 215–22, 226, 229, 231, 247, 248, 266 UK, People’s Plan for the Royal Docks (London), 230–31 UK, Preston community wealth building (CWB) program, 237–38, 247, 255 for work and the corporation, 252–55 democratic socialism, 216–17, 241–48, 265 Democratic Socialists of America (DSA), 250 dependency theory, 184–86, 199, 205 deregulation, xv–xvi, 7, 31, 32, 51, 170, 206 Deutsche Bank, 49 developmentalism, 137, 170–72, 205–8 disaster capitalism, 41–71 climate breakdown and, 66–71 collective action problems and, 47–48, 67, 70, 159–61, 248–49, 253 corporate welfare programs and, 31–32 COVID-19 pandemic and, see COVID-19 pandemic financial crisis of 1987 and, 126–27 financial crisis of 1997 and, 51, 200 financial crisis of 2008 and, see financial crisis of 2008 (subprime bubble) nature of, 38 shock doctrine (N.

The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)
by Phil Thornton
Published 7 May 2014

The Bank of England, the Federal Reserve and the European Central Bank have all run inflation-targeting regimes over the last couple of decades. 162 The Great Economists The idea of using fiscal policy to fine-tune the economy now receives little support. But perhaps the greatest endorsement of Friedman’s work was the adoption by the Federal Reserve of the medicine he had retrospectively prescribed for the Great Depression, which was vigorously applied in 2009 when central banks slashed interest rates to zero and embarked on ‘quantitative easing’ – pumping money into the economy. Giving testimony to the US Congress in that year, Ben Bernanke specifically referenced Friedman and Schwartz’s analysis of the Great Depression. ‘With that lesson in mind, the Federal Reserve has reacted very aggressively to cut interest rates in this current crisis.

…

But Friedman-ism is clearly embedded in the new economic consensus. The dominant New Keynesian models that attempted to bring together the best of Keynes and Friedman include the idea of consumption smoothing over time, a primacy of monetary policy and rules for its conduct. Even the policies of quantitative easing that central banks have used since the 2008–9 financial crisis were something Friedman had prescribed to solve Japan’s ills 20 years previously. But despite that achievement it is also clear that few economies have embraced the small government, regulationlite, purely market economies that Friedman believed in. 164 The Great Economists Even in his homeland, the public sector takes up as large a percentage of the economy as it did 30 years ago and there is a general acceptance of the need for government regulation to curb the excesses of the free market.

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Roosevelt) 148 New Keynesianism 159, 163 New Neoclassical Synthesis 111 Nicholas I, Tsar 52 NINJA (No Income, No Job, No Assets) homebuyers 61–2 Nixon, Richard 109, 146 Nobel laureates Kenneth Arrow (1972) 191, 213 Gary Becker (1992) 194, 195–6 Ronald Coase (1991) 73 Peter Diamond (2010) 179 Eugene Fama (2013) 160, 187 Milton Friedman (1976) 146, 147–8, 154, 161 Lars Peter Hansen (2013) 160 Friedrich Hayek (1974) 137 Daniel Kahneman (2002) 218, 220 Paul Krugman (2008) 180, 191 Simon Kuznets (1971) 148 Robert Lucas (1995) 202 Robert Merton (1997) 187 Edmund Phelps (2006) 213 Paul Samuelson (1970) 168 Myron Scholes (1997) 187 Vernon Smith (2002) 218 non-accelerating inflation of unemployment (NAIRU) 153–5 Nordhaus, William 171, 178 North American Free Trade Agreement 41, 187 North, Lord 23 Obama, Barack 162, 190 offshoring of jobs 41 OPEC 22 opportunity cost concept 201, 205 optimism bias and overconfidence 226–7 outsourcing 21 overlapping generations (OLG) model 178–80 Pareto, Vilfredo 182 Pareto efficiency 182 pensions and pension funds 178 permanent income hypothesis (Friedman) 148–50 Perot, Ross 41 Phelps, Edmund 154, 213 Philip, Prince 158 Pigou, A.C. 95 Pinochet, Augusto 161 political economy 28, 74, 93 population growth theories Malthus 31 Ricardo 31, 32–3 Posner, Richard 215 Predictably Irrational (Ariely, 2009) 234 prejudice economic perspective of Becker 196–7, 198–9 views of Friedman 157 price, as interaction of supply and demand (Marshall) 75–9 prices and knowledge (Hayek) 131–3 Prices and Production (Hayek, 1931) 126, 130 Principles of Economics (Marshall, 1890) 72, 76, 77–8, 87–8, 188 private savings, influence of taxation policy 43–4 private sector windfalls, impact of stimulus measures 43–4 privatisation of state-owned monopolies 21 246Index productivity, and division of labour 11–14 Prospect Theory (Kahneman) 228–32, 234 protectionism 22–3, 33–5, 41–2, 185 public goods economics 175–8 purchasing price parity (PPP) measures 186 quantitative easing 162, 163 quantity theory of money, criticism by Keynes 97 Rae, John 23 rational choice model (Becker) 197, 212–15, 216 challenge from Kahneman 221–33 rational expectations hypothesis 111, 137 Reagan, Ronald 19, 20, 139, 146, 158, 160 recession drivers of (Keynes) 101 see also Great Recession (2009) reflection effect 229 revealed preference theory 180–1 reverse elasticity 84 Ricardo, Abraham 28–9 Ricardo, David (1772–1823) 27–46, 183 attack on the Corn Laws 33–5 early life and influences 28–30 from finance to economics 30–1 global free trade 40–2 government debt 38–9 influence of Adam Smith 30 international trade and comparative advantage 35–8 key ideas 46 long-term legacy 40–4 on the general workings of the economy 31–3 on wealth creation and distribution 31–3 political career 30 population growth theories 31, 32–3 The Principles of Political Economy and Taxation (1817) 28, 31–3, 188 Ricardian equivalence 38–9 Ricardo effect 33 verdict 45–6 wine and cloth example 35, 37, 40–1 Ricardian equivalence 38–9 Ricardo effect 33 Robbins, Lionel 122, 129 Rogeberg, Ole 211 Rogoff, Kenneth 189–90 Roosevelt, Franklin D. 148 Samuelson, Paul (1915–2009) 37, 106, 137, 159, 167–92 autarky concept 184 early life and influences 169–70 economics in action 190–1 Economics: An Introductory Analysis (1948) 168, 171–3, 188–9 efficient markets 187 ethical judgements in economics 182–3 explaining trade imbalances 184–5 factor price equalisation theorem 186–7 financial economics 187 Foundations of Economic Analysis (1947) 168, 169–70 global public goods 177–8 influence of Keynes 171–2 influence on economic theory 189–90 intergenerational economics 178–80 international economics and trade 183–7 key economic theories and writings 171–87 long-term legacy 188–91 mathematical approach to economic issues 169–70 microeconomic market system 172–3, 174 multiplier effect 174–5 Index247 neoclassical synthesis 174 neo-Keynesianism 168–9, 173–5 Nobel Prize in economic sciences (1970) 168 oscillator model of business cycles 174–5 overlapping generations (OLG) model 178–80 public goods and public finance 175–8 public goods economics 175–8 revealed preference theory 180–1 understanding consumer behaviour 180–1 verdict 191–2 warrant pricing 187 welfare economics 181–3 Scholes, Myron 187 Schwartz, Anna 150–1, 162 Scottish Enlightenment 3 Second World War 95, 96 self-interest theory of Adam Smith 2–3, 6, 8–9, 20 Skidelsky, Robert 114, 128 slavery 10–11 Smith, Adam (1723–90) 1–25, 97, 230–1 A Theory of Moral Sentiments (1759) 2, 5–6 division of labour and productivity 11–14 drivers of rates of pay 12–13 early life and character 3–5 free-market mechanism of supply and demand 8–9 free international trade 13–14 from philosophy to economics 6–7 functions funded by general taxation 16 functions of the state 16–18 functions that users should pay for 16–17 idea of ‘natural liberty’ 8 idea of ‘sympathy’ of people for each other 6 key ideas 25 long-term legacy 19–23 market price of a commodity 15–16 on slavery 10–11 personal legacy 23 pin factory example 11–13 role of the state in the economy 9, 10 self-interest theory 2–3, 6, 8–9, 20 taxation principles 17–18 the evil of cartels and monopolies 10–11 the invisible hand 7–9 the market mechanism 15–16 The Wealth of Nations (1776) 2–3, 6, 7–25, 188 verdict 23–4 Smith, Vernon 218 Smoot-Hawley Tariff Act (US) 42 social security systems 179 social welfare function 182–3 socialism 134–6 sovereign debt crisis in Greece 113–14 Soviet Union, collapse of 140, 158 Sraffa, Piero 130–1 stagflation in the 1970s 154, 173–4 Standard Oil Company of New Jersey 21 state-owned monopolies, privatisation programmes 21 Statecraft (Thatcher, 2002) 19 status quo bias 227–8 stimulus measures, debate over effects of 43–4 stimulus versus austerity debate 43–4, 140–1 Stockholm School of Economics 168 Stolper, Wolfgang 184–5 Stolper–Samuelson theorem 184–5 Strachey, Lytton 94 structural unemployment 155 substitution effect, response to price change 82, 83 Summers, Anita 190 Summers, Lawrence 190 Summers, Robert 190 Sunstein, Cass 234 248Index supply and demand market mechanism 8–9, 15–16, 75–84 supply side economics 127, 201 surplus value of labour (Marx) 54–6 taxation policy influence on private savings 43–4 views of Adam Smith 16–18 taxpayers, view of government debt (Ricardo) 38–9 Thaler, Richard 232, 234, 235 Thatcher, Margaret 19, 138–9, 155, 160–1 The General Theory of Employment, Interest and Money (Keynes, 1936) 99–106 The Principles of Political Economy (Mill, 1848) 188 The Principles of Political Economy and Taxation (Ricardo, 1817) 28, 31–3, 188 The Road to Serfdom (Hayek, 1944) 135, 138, 140 The Wealth of Nations (Smith, 1776) 2–3, 6, 7–25, 188 Thinking, Fast and Slow (Kahneman, 2012) 226–7, 234 time factor and the value of capital (Hayek) 124–6 in the supply and demand model 77–9 Townshend, Charles 5, 6–7 Toyota, production systems 21 trade barriers 22–3, 41–2, 185 Corn Laws 33–5 trade imbalances, Samuelson’s explanation 184–5 trade unions 19 transient income concept 149 Treatise on Human Nature (Hume) 4 Treaty of Versailles 95–6 Tversky, Amos 218, 220, 221–5, 228–33, 235 Ulam, Stanislaw 37 uncertainty and investment volatility 104–5 unemployment causes of (Keynes) 101 frictional 155 ‘natural’ rate of (Friedman) 153–5 relationship with inflation 153–5 structural 155 United States housing market crisis (2008) 61–2, 112 import tariffs after the Wall Street Crash 42 savings and investment imbalance with China 113 trade imbalance with China 45 US Federal Reserve 111–12 action to control inflation 161 and the 2008 financial crisis 235 influence of monetary policy 159 money supply and the Great Depression (1930s) 150–2 quantitative easing (2009 onward) 162 role in the Great Depression (1930s) 159 utilitarianism 31, 182 value and costs of production 75–7 distribution of economic value (Marx) 54–6 surplus value of labour (Marx) 54–6 Voltaire 7 wages drivers of wage rates (Smith) 12–13 effects of reducing (Keynes) 101–2 relationship to rents and profits 32–3 surplus value of labour (Marx) 54–6 Wall Street Crash (1929) 23, 42 Wallich, Henry 190–1 warrant pricing (Samuelson) 187 wealth creation and distribution, view of Ricardo 31–3 Index249 welfare economics 181–3 White, Harry Dexter 108 Wilberforce, William 10 Wittgenstein, Ludwig 121 women in the workforce 202 Wood, Kingsley 106 Woolf, Leonard 94 World Bank Group 109 World Trade Organization (WTO) 22, 40–1, 185 

Hard Times: The Divisive Toll of the Economic Slump
by Tom Clark and Anthony Heath
Published 23 Jun 2014

Analysis of official data by the Centre for Research on Socio-Cultural Change at Manchester University for the Guardian; Aditya Chakrabortty, ‘London's economic boom leaves rest of Britain behind’, Guardian, 23 October 2013, at: www.theguardian.com/business/2013/oct/23/london-south-east-economic-boom 23. Claire Jones and Chris Giles, ‘King warns over surge in asset prices’, Financial Times, 13 February 2013, at: www.ft.com/cms/s/0/756c4840–75ff–11e2–9891–00144feabdc0.html#axzz2jt3EgRGf For a fuller explanation and analysis of quantitative easing, see M. Joyce, M. Tong and R. Woods, ‘The United Kingdom's quantitative easing policy: Design, operation and impact’, Bank of England Quarterly Bulletin, 51:3 (2011), pp. 200–12. 24. For a comparison of Chamberlain's and Osborne's rhetoric, see Duncan Weldon, 'UK recession: Have we heard it all before?’, Guardian, 25 July 2013, at: www.guardian.co.uk/commentisfree/2012/jul/25/uk-recession-george-osborne-neville-chamberlain 25.

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In the UK, new analysis of official data shows that the proportion of bank lending going to productive businesses is actually lower than it was before the bust.22 Meanwhile, orthodox voices such as Sir Mervyn King, former Bank of England governor, openly worry that a recovery pumped by so-called quantitative easing – the policy of printing money to pour into financial assets – could even inflate a fresh bubble.23 If that is right, another bust could become conceivable sooner than anyone would like to imagine. But even if the recovery is sustained, it is built on the same old foundations. Both British and American societies will live with the consequences, as the effects of the Great Recession – which might soon be forgotten in more prosperous neighbourhoods – dog poor communities into the indefinite future.

…

Just as with taxes and spending, macroeconomic choices over interest rates and so on will create winners and losers, and the balance of political power between them will bear upon the direction of policy.5 But monetary policy in the Great Recession has been nothing like as controversial as during the Depression: this time reflationists have carried the day with relative ease in Britain and America, if not continental Europe. Although it is worth noting in passing that ‘quantitative easing’ has disproportionately boosted the value of assets held by the rich,6 even this unprecedented aspect of the monetary stance has not proven especially divisive. It thus makes sense for us to concentrate on the fiscal side, and most especially social expenditure and redistribution. In tracing public opinion on these things, we will concern ourselves not with particular policies or plans (which inevitably evolve over time, and on which many voters will typically have no view), but rather with support for the broad underlying principles of providing for the poor and pooling risk – principles as pertinent today as they were in the hard times of the 1930s.

Planet Ponzi
by Mitch Feierstein
Published 2 Feb 2012

You can’t expect Ben Bernanke, chairman of the Fed, to be able to do anything about that. On the other hand, the Fed’s response to the rapidly declining value of the dollar has been to assist that decline in every way possible. I pointed out in chapter 1 that the Fed has allowed its balance sheet to inflate by some $2,000 billion, largely as a result of quantitative easing (to use the technical term) or printing money (to use the descriptive one). This ‘easing’ has taken place at a time when the Fed has already forced down short-term interest rates as low as they can possibly go, lower than they’ve been for generations.9 It has come at a time when long-term interest rates are as low as they’ve been since Japanese bombs were falling on Pearl Harbor.10 In addition, it’s come at a time when the threat of deflation (an admittedly serious possibility) has long, long retreated.

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One cost is the risk of being perceived as embarking on the slippery slope of debt monetization [i.e. printing money to support government borrowing]. We know that once a central bank is perceived as targeting government debt yields at a time of persistent budget deficits, concern about debt monetization quickly arises. I realized that two other central banks were engaging in quantitative easing—the Bank of Japan and, most notably, our friends at the Bank of England. But the Bank of England is offsetting an announced fiscal policy tightening that out-Thatchers Thatcher. This is not the case here. Here we suffer from fiscal incontinence and regulatory misfeasance. If this were to change, I might advocate for accommodation.

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Cotton prices are also exceptionally volatile.29 The same has been true of cocoa futures.30 By good fortune, none of these flash crashes have yet caused much damage, but poorly maintained levees didn’t do much harm to New Orleans until 2005. The mortgage market looked to be working fine, until it came close to destroying the international financial system. In 2010 we were fortunate that the flash crash happened when the markets were still being buoyed up by ultra-low interest rates, by quantitative easing, by massive fiscal stimulus, and by a broad sense of returning security in the financial markets. Those props (disastrous as they’re proving in the longer run) were enough to stop the meltdown. But just suppose the next crash happens when another major financial institution is on the brink.

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory
by Kariappa Bheemaiah
Published 26 Feb 2017

The cumulative effect of these two changes results in choking investments, higher unemployment levels, and a reduced demand for goods and services. In the past, to overcome these effects and boost spending, monetary policies aimed at reducing interest rates and employed the use of nontraditional instruments, such as quantitative easing (QE), in order to boost the supply of credit. While the effects of QE and other recently employed tools will be discussed in a later part of this book, the key point to consider is that the use of such measures is limited, since borrowers who are already overleveraged do not wish to get into more debt.

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The enactment of the Volker rule, which restricts US banks from making certain kinds of speculative investments that do not benefit their customers, is a return to the older form of banking regulations when deposits were not used to trade on the bank’s own accounts. While the net effect of these rulings, along with stricter regulations following the LIBOR23 scandal, do apply new restrictions on the ability of commercial banks to participate in speculative activities, they have been coupled with extraordinary measures such as quantitative easing (QE) and quantitative and qualitative easing24 (QQE). This is not to say that the regulators and central bankers were wrong in doing what they did. Following the events of the crisis of 2008, pumping money into the economy at ultra-low rates was better than not taking any action. But it replays the dance with debt all over again, as thanks to the current modus operandi, governments have to borrow and pay interest to central banks for the newly minted money they push into the economy.

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LIBOR is used to settle contracts on money market derivatives and is also used as a benchmark to set payments on about $800 trillion worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. Source: The Economist: http://​www.​economist.​com/​node/​21558281 24Qualitative easing means targeting certain assets to try to drive up their prices and drive down their yields, whereas quantitative easing is unspecific and intends to drive down interest rates across the whole spectrum of assets. Source: Bloomberg: http://​www.​bloomberg.​com/​news/​articles/​2014-10-31/​what-the-heck-is-japans-qqe2 © Kariappa Bheemaiah 2017 Kariappa BheemaiahThe Blockchain Alternative10.1007/978-1-4842-2674-2_2 2.

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
by Kate Raworth
Published 22 Mar 2017

IMF Working Paper 12/202. https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf 50. Keynes, J. M. (1936) General Theory of Employment, Interest and Money, Chapter 24. 51. Ryan-Collins, J. et al. (2013) Strategic Quantitative Easing: Stimulating Investment to Rebalance the Economy. London: New Economics Foundation. 52. Blyth, M., Lonergan, E. and Wren-Lewis, S., ‘Now the Bank of England needs to deliver QE for the people’. Guardian, 21 May 2015. 53. Murphy, R. and Hines, C. (2010) ‘Green quantitative easing: paying for the economy we need’, Norfolk: Finance for the Future, available at: http://www.financeforthefuture.com/GreenQuEasing.pdf 54. Greenham, T. (2012) ‘Money is a social relationship’, TEDx Leiden, 29 November 2012, available at: https://www.youtube.com/watch?

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In mild recessions, central banks normally seek to boost the money supply by cutting interest rates in order to stimulate commercial bank lending and hence money creation. In deep recessions, however, once interest rates have already been cut very low, central banks attempt to further boost the money supply by buying back government bonds from commercial banks – a practice known as quantitative easing, or QE – in the hope that the banks will then seek to invest the extra money in expanding productive businesses. But as post-financial-crash experience demonstrated, commercial banks used that extra money to rebuild their own balance sheets instead, buying speculative financial assets like commodities and shares.

…

London: Simon & Schuster. Morgan, M. (2012) The World in the Model. Cambridge: Cambridge University Press. Murphy, D. J. (2014) ‘The implications of the declining energy return on investment of oil production’, Philosophical Transactions of the Royal Society A 372. Murphy, R. and Hines, C. (2010) ‘Green quantitative easing: paying for the economy we need’, Norfolk: Finance for the Future. Murphy, S., Burch, D. and Clapp, J. (2012) Cereal Secrets: the world’s largest grain traders and global agriculture, Oxfam Research Reports, Oxford: Oxfam International. OECD (2014) Policy Challenges for the Next 50 Years, OECD Economic policy paper no. 9.

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown
by Detlev S. Schlichter
Published 21 Sep 2011

This was the so-called subprime crisis that commenced in the summer of 2007. Not surprisingly, the U.S. Federal Reserve did go again one step further, now adopting practically zero policy rates and conducting aggressive debt monetization, labeled “quantitative easing,” a policy in which it was followed by the Bank of England. But again, Japan had preceded everybody by a few years, having conducted zero-rate policies and quantitative easing from 2001 to 2006. When Japan had done so, the policy had again been unprecedented and appeared extreme to financial market commentators. The policy establishment began to follow Japanese developments with increasing trepidation, frustration, and even anger.

…

Nevertheless, statistics may give us an indication: Industrial production in the United States is about 12 times larger today than it was at the beginning of the Great Depression.2 However, the amount of currency in circulation (notes and coins) is more than 200 times larger today (end of 2010).3 The stock of money in the statistical definition of M1 is about 65 times larger and in the M2 definition about 150 times larger.4 By the end of 2010, the Federal Reserve was on its second round of quantitative easing, which meant that the monetary base and bank reserves were more than 330 times larger than in October 1929.5 Total net debt as a percent of GDP—which stood at about 150 percent when Nixon took the dollar off gold—reached a record high of 370 percent in the third quarter of 2009. At the time of the 1929 stock market crash, this ratio stood at less than 200 percent and was thus half of what it is today.6 It is part of the inherent logic of the present system that policy makers must do everything to avoid a rise in interest rates, as such a rise would reveal the true availability of savings, which naturally is much more limited than what artificially lowered interest rates have consistently projected.

…

The reason for the central bank’s intervention was to avoid a spreading of the sovereign debt crisis to other and bigger members of the monetary union, none of which are fiscally sound. In the United States, where the government is running record budget deficits, the central bank has, with its second round of so-called quantitative easing, become the biggest marginal buyer of U.S. government bonds and will soon be the largest holder. The central bankers make every effort to portray these market interventions as only temporary. They are supposed to appear as creative stimulus measures or as short-term maneuvers that guarantee stability and liquidity.

No Ordinary Disruption: The Four Global Forces Breaking All the Trends
by Richard Dobbs and James Manyika
Published 12 May 2015

Dobbs et al., Farewell to cheap capital? 33. Ibid. 34. Ibid. 35. Richard Dobbs and Susan Lund, “Quantitative easing, not as we know it,” The Economist, November 14, 2013, www.economist.com/blogs/freeexchange/2013/11/unconventional-monetary-policy. 36. EIU World Database; McKinsey Global Institute analysis. 37. Historical tables, Budget of the US government, Fiscal year 2015, Office of Management and Budget, www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf. 38. Dobbs and Lund, “Quantitative easing.” 39. Ibid. 40. Ibid. 41. Fiscal Monitor, International Monetary Fund, April 2014, www.imf.org/external/pubs/ft/fm/2014/01/pdf/fm1401.pdf. 42.

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Between fiscal year 2008 and fiscal year 2012, for example, the US government’s net interest bill fell from $253 billion to $220 billion, a decline of 13 percent, even as the total gross federal debt outstanding grew 67 percent.37 Historically, expansive monetary policy has been a temporary measure deployed to boost consumer expenditure and corporate investments at times of slow growth. Most analysts agree that the central banks’ efforts at quantitative easing over the past five years have boosted global aggregate GDP by 1 to 3 percent.38 However, precisely how the central banks achieved this remains a point of debate. The impact of ultralow rates on consumer expenditure and corporate investment isn’t clear. In the United States, for example, the personal savings rate in 2013 was 5 percentage points higher than the precrisis level, while the rate of business investment remains at its lowest levels since the end of World War II.39 Did lower rates stimulate GDP growth?

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That is to say, the central bank will create new money in order to purchase the debt issued by the government. Japan may not be alone. As governments struggle to find a way to deleverage in the face of increasing age-related spending and fragile growth rates, unconventional monetary policies such as quantitative easing and even permanent debt monetization may become less of a taboo among central banks and policy makers. In this new macroeconomic territory, a traditional view of supply and demand fundamentals may no longer be a sufficient indicator for the future cost of capital. As illustrated by the European Central Bank’s move in the spring of 2014 to lower its benchmark deposit interest rate below zero, ultralow interest rates may remain the norm over the coming years.43 As economists Carmen Reinhart and Kenneth Rogoff argued in a 2013 IMF paper, policy makers need to guard against overplaying the risks related to unconventional monetary support and limiting central banks’ room for policy maneuvering.44 HOW TO ADAPT As demand-supply dynamics change, business leaders need to be prepared to navigate both worlds.

Battling Eight Giants: Basic Income Now
by Guy Standing
Published 19 Mar 2020

Additional finance could be raised by tackling the widespread tax avoidance by wealthy individuals and corporations, which has been allowed and even facilitated to a much greater extent in the UK than in other countries.14   Why Basic Income Beats the Alternatives 59 There are other ways of showing how a basic income could be afforded. Some commentators propose funding basic income through monetary policy, a form of ‘quantitative easing for people’ instead of the Bank of England’s ‘quantitative easing’ policy of releasing money to the financial markets. This could be a means of redressing a structural failing of the British economy, the increasing lag of aggregate wage income behind GDP growth, which is resulting in rising debt as households try to maintain living standards by borrowing to pay for goods and services.15 Stewart Lansley and Howard Reed, in a report for Compass, have proposed a three-step approach for phasing in a full basic income.

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See also individual entries definition 1, 4–8 reasons for need 8–9 security 98, 113, 114 system 1, 20, 23, 26, 32, 37, 52, 70, 84, 90–1, 122 n.7 Basic Income Earth Network (BIEN) 94 behavioural conditionality 70, 73, 77, 114 behaviour-testing 4, 39, 70, 84 benefits 5, 7, 27 conditional schemes 41 social assistance 23 BET365 11 Beveridge, William 8–9, 38 Beveridge model 21 Big Bang liberalization 18 BJP 92 black economy 40, 60 B-Mincome 99–100 Booker, Cory 101 brain development 98–9 132 Branson, Richard 54 Brexit 53 Britain 6, 8–10, 12–18, 20, 23–4, 26–7, 30–1, 33–4, 37–8, 40–2, 55, 57, 59, 90, 101, 104, 112 British Columbia 95 British Constitution 1 Buck, Karen 57 bureaucracy 40, 49, 100, 102 Bureau of Economic Analysis 16 Business Property Relief 58 California 69, 96–7 Canada 35 capacity-to-work tests 6, 104 cap-and-trade approach 34 Capita 50 capital dividend 59 capital fund 89–90 capital grants 59, 75, 76, 92 carbon dividends 37 carbon emissions 33–4 carbon tax 34–5, 37 care deficit 53 care work 36, 53, 67, 74, 84 cash payments 111 cash transfers 99 ‘casino dividend’ schemes 88 charities 48 The Charter of the Forest (1217) 1 Chicago 99 Child Benefit 57, 58, 72, 123 n.4 childcare 99, 110–11 child development 88 Child Tax Credits 81 chronic psychological stress 26 Citizens Advice 46–8 Citizen’s Basic Income Trust 7, 122 n.7, 123 n.4 citizenship rights 1, 29 civil society organizations 79 Index climate change 34 Clinton, Hillary 126 n.4 Clinton, Bill 105 Coalition government 41, 50 cognitive performance 33 collateral damage 53 common dividends 7, 20, 21, 59–60, 69, 73, 75, 83, 84, 85 Commons Fund 8, 35, 57, 59, 89 community cohesion 3 resilience 23 work 84 ‘community payback’ schemes 102 Compass 59 compensation 2, 7, 16, 104 ‘concealed debt’ 24–5 conditional cash transfer schemes 90 Conservative government 9, 85 Conservatives 23 consumer credit 24 consumption 23 contractual obligations 46 Coote, Anna 113 cost of living 25, 49, 52, 83 council house sales 76 council tax 25 Crocker, Geoff 122 n.15 cross-party plans 80 crowd-funded schemes 100 deadweight effects 102 ‘deaths of despair’ 27 Deaton, Angus 10 debt 23–6, 67, 85 debt collection practices 24–5 decarbonization 34 dementia 33 democratic values 69 Democrats 37 demographic changes 15   Index 133 Department for Work and Pensions (DWP) 11–12, 42–8, 50–2, 73, 81, 92, 129 n.6 depression 28, 94 direct taxes 56, 58 disability benefits 6, 49–52, 83 Disability Living Allowance (DLA) 49–51 Disabled People Against Cuts 52 Dividend Allowance 58 ‘dividend capitalism’ 8 domestic violence 29, 87 Dragonfly 92 due process 46, 49 ecological crisis 33, 37, 39, 114 ecological developments 21 ecological disaster 35 ecological taxes and levies 37 economy benefits 20, 60 crisis 106 damage 34 growth 20, 36, 106 industrialized 20 insecurity 21, 35, 39, 89 security 75, 80, 84, 88 system 15, 27, 38 tax-paying 60 uncertainty 8, 22–3, 31 ‘eco-socialism’ 8 ecosystems 33 Edinburgh 80 education 88, 108 Elliott, Larry 122 n.15 employment 16, 22, 39, 60–1, 81, 89, 93–4, 102, 106, 107, 110, 114 Employment Support Allowance (ESA) 27, 41, 49–51 England 28, 63, 110–11 Enlightenment 85 Entrepreneurs’ Relief 18 equality 31, 85 Europe 37 European Foundation for the Improvement of Living and Working Conditions (Eurofound) 120 n.1 European Heart Journal 33 European Union 6, 17, 41 euthanasia 113 extinction 33–7 ‘Extinction Rebellion’ 33 Fabian Society 57–8 Facebook 97 family allowances 56 family benefits 56 family insecurity 23 federal welfare programs 106 Fife 24, 80 financial crash (2007–8) 23, 26, 34 financialization 116 n.22 financial markets 18 Financial Services Authority 123 n.15 Financial Times 19, 123 n.15 financial wealth 18 Finland 28, 61, 93–5 food banks 10, 29–30, 43, 109 food donations 29 food insecurity 108–9 fossil fuels 33–4 France 12, 17, 18, 32, 38, 57 free bus services 112 freedom 8, 30, 84, 85, 101, 114 ‘free food’ 108–9, 129 n.6 ‘free’ labour market 106 free trade 13 Friends Provident Foundation 75 fuel tax 35 fund and dividend model 89 funding 29, 59, 62, 69, 71–2, 112 134 G20 (Group of 20 large economies) 15 Gaffney, Declan 57 Gallup 105 GDP 14, 17–18, 23–4, 34, 36, 59, 89, 108 General Election 91–2, 94 ‘genuine progress indicator’ 36 Germany 17–18, 38, 100 Gillibrand, Kirsten 101 Gini coefficient 9, 12 GiveDirectly 91 Glasgow City 80 globalization 14 Global Wage Report 2016/17 14 global warming 33, 37 Good Society 75, 106 The Great British Benefits Handout (TV series) 92 Great Depression 9 Great Recession 23 greenhouse gas emissions 34, 36 gross cost 110 The Guardian 101, 103, 122–3 n.15 Hansard Society 37 Harris, Kamala 101 Harrop, Andrew 57 Hartz IV 100 HartzPlus 100 health 67, 87, 100 human 33 insurance premiums 35 services 60 healthcare costs 28 hegemony 14 help-to-buy loan scheme 76 Her Majesty’s Revenue and Customs (HMRC) 64, 73, 81 Hirschmann, Albert 56 household debt 24 Index household earnings 16 household survey 12 House of Commons 110–11 housing allowance 95 Housing Benefit 24, 41, 53, 71 housing policy 53 hub-and-spoke model 112 Hughes, Chris 97 humanity 33 human relations 3 ‘immoral’ hazard 109 ‘impact’ effects 78 incentive 62 income 81 assistance 88 average 83 components 11 distribution system 4, 13–14, 38, 67, 84, 107, 114 gap 9 growth 16 insecurity 27 men vs. women 15–16 national 14, 36 pensioners’ 16 rental 13–15, 20 social 14, 16–17 support payments 110 tax 1, 7, 57, 89, 111 transfer 85 volatility 22 India 68, 80, 90–2 Indian Congress Party 91 inequality 2, 4, 9–13, 21, 29, 31, 33, 35, 37, 38, 39, 54, 80, 85, 114 growth 17 income 9–10, 15–17, 19 living standard 20 wealth 18–19, 76 informal care 111   Index 135 inheritance tax 58 in-kind services 111 insecurity 21–3, 29, 38, 39, 47, 67, 85, 106 Institute for Fiscal Studies (IFS) 10 Institute for Public Policy Research 125 n.17 Institute for Public Policy Research (IPPR) 75, 111 Institute of New Economic Thinking 123 n.15 Institute of Public Policy Research 59 insurance schemes 8 intellectual property 14–15 Intergovernmental Panel on Climate Change (IPCC) 34 International Labour Organization (ILO) 14, 122 n.4 International Monetary Fund (IMF) 31, 34 international tax evasion 18 interpersonal income inequality 83 inter-regional income inequalities 83 intra-family relationships 3 involuntary debt 26 in-work benefits 22 Ireland 35 Italy 18 labour 31, 107 inefficiency 106 law 101 markets 8, 14, 32, 39, 40, 60, 62–3, 96, 100, 106 regulations 13 supply 67, 95 Labour governments 85 labourism 106 Lansley, Stewart 59 Latin America 90 Left Alliance 94 Lenin, Vladimir Ilyich 113 Liberal government 35 life-changing errors 51 life-threatening illness 33 Liverpool 80 living standards 20, 23, 33, 36, 53, 59, 92 Local Housing Allowances 24 London Homelessness Project 92–3 low-income communities 33 low-income families 21 low-income households 17 low-income individuals 86 Low Pay Commission 63 low-wage jobs 60, 107 Luddite reaction 32 lump-sum payments 35, 59, 76 Jackson, Mississippi 99 JobCentrePlus 47 job guarantee policy 101–7 job-matching programs 106 Jobseeker’s Allowance (JSA) 41, 46 Joseph Rowntree Foundation 21 McDonnell, John 129 n.13 McKinsey Global Institute 31 Macron, Emmanuel 35 Magna Carta 1 ‘Making Ends Meet’ 97 ‘mandatory reconsideration’ stage 51 Manitoba 87–8 Manitoba Basic Annual Income Experiment (Mincome) 87 market economy 105, 114 master-servant model 101 Kaletsky, Anatole 123 n.15 Kenya 90–2 Khanna, Ro 103 Kibasi, Tom 113 136 Index Maximus 50 means-testing 4, 39, 42, 48, 58, 61–2, 70, 84, 88, 90, 109–10, 114 benefits 5, 7, 27, 40, 46, 56, 71–3, 81, 129 n.6 social assistance 23, 41, 95, 122 n.7 system 6 medical services 28 Mein Grundeinkommen (‘My Basic Income’) 100 mental health 26, 28, 94 disorders 88 trusts 28 mental illness 33, 68 migrants 7, 113 ‘minimum income floor’ 45 Ministry of Justice 51 modern insecurity 22 modern life 31 monetary policy 59 Mont Pelerin Society 13 moral commitment 75 moral hazard 109 mortality 27, 76 multinational investment funds 34 Musk, Elon 31, 54 Namibia 90–2 National Audit Office (NAO) 24, 43–4, 46, 76 National Health Service (NHS) 8, 24, 27–8, 44, 68, 80, 108, 111 National Insurance 18, 22, 124 n.4 nationalism 37 National Living Wage 63 National Minimum Wage 63–4 national solidarity 3 Native American community 88 negative income tax (NIT) 23, 87, 95, 100 neo-fascism 37–8 neoliberalism 13, 84 Netherlands 96 New Economics Foundation (NEF) 57, 113, 122 n.15 non-resident citizens 113 non-wage benefits 16 non-wage work 74 North America 67 North Ayrshire 80 North Carolina 88 North Sea oil 89–90 Nyman, Rickard 23 Oakland 96–7 Office for National Statistics (ONS) 14–15, 17, 36 Ontario, Canada 95–6 open economy 84 open ‘free’ markets 13, 15 opportunity dividend 59 Organization for Economic Co-operation and Development (OECD) 18, 23, 27, 31 Ormerod, Paul 23 Osborne, George 19 Paine, Thomas 2, 75 Painian Principle 2 panopticon state 55 Paris Agreement (2015) 34 participation income 74–5 paternalism 42, 55 pauperization 63 Pawar, Alderman Ameya 99 pay contributions 21 pension contributions 18, 58 Pension Credit 41 Pericles Condition 75 permanent capital fund 71 personal care services 110–11   Index 137 personal income tax 35 Personal Independence Payment (PIP) 49–51 personal insecurity 23 Personal Savings Allowance 58 personal tax allowances 17, 58, 59 perverse incentives 50 physical health 26, 94 piloting in Britain 67–81 applying 80–1 rules in designing 70–80 policy development 3, 69 political decision 78 political discourse 92 political instability 35 political system 38 populism 37–8, 75 populist parties 37 populist politics 39 Populus survey 55 post-war system 8 poverty 2, 4, 10–12, 22, 27, 29, 36, 38, 40, 60–1, 89, 100, 108–9, 114, 125 n.17, 129 n.6 precarity 29–30, 38, 39, 60–1, 85, 103, 129 n.6 Primary Earnings Threshold 124 n.4 private debt 23–4, 39 private inheritance 2 private insurance 85 private property rights 13 private wealth 18 privatization 13, 17, 112 property prices 76 prostitution 43 Public Accounts Committee (PAC) 51 public costs 28 public debt 23 public inheritance 61 public libraries 47 public policy 97 public sector managers 103 public services 4, 17, 62, 108, 112, 114 public spending 89 public wealth 18 ‘quantitative easing’ policy 59 quasi-basic income 89, 98 quasi-universal basic services 30 quasi-universal dividends 35 quasi-universal system 61, 70, 90 Randomised Control Trial (RCT) 124–5 n.14 rape 44 Ratcliffe, Jim 12 Reagan, Ronald 13 Reed, Howard 59 refugees 7 regressive universalism 57 regular cash payment 7 rent arrears 24 controls 53 rentier capitalism 13–21, 107, 116 n.22 republican freedom 2–3, 30, 84 Republicans 37 Resolution Foundation 10, 15, 19, 25, 76 ‘revenue neutral’ constraint 7 right-wing populism 37–8 robot advance 31–3 Royal College of Physicians 33 Royal Society of Arts 55, 59, 124 n.12 RSA Scotland 125 n.17 Rudd, Amber 9 Russia 113 138 Sanders, Bernie 101 scepticism 31 schooling 67, 89 Scotland 69, 80, 111 Second World War 19, 21 security 8, 38, 55, 68, 84 economic 3, 4, 49, 56 income 73–4 social 8, 22, 49 Self-Employed Women’s Association (SEWA) 68 self-employment 45 Shadow Chancellor of the Exchequer 3, 115 n.3 Smith, Iain Duncan 42 ‘snake oil’ 113 social assistance 3, 28 social benefit 20 social care 102, 104, 110–11 social crisis 106 social dividend scheme 92 Social Fund 29 social inheritance 2 social insecurity 21 social insurance 22, 85 social integration 44 social justice 2, 8, 20, 69, 84, 101, 114 social policy 8, 23, 26, 30, 42, 53, 84–5, 96 social protection system 32 social relation 100 social security 10, 70–1, 95 social solidarity 3, 8, 39, 61, 84–5, 91 social spending 17 social status 104 social strife 35 social value 29 ‘something-for-nothing’ economy 19–20, 61 Index Speenhamland system 63 State of the Global Workplace surveys 105 statutory minimum wages 106 stigma 47, 55 stigmatization 41, 109 Stockton 97–9 Stockton Economic Empowerment Demonstration (SEED) 97 stress 26–9, 39, 51, 67, 68, 85, 93 student loans 24 substitution effects 102–3 suicides 26–7 Summers, Larry 105–6 Sweden 113 Swiss bank Credit Suisse 12 Switzerland 35 tax advantages 49 and benefit systems 17, 18, 69, 110 credits 3, 17, 24, 63, 105, 106 policies 16 rates 72 reliefs 17–18, 57–8, 61 tax-free inheritance 19 technological change 105 technological revolution 14, 31, 114 ‘teething problems’ 42 Thatcher, Margaret 13 Thatcher government 9, 18 The Times 92 Torry, Malcolm 122 n.7 Trades Union Congress 24 tribal casino schemes 76 ‘triple-lock’ policy 16 Trump, Donald 37 Trussell Trust 29, 43 Tubbs, Michael 97–8   Index 139 Turner, Adair 123 n.15 two-child limit 44 UK.

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

We should have learned that monetary stimulus—even strong and unprecedented actions like quantitative easing—has, at most, limited effects. Attention is focused on reversing deflation, which I believe is mainly a concern because it is a symptom of underutilization. While weakening the yen’s exchange rate will make Japanese goods more competitive and thus stimulate the economy’s growth, this is the reality of the international interdependence of monetary policy. It is equally true that the Federal Reserve’s policy of “quantitative easing” weakens the dollar. We can look forward to a day when global coordination improves in this area.

…

As always, it is the poor who suffer the most from such crises, as they lose their jobs and face protracted unemployment. In this case, the effects on ordinary Americans were particularly grave, given that more than 14 million homes were foreclosed from 2007 to 2013, and given the magnitude of the cutbacks in government spending, including for education. Aggressive monetary policy (so-called quantitative easing) focused more on restoring prices in the stock market than on restoring lending to small and medium-size enterprises, and as a result was much more effective in restoring wealth to the rich than in benefiting average Americans or in creating jobs for them. That’s why in the first three years of the so-called recovery, some 95 percent of the increases in income went to the top 1 percent, and why six years after the start of the crisis, median wealth was down 40 percent relative to precrisis levels.

…

Indeed, it is even possible that wealth could be increasing, even as “capital” was decreasing. In Piketty’s home country of France, the value of land in the Riviera was increasing. But that didn’t mean that there was more land. The land in the Riviera is the same today as it was fifty years ago. Only the price of land was increasing. Loose money (for instance, associated with quantitative easing, where the U.S. Fed tripled its balance sheet by buying large amounts of medium- and long-term debt, increasing it by some two trillion dollars over a short time) had led to a flood of credit. Textbook economics suggested that this should increase the quantity of lending and reduce the cost of lending, and both would have helped the American economy.

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy
by Daniel Gross
Published 7 May 2012

Other interventions were made to keep interest rates low and to jolt the economy back into life. After the financial panic passed, the Federal Reserve continued to add new assets to its balance sheet, creating new money to buy $1 trillion in mortgage-backed securities in 2009, in the first round of what came to be known as “quantitative easing” (QE). In late 2010 and early 2011, in a second round of quantitative easing, the Fed bought $600 billion in Treasury securities. But the overall balance sheet didn’t expand by anywhere near $1.6 trillion as a result of QE1 and QE2, thanks to the slow-motion erosion of crisis-era facilities and loans. Each week, as people made payments on mortgages and refinanced and sold homes, the mortgage-backed securities portfolio shrank.

…

But Nishimura’s takeaway was an optimistic one. In the 1990s Japanese policymakers deliberated and delayed before embarking on a regime of interest rate cuts, stimulus measures, an expansion of bank deposit insurance, a partial nationalization of failed institutions, bank capital injections, a zero-interest-rate policy, quantitative easing, and still more stimulus. The United States, he said, had essentially undertaken the same response, with one significant difference: speed. It took the United States just eighteen months to conduct the aggressive fiscal and monetary actions that Japan waited twelve years to carry out. Whereas Japan’s first major stimulus came seven quarters after its commercial real estate bubble peaked, the U.S. policymaking apparatus responded to the downturn much more quickly.

…

As a result the vicious debt circle of 2008 and 2009 was increasingly replaced by a virtuous circle in 2010 and 2011. Higher demand—led by global growth, rising government expenditures, and a recovering private sector—spurred job creation starting in February 2010. And this process gained steam even as the effects of policy and public spending withered. The Federal Reserve’s quantitative easing helped keep interest rates low in 2010 and 2011, but petered out in the second half of 2011. The stimulus and government assistance, so vital to averting a Great Depression in 2008 and 2009, began to wane in 2010. Meanwhile states and cities were acting as brakes on growth by cutting spending and employment.

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely
by Andrew Craig
Published 6 Sep 2015

The value (purchasing power) of one pound or one dollar has fallen by around 90 per cent since 1971. Worse, this negative trend in the value of money is accelerating thanks to the actions of politicians and central banks all over the world as they continue to invent large amounts of new money out of thin air. In the UK and US this is called quantitative easing (QE). BUT WHAT IS INFLATION? “But inflation is still really quite low – 2 per cent or something, isn’t it?” I hear you ask. Yes but what is “inflation” as reported by governments? Here is a little story that may help explain why official government inflation numbers are of very little use to us.

…

Interest rates in Greece, Italy, Spain and even France had been significantly pushed up by a bond market that refused to pay as much for these countries’ debt as before. The only way for a country to fight against this reality is by inventing money to buy their own bonds. This is essentially what “quantitative easing” (QE) is. As we have seen, throughout history this policy has always caused significant inflation. And higher inflation means lower real returns on assets. In those countries that decided to combat this by printing money (particularly the UK and the US), property markets are caught between the “rock” of rising interest rates and the “hard place” of rising inflation.

…

So far, governments on both sides of the Atlantic have taken the money-printing option, and it is extremely likely this will continue for the simple reason that they can get away with it, because so few people understand what is going on (remember the John Maynard Keynes quote about only “one man in a million” understanding inflation). And for obvious reasons a politician who stands up and says, “Sorry, you can’t have a pension, we just can’t afford it any more,” has a much shorter life span than one who says, “We are taking positive steps to solve the financial crisis with a £100 billion package of quantitative easing (QE).” Both statements have essentially the same result but only a small minority of people understand this. No matter what your political inclinations, no matter how you view the role of government, the simple fact is that we can’t afford to pay for society’s pension and healthcare requirements the way we have for the last few decades.

Unhappy Union: How the Euro Crisis - and Europe - Can Be Fixed
by John Peet , Anton La Guardia and The Economist
Published 15 Feb 2014

The mood of foreboding grew darker still on May 6th 2010, the day of a strange “flash-crash” on Wall Street, in which the Dow Jones Industrial Average collapsed by about 1,000 points before recovering within minutes, perhaps because of a technical glitch. The ECB’s governing council, in Lisbon that day for its monthly meeting, faced a momentous decision: should it start buying sovereign bonds to stop the panic? The Federal Reserve and the Bank of England had been doing so under their policy of quantitative easing to bring down long-term borrowing costs. But the ECB had not gone so far, wary of the prohibition against anything resembling “monetary financing”, that is, printing money to finance public debt. After the official meeting, Trichet told journalists that the subject of bond-buying had not been discussed.

…

The inflation-busting tradition of the Bundesbank meant that the ECB would rather flirt with deflation than let prices rise too high in Germany, or upset German savers by more aggressive lowering of interest rates. It never dared engage in the aggressive loosening of monetary policy, known as “quantitative easing” (involving the purchase of government bonds and other assets), long pursued by the US Federal Reserve and the Bank of England. Excessively low inflation, overly tight monetary policy and a high exchange rate made it even harder for the periphery to adjust relative to Germany. The Bundesbank openly opposed any resort to bond-buying to hold down borrowing costs.

…

And given that its supervisory role already raises questions about its political independence, not least because bank failures have an impact on national treasuries, the ECB should get out of the entanglement of the troika. For now, the ECB must have the courage to loosen monetary policy more aggressively, despite German complaints that savings are being undermined, to avert the threat of deflation. A dose of American-style quantitative easing may be in order. Once again, though, it would be easier if the ECB had Eurobonds to buy instead of having to pick and choose which country’s debt to buy and which to exclude. Narrow the democratic deficit The integration of the euro zone, the intrusion of European bodies into national economic policymaking and the growing popular disenchantment with the European project require the democratic deficit to be addressed more urgently than ever.

Money Free and Unfree
by George A. Selgin
Published 14 Jun 2017

Paying interest on reserves allowed the Fed to increase the level of reserves and still maintain control of the federal funds rate” (FRBSF 2013). Where to begin? The Fed can always “expand its balance sheet” as much as it wishes, without regard to the federal funds rate, by purchasing assets, as it has done during the various rounds of quantitative easing. And interest on reserves wasn’t needed to “place a floor on the federal funds rate”: it merely served to raise the floor—that is, the rate at which banks ceased to have any incentive to extend overnight credit to other banks—from zero to some positive value. As a solution to the “zero lower bound” problem, this was akin to raising the pavement around skyscrapers to their second story, so as not to have to worry about jumpers ever reaching the ground.

…

According to Thornton (2012: 25), the Fed did provide some help through its Term Auction Facility, though it’s having done so at subsidized rates—yet another violation of Bagehot’s rules—was “troublesome.” But not until late March 2009 did it begin expanding the monetary base aggressively, by its first round of quantitative easing. By that late date, however (Thornton observes), aggressive easing was no longer justified: financial markets had already stabilized, risk-spreads had declined considerably, and the Term Auction Facility auctions were undersubscribed. By June, according to the National Bureau of Economic Research’s reckoning, the contraction had already ended (Thornton 2012: 14).

…

This expectations effect will be particularly important when the actions are taken at a time when there are significant signs that financial markets are stabilizing and the economy is improving. Among other things, the “expectations effect” of the Fed’s unorthodox policies gave banks and other firms a greater inclination than ever to hold cash rather than invest it, undermining the potential for quantitative easing to either reduce long-term rates or revive aggregate demand. Instead, the easing served merely to further redistribute credit, while dramatically enhancing the Fed’s share of the total extent of financial intermediation. Despite such criticisms, the belief that the Fed “saved us from another Great Depression” (Li 2013) is now well on its way to becoming conventional wisdom.

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis
by James Rickards
Published 15 Nov 2016

Approaching a sexagenarian thesis adviser with an abstract that refutes what the adviser has held dear for decades is not an astute career move. Most deem it better to bang out the thousandth variation of a dynamic stochastic general equilibrium model using autoregressive conditional heteroscedasticity to explain the impact of quantitative easing on swap spreads. That’s the way to get ahead. Then there is simple inertia, like staying in a warm bed on a cold morning. Academics have their comfort zones too. New knowledge is like a dive in the surf in winter—bracing, exhilarating, but not everyone’s cup of tea. The preference for certainty over uncertainty, the allure of elegant mathematics, the close-minded academic mentality, and inertia are good explanations for why flawed paradigms persist.

…

China put its own chop on the Spanish coins to make them a circulating currency in China. If gold was the first world money, silver was the first world currency. Silver’s popularity as a monetary standard was based on supply and demand. Gold was always scarce; silver more readily available. Charlemagne invented quantitative easing in the ninth century by substituting silver for gold coinage to increase the money supply in his empire. Spain did the same in the sixteenth century. Silver has most of gold’s attractions. Silver is of uniform grade, malleable, relatively scarce, and pleasing to the eye. After the United States made gold possession a crime in 1933, silver coins circulated freely.

…

. … An incremental expansion of the SDR’s role in the new global financial architecture, aimed at making the monetary-policy transmission mechanism more effective, can be achieved without major disagreement. This is because, conceptually, an increase in SDRs is equivalent to an increase in the global central bank balance sheet (quantitative easing). … Consider a scenario in which member central banks increase their SDR allocation in the IMF by, say, $1 trillion. A five-times leverage would enable the IMF to increase either lending to member countries or investments in infrastructure via multilateral development banks by at least $5 trillion.

Postcapitalism: A Guide to Our Future
by Paul Mason
Published 29 Jul 2015

When money expands at this rate, it is a sign that we think the future is going to be spectacularly richer than the present. The crisis was simply a feedback signal from the future: we were wrong. All the global elite could do once the crisis exploded was put more chips on the roulette table. Finding them, to the tune of $12 trillion in quantitative easing, was no problem since they themselves were the cashiers at the casino. But they had to spread their bets more evenly for a while, and become less reckless.12 That, effectively, is what the policy of the world has been since 2008. You print so much money that the cost of borrowing it for banks becomes zero, or even negative.

…

Fiat money, then, contributed to the crisis by creating wave after wave of false signals from the future: the Fed will always save us, shares are not risky and banks can make high profits out of low-risk business. Nothing demonstrates the continuity between pre- and post-crisis policy better than quantitative easing (QE). In 2009, having wavered before the enormity of the task, Bernanke – together with his UK counterpart Mervyn King, governor of the Bank of England – started the presses rolling. In November 2008 China had already begun printing money in the more direct form of ‘soft’ bank loans from the state-owned banks to businesses (i.e. loans that nobody expected to be repaid).

…

Interest rates35 Kondratieff measured his waves using interest rates, and for the post-1945 period there is no clearer metric than this one: the average interest rates banks charge to companies and individuals in the USA. Interest rates rose gradually during the long boom, spiked in the early 1980s – when high interest rates were used to wipe out swathes of the old industries – and have gradually declined, flatlining at the end of the graph because of quantitative easing. Kondratieff’s colleagues, who’d seen this exact pattern in all the previous cycles, would have concluded: ‘Comrade, that’s a long wave.’ 3. Commodity prices: nickel However, Kondratieff also tracked the prices of basic commodities, such as coal and iron. This graph tracks the price of a modern equivalent, nickel – a key component of stainless steel – over fifty-seven years.

The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival
by Charles Goodhart and Manoj Pradhan
Published 8 Aug 2020

Charles Goodhart Manoj Pradhan London, UK Abbreviations ACE Allowance for Corporate Equity ADL Activities of Daily Life AE Advanced Economies AEA American Economic Association AFD Alternative for Germany AGM Annual General Meeting AI Artificial Intelligence AIG American International Group BEPS Base Erosion and Profit Shifting BIS Bank of International Settlements BLS Bureau of Labour Statistics BoA Bank of America BoJ Bank of Japan CAR Capital Adequacy Ratio CBI Central Bank Independence CBO Congressional Budget Office CEO Chief Executive Officer CFAS Cognitive Function and Ageing Study CPI Consumer Price Index CSI Cyclically Sensitive Inflation DBCFT Destination-Based Cash Flow Taxation ECB European Central Bank ELB Effective Lower Bound ELSA English Longitudinal Study of Ageing EME Emerging Market Economies EQ Emotional Quotient FDI Foreign Direct Investment FRB Federal Reserve Board FRED Federal Reserve Economic Database FT Financial Times FTSE Financial Times Stock Exchange FX Forex G10 Group of 10 GDP Gross Domestic Product GFC Great Financial Crisis GFCF Gross Fixed Capital Formation GGM General Gaidar Model HH Household HIC High-Income Countries IBC Indian Bankruptcy Code ICE Intercontinental Exchange IMF International Monetary Fund LHS Left Hand Side LMIC Low- and Middle-Income Countries LTI Loan to Income LTIP Long-Term Incentive Plan LTV Loan to Value MAC Migration Advisory Committee METI [Japan] Ministry of Economy, Trade and Industry MFN Most Favoured Nation MITI [Japan] Ministry of International Trade and Industry MMSE Mini-Mental State Examination NAIRU Non-Accelerating Inflation Rate of Unemployment NBER National Bureau of Economic Research NFC Non-Financial Corporation NHS [British] National Health Service NICE Non-Inflationary with Continuous Expansion NLW National Living Wage NRU Natural Rate of Unemployment NUM [UK] National Union of Mineworkers OBR Office for Budget Responsibility OECD Organisation for Economic Cooperation and Development ONS Office for National Statistics O-FDI Outbound Foreign Direct Investment p.a. Per Annum PACSim Population Ageing and Care Simulation PBoC People’s Bank of China PNTR Permanent Normal Trade Relations PSC Private Sector QE Quantitative Easing R&D Research and Development RHS Right Hand Side RMB Renminbi RoE Return on Equity RPA Rural Payment Agency RPI Retail Price Index SOE State-Owned Enterprises SSA Sub-Saharan Africa TARP Troubled Asset Recovery Program TU Trade Union UAW [USA] Union of Auto Workers UE Unemployment UN United Nations UR Unemployment Rate USD US Dollar VAT Value Added Tax WAP Working Age Population WAR World Alzheimer Report WEF World Economic Forum WHO World Health Association WTO World Trading Organisation ZLB Zero Lower Bound Contents 1 Introduction 2 China: An Historic Mobilisation Ends 3 The Great Demographic Reversal and Its Effect on Future Growth 4 Dependency, Dementia and the Coming Crisis of Caring 5 The Resurgence of Inflation 6 The Determination of (Real) Interest Rates During the Great Reversal 7 Inequality and the Rise of Populism 8 The Phillips Curve 9 ‘Why Didn’t It Happen in Japan?’

…

The main thesis of this book is that the great demographic reversal will shortly raise inflation and interest rates. With public sector debt ratios at high levels, and continuing worsening pressures from demography, the aims and objectives of Ministers and Central Banks may soon cease to be comfortably aligned and may come into conflict. Moreover, the effect of quantitative easing (QE) has been drastically to shorten the average duration of public sector debt (including the cash liabilities of the Central Bank). The implication of this is that when interest rates go up, this will have an even quicker effect in raising the interest burden that the Minister of Finance has to face.

…

Partly as a result, the general deflationary pressures which had already been in evidence before the GFC became even more intense afterwards. With fiscal policies constrained for the reasons set out in Chapter 6, this brought continuing pressure on monetary policies to be even more expansionary, with quantitative easing (QE) and negative official interest rates; ‘the only game in town’. Whereas the first round of QE in 2009 was massively beneficial and successful in quelling the panic search for liquidity that the GFC caused, it is arguable whether the subsequent steps had much, if any, strong positive effects, partly because of the potential adverse effects on bank profitability; for a discussion on all this see Altavilla et al. (2018); Borio et al. (2017); Brunnermeier and Koby (2018); Eggertsson et al. (2019); Goodhart and Kabiri (2019); Heider et al. (2019); and Xu et al. (2019).

Uncomfortably Off: Why the Top 10% of Earners Should Care About Inequality
by Marcos González Hernando and Gerry Mitchell
Published 23 May 2023

Average weekly earnings among full-time employees in London are a third higher than the UK average and nearly two thirds higher than those in the north-east.9 At the same time, though London is one of the richest regions in northern Europe, 27.7% of its inhabitants live in poverty.10 After the financial crisis, the UK government, instead of tackling the root causes of the financial crash – an economy over-reliant on an over-leveraged financial system whose proceeds mostly benefited one city – found scapegoats; initially welfare recipients and later, immigrants. In 2010, Labour was replaced by a Conservative-Liberal Democrat coalition whose main policy response was to cut public sector spending while relying on the Bank of England to provide quantitative easing,11 which was ‘originally conceived to enhance productivity and wages by bringing down borrowing costs and encouraging investment. Instead, it has pushed up asset prices (which favours wealthier asset-owners) but without the investment.’12 Money ended up in the coffers of banks rather than generating more loans to individuals and small businesses.

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Disabled people are 8% of the population but took an estimated 29% of all cuts, including the Personal Independence Payment for people with the highest personal care and mobility needs. Around that time, there was a noticeable slowdown in the growth of UK life expectancy.17 Austerity also undermined business confidence and the investment required for growth. Since 2010, the economic recovery has mostly been driven by increasing public and private debt. In tandem, quantitative easing – although explicitly designed to supply banks with liquidity to lend at low interest, instead boosted the assets of the richest while lending to UK businesses was negative.18 Credit instead flowed to an overheating property market, fuelling property prices. This affected harshly those who do not own their homes but created a boon for sellers, landlords and the real estate sector.

…

A true Tory budget’,23 what’s surprising about this episode is the confluence of three phenomena: the brazenness of the proposals, which married tax cuts for the most affluent with spending cuts for the most vulnerable; the effect of the markets’ reaction to the government’s sudden lurch to the right, reflecting their increased power as quantitative easing starts to be reversed; and that all of this is happening in a context where the fallout of previous and ongoing crises (not least 2008, Brexit, COVID-19 and the Ukraine–Russia war) still afflict the UK economy. Ultimately, this represents a rift 105 Uncomfortably Off between the markets and their most die-hard advocates and the end of the idea that tax cuts are per se a responsible proposal to spur growth and address government debt.

Prosperity Without Growth: Foundations for the Economy of Tomorrow
by Tim Jackson
Published 8 Dec 2016

Herndon was a graduate student at Princeton when he discovered the errors in the Reinhart and Rogoff paper. See www.bbc.co.uk/news/magazine-22223190 (accessed 18 March 2016). See also Jayadev and Konczal (2010). 49 Quantitative easing is a way of injecting more liquidity into the economy and stimulating investment. The term refers mostly to the purchase by the Central Bank of government and corporate debt from financial institutions. See for instance BoE (2010). Suggestions for ‘green quantitative easing’ or ‘people’s quantitative easing’ work slightly differently. See GND (2013), Positive Money (2013). On the scale of the US commitments, see Felkerson (2011). 50 Stuckler and Basu (2014). 51 For an overview (and collection of essays) on secular stagnation, see Teulings and Baldwin (2014); see also BIS (2015), Summers (2014).

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The impacts were as unsavoury as they were predictable. Economies that had been on the verge of recovery were pushed back into recession. With interest rates at zero, and deficit spending outlawed, central banks were forced to turn towards more unconventional monetary policy. They committed even more money – this time in the form of ‘quantitative easing’ – to try and increase nominal demand and restimulate investment. The sheer scale of these commitments was extraordinary. By 2012, the US alone had committed a staggering $30 trillion – almost twice its annual GDP – to the recovery effort.49 But as health economists David Stuckler and Sanjay Basu argue, the ‘greatest tragedy of austerity is not that it has hurt our economies.

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INDEX Locators in italic refer to figures absolute decoupling 84–6; historical perspectives 89–96, 90, 92, 94, 95; mathematical relationship with relative decoupling 96–101, 111 abundance see opulence accounting errors, decoupling 84, 91 acquisition, instinctive 68 see also symbolic role of goods adaptation: diminishing marginal utility 51, 68; environmental 169; evolutionary 226 advertising, power of 140, 203–4 Africa 73, 75–7; life-expectancy 74; philosophy 227; pursuit of western lifestyles 70; growth 99; relative income effect 58, 75; schooling 78 The Age of Turbulence (Greenspan) 35 ageing populations 44, 81 agriculture 12, 148, 152, 220 Aids/HIV 77 algebra of inequality see inequality; mathematical models alienation: future visions 212, 218–19; geographical community 122–3; role of the state 205; selfishness vs. altruism 137; signals sent by society 131 alternatives: economic 101–2, 139–40, 157–8; hedonism 125–6 see also future visions; post-growth macroeconomics; reform altruism 133–8, 196, 207 amenities see public services/amenities Amish community, North America 128 An Inquiry into the Nature and Causes of the Wealth of Nations (Smith) 123, 132 angelised growth see green growth animal welfare 220 anonymity/loneliness see alienation anthropological perspectives, consumption 70, 115 anti-consumerism 131 see also intrinsic values anxiety: fear of death 69, 104, 115, 212–15; novelty 116–17, 124, 211 Argentina 58, 78, 78, 80 Aristotle 48, 61 The Art of Happiness (Dalai Lama) 49 arts, Baumol’s cost disease 171–2 assets, stranded 167–8 see also ownership austerity policies xxxiii–xxxv, 189; and financial crisis 24, 42–3; mathematical models 181 Australia 58, 78, 128, 206 authoritarianism 199 autonomy see freedom/autonomy Ayres, Robert 143 backfire effects 111 balance: private interests/common good 208; tradition/innovation 226 Bank for International Settlements 46 bank runs 157 banking system 29–30, 39, 153–7, 208; bonuses 37–8 see also financial crisis; financial system basic entitlements: enterprise as service 142; income 67, 72–9, 74, 75, 76, 78; limits to growth 63–4 see also education; food; health Basu, Sanjay 43 Baumol, William 112, 147, 222, 223; cost disease 170, 171, 172, 173 BBC survey, geographical community 122–3 Becker, Ernest 69 Belk, Russ 70, 114 belonging 212, 219 see also alienation; community; intrinsic values Bentham, Jeremy 55 bereavement, material possessions 114, 214–15 Berger, Peter 70, 214 Berry, Wendell 8 Better Growth, Better Climate (New Climate Economy report) 18 big business/corporations 106–7 biodiversity loss 17, 47, 62, 101 biological perspectives see evolutionary theory; human nature/psyche biophysical boundaries see limits (ecological) Black Monday 46 The Body Economic (Stuckler and Basu) 43 bond markets 30, 157 bonuses, banking 37–8 Bookchin, Murray 122 boom-and-bust cycles 157, 181 Booth, Douglas 117 borrowing behaviour 34, 118–21, 119 see also credit; debt Boulding, Elise 118 Boulding, Kenneth 1, 5, 7 boundaries, biophysical see limits (ecological) bounded capabilities for flourishing 61–5 see also limits (flourishing within) Bowen, William 147 Bowling Alone (Putnam) 122 Brazil 58, 88 breakdown of community see alienation; social stability bubbles, economic 29, 33, 36 Buddhist monasteries, Thailand 128 buen vivir concept, Ecuador xxxi, 6 built-in obsolescence 113, 204, 220 Bush, George 121 business-as-usual model 22, 211; carbon dioxide emissions 101; crisis of commitment 195; financial crisis 32–8; growth 79–83, 99; human nature 131, 136–7; need for reform 55, 57, 59, 101–2, 162, 207–8, 227; throwaway society 113; wellbeing 124 see also financial systems Canada 75, 206, 207 capabilities for flourishing 61–5; circular flow of the economy 113; future visions 218, 219; and income 77; progress measures 50–5, 54; role of material abundance 67–72; and prosperity 49; relative income effect 55–61, 58, 71, 72; role of shame 123–4; role of the state 200 see also limits (flourishing within); wellbeing capital 105, 107–10 see also investment Capital in the 21st Century (Piketty) 33, 176, 177 Capital Institute, USA 155 capitalism 68–9, 80; structures 107–13, 175; types 105–7, 222, 223 car industry, financial crisis 40 carbon dioxide emissions see greenhouse gas emissions caring professions, valuing 130, 147, 207 see also social care Cat on a Hot Tin Roof (Williams) 213 causal path analysis, subjective wellbeing 59 Central Bank 154 central human capabilities 64 see also capabilities for flourishing The Challenge of Affluence (Offer) 194 change see alternatives; future visions; novelty/innovation; post-growth macroeconomics; reform Chicago school of economics 36, 156 children: advertising to 204; labour 62, 154; mortality 74–5, 75, 206 Chile xxxiii, xxxvii, 58, 74, 74, 75, 76 China: decoupling 88; GDP per capita 75; greenhouse gas emissions 91; growth 99; life expectancy 74; philosophy 7; post-financial crisis 45–6; pursuit of western lifestyles 70; relative income effect 58; resource use 94; savings 27; schooling 76 choice, moving beyond consumerism 216–18 see also freedom/autonomy Christian doctrine see religious perspectives chromium, commodity price 13 Cinderella economy 219–21, 224 circular economy 144, 220 circular flow of the economy 107, 113 see also engine of growth citizen’s income 207 see also universal basic income civil unrest see social stability Clean City Law, São Paulo 204 climate change xxxv, 22, 47; critical boundaries 17–20; decoupling 85, 86, 87, 98; fatalism 186; investment needs 152; role of the state 192, 198, 201–2 see also greenhouse gas emissions Climate Change Act (2008), UK 198 clothing see basic entitlements Club of Rome, Limits to Growth report xxxii, xxxiii, 8, 11–16, Cobb, John 54 collectivism 191 commercial bond markets 30, 157 commitment devices/crisis of 192–5, 197 commodity prices: decoupling 88; financial crisis 26; fluctuation/volatility 14, 21; resource constraints 13–14 common good: future visions 218, 219; vs. freedom and autonomy 193–4; vs. private interests 208; role of the state 209 common pool resources 190–2, 198, 199 see also public services/amenities communism 187, 191 community: future visions of 219–20; geographical 122–3; investment 155–6, 204 see also alienation; intrinsic values comparison, social 115, 116, 117 see also relative income effect competition 27, 112; positional 55–61, 58, 71, 72 see also struggle for existence complexity, economic systems 14, 32, 108, 153, 203 compulsive shopping 116 see also consumerism Conference of the Parties to the UN Framework Convention on Climate Change (CoP21) 19 conflicted state 197, 201, 209 connectedness, global 91, 227 conspicuous consumption 115 see also language of goods consumer goods see language of goods; material goods consumer sovereignty 196, 198 consumerism 4, 21, 22, 103–4, 113–16; capitalism 105–13, 196; choice 196; engine of growth 104, 108, 120, 161; existential fear of death 69, 212–15; financial crisis 24, 28, 39, 103; moving beyond 216–18; novelty and anxiety 116–17; post-growth economy 166–7; role of the state 192–3, 196, 199, 202–5; status 211; tragedy of 140 see also demand; materialism contemplative dimensions, simplicity 127 contraction and convergence model 206–7 coordinated market economies 27, 106 Copenhagen Accord (2009) 19 copper, commodity prices 13 corporations/big business 106–7 corruption 9, 131, 186, 187, 189 The Cost Disease: Why Computers get Cheaper and Health Care Doesn’t (Baumol) 171, 172 Costa Rica 74, 74, 76 countercyclical spending 181–2, 182, 188 crafts/craft economies 147, 149, 170, 171 creative destruction 104, 112, 113, 116–17 creativity 8, 79; and consumerism 113, 116; future visions 142, 144, 147, 158, 171, 200, 220 see also novelty/innovation credit, private: deflationary forces 44; deregulation 36; financial crisis 26, 27, 27–31, 34, 36, 41; financial system weaknesses 32–3, 37; growth imperative hypothesis 178–80; mortgage loans 28–9; reforms in financial system 157; spending vs. saving behaviour of ordinary people 118–19; and stimulation of growth 36 see also debt (public) credit unions 155–6 crises: of commitment 192–5; financial see financial crisis critical boundaries, biophysical see limits (ecological) Csikszentmihalyi, Mihalyi 127 Cuba: child mortality 75; life expectancy 74, 77, 78, 78; response to economic hardship 79–80; revolution 56; schooling 76 Cushman, Philip 116 Dalai Lama 49, 52 Daly, Herman xxxii, 54, 55, 160, 163, 165 Darwin, Charles 132–3 Das Kapital (Marx) 225 Davidson, Richard 49 Davos World Economic Forum 46 Dawkins, Richard 134–5 de Mandeville, Bernard 131–2, 157 death, denial of 69, 104, 115, 212–15 debt, public-sector 81; deflationary forces 44; economic stability 81; financial crisis 24, 26–32, 27, 37, 41, 42, 81; financial systems 28–32, 153–7; money creation 178–9; post-growth economy 178–9, 223 Debt: The First Five Thousand Years (Graeber) 28 decoupling xix, xx, xxxvii, 21, 84–7; dilemma of growth 211; efficiency measures 84, 86, 87, 88, 95, 104; green growth 163, 163–5; historical perspectives 87–96, 89, 90, 92, 94, 95; need for new economic model 101–2; relationship between relative and absolute 96–101 deep emission and resource cuts 99, 102 deficit spending 41, 43 deflationary forces, post-financial crisis 43–7, 45 degrowth movement 161–3, 177 demand 104, 113–16, 166–7; post-financial crisis 44–5; post-growth economy 162, 164, 166–9, 171–2, 174–5 dematerialisation 102, 143 democratisation, and wellbeing 59 deposit guarantees 35 deregulation 27, 34, 36, 196 desire, role in consumer behaviour 68, 69, 70, 114 destructive materialism 104, 112, 113, 116–17 Deutsche Bank 41 devaluation of currency 30, 45 Dichter, Ernest 114 digital economy 44, 219–20 dilemma of growth xxxi, 66–7, 104, 210; basic entitlements 72–9, 74, 75, 76, 78; decoupling 85, 87, 164; degrowth movement 160–3; economic stability 79–83, 174–6; material abundance 67–72; moving beyond 165, 166, 183–4; role of the state 198 diminishing marginal utility: alternative hedonism 125, 126; wellbeing 51–2, 57, 60, 73, 75–6, 79 disposable incomes 27, 67, 118 distributed ownership 223 Dittmar, Helga 126 domestic debt see credit dopamine 68 Dordogne, mindfulness community 128 double movement of society 198 Douglas, Mary 70 Douthwaite, Richard 178 downshifting 128 driving analogy, managing change 16–17 durability, consumer goods 113, 204, 220 dynamic systems, managing change 16–17 Eastern Europe 76, 122 Easterlin, Richard 56, 57, 59; paradox 56, 58 eco-villages, Findhorn community 128 ecological investment 101, 166–70, 220 see also investment ecological limits see limits (ecological) ecological (ecosystem) services 152, 169, 223 The Ecology of Money (Douthwaite) 178 economic growth see growth economic models see alternatives; business-as-usual model; financial systems; future visions; mathematical models; post-growth macroeconomics economic output see efficiency; productivity ‘Economic possibilities for our grandchildren’ (Keynes) 145 economic stability 22, 154, 157, 161; financial system weaknesses 34, 35, 36, 180; growth 21, 24, 67, 79–83, 174–6, 210; post-growth economy 161–3, 165, 174–6, 208, 219; role of the state 181–3, 195, 198, 199 economic structures: post-growth economy 227; financial system reforms 224; role of the state 205; selfishness 137 see also business-as-usual model; financial systems ecosystem functioning 62–3 see also limits (ecological) ecosystem services 152, 169, 223 Ecuador xxxi, 6 education: Baumol’s cost disease 171, 172; and income 67, 76, 76; investment in 150–1; role of the state 193 see also basic entitlements efficiency measures 84, 86–8, 95, 104, 109–11, 142–3; energy 41, 109–11; growth 111, 211; investment 109, 151; of scale 104 see also labour productivity; relative decoupling Ehrlich, Paul 13, 96 elasticity of substitution, labour and capital 177–8 electricity grid 41, 151, 156 see also energy Elgin, Duane 127 Ellen MacArthur Foundation 144 emissions see greenhouse gas emissions employee ownership 223 employment intensity vs. carbon dioxide emissions 148 see also labour productivity empty self 116, 117 see also consumerism ends above means 159 energy return on investment (EROI) 12, 169 energy services/systems 142: efficiency 41, 109–11; inputs/intensity 87–8, 151; investment 41, 109–10, 151–2; renewable xxxv, 41, 168–9 engine of growth 145; consumerism 104, 108, 161; services 143, 170–4 see also circular flow of the economy enough is enough see limits enterprise as service 140, 141–4, 158 see also novelty/innovation entitlements see basic entitlements entrepreneur as visionary 112 entrepreneurial state 220 Environmental Assessment Agency, Netherlands 62 environmental quality 12 see also pollution environmentalism 9 EROI (energy return on investment) 12, 169 Essay on the Principle of Population (Malthus) 9–11, 132–3 evolutionary map, human heart 136, 136 evolutionary theory 132–3; common good 193; post-growth economy 226; psychology 133–5; selfishness and altruism 196 exchange values 55, 61 see also gross domestic product existential fear of death 69, 104, 115, 212–15 exponential expansion 1, 11, 20–1, 210 see also growth external debt 32, 42 extinctions/biodiversity loss 17, 47, 62, 101 Eyres, Harry 215 Fable of the Bees (de Mandeville) 131–2 factor inputs 109–10 see also capital; labour; resource use fast food 128 fatalism 186 FCCC (Framework Convention on Climate Change) 92 fear of death, existential 69, 104, 115, 212–15 feedback loops 16–17 financial crisis (2008) 6, 23–5, 32, 77, 103; causes and culpability 25–8; financial system weaknesses 32–7, 108; Keynesianism 37–43, 188; nationalisation of financial sector 188; need for financial reforms 175; role of debt 24, 26–32, 27, 81, 179; role of state 191; slowing of growth 43–7, 45; spending vs. saving behaviour of ordinary people 118–21, 119; types/definitions of capitalism 106; youth unemployment 144–5 financial systems: common pool resources 192; debt-based/role of debt 28–32, 153–7; post-growth economy 179, 208; systemic weaknesses 32–7; and wellbeing 47 see also banking system; business-as-usual model; financial crisis; reform Findhorn community 128 finite limits of planet see limits (ecological) Fisher, Irving 156, 157 fishing rights 22 flourishing see capabilities for flourishing; limits; wellbeing flow states 127 Flynt, Larry 40 food 67 see also basic entitlements Ford, Henry 154 forestry/forests 22, 192 Forrester, Jay 11 fossil fuels 11, 20 see also oil Foucault, Michel 197 fracking 14, 15 Framework Convention on Climate Change (FCCC) 92 France: GDP per capita 58, 75, 76; inequality 206; life-expectancy 74; mindfulness community 128; working hours 145 free market 106: financial crisis 35, 36, 37, 38, 39; ideological controversy/conflict 186–7, 188 freedom/autonomy: vs. common good 193–4; consumer 22, 68–9; language of goods 212; personal choices for improvement 216–18; wellbeing 49, 59, 62 see also individualism Friedman, Benjamin 176 Friedman, Milton 36, 156, 157 frugality 118–20, 127–9, 215–16 fun (more fun with less stuff) 129, 217 future visions 2, 158, 217–21; community banking 155–6; dilemma of growth 211; enterprise as service 140, 141–4, 147–8, 158; entrepreneur as visionary 112; financial crisis as opportunity 25; and growth 165–6; investment 22, 101–2, 140, 149–53, 158, 169, 208; money as social good 140, 153–7, 158; processes of change 185; role of the state 198, 199, 203; timescales for change 16–17; work as participation 140, 144–9, 148, 158 see also alternatives; post-growth macroeconomics; reform Gandhi, Mahatma 127 GDP see gross domestic product gene, selfish 134–5 Genuine Progress Indicator (GPI) 54, 54 geographical community 122–3 Germany xxxi; Federal Ministry of Finance 224–5; inequality 206; relative income effect 58; trade balance 31; work as participation 146 Glass Steagal Act 35 Global Commodity Price Index (1992–2015) 13 global corporations 106–7 global economy 98: culture 70; decoupling 86–8, 91, 93–5, 95, 97, 98, 100; exponential expansion 20–1; inequality 4, 5–6; interconnectedness 91, 227; post-financial crisis slowing of growth 45 Global Research report (HSBC) 41 global warming see climate change Godley, Wynne 179 Goldman Sachs 37 good life 3, 6; moral dimension 63, 104; wellbeing 48, 50 goods see language of goods; material goods; symbolic role of goods Gordon, Robert 44 governance 22, 185–6; commons 190–2; crisis of commitment 192–5, 197; economic stability 34, 35; establishing limits 200–8, 206; growth 195–9; ideological controversy/conflict 186–9; moving towards change 197–200, 220–1; post-growth economy 181–3, 182; power of corporations 106; for prosperity 209; signals 130 government as household metaphor 30, 42 governmentality 197, 198 GPI (Genuine Progress Indicator) 54, 54 Graeber, David 28 Gramm-Leach-Bliley Act 35 Great Depression 39–40 Greece: austerity xxxiii–xxxiv, xxxvii, 43; energy inputs 88; financial crisis 28, 30, 31, 77; life expectancy 74; schooling 76; relative income effect 58; youth unemployment 144 Green Economy initiative 41 green: growth xxxvii, 18, 85, 153, 166, 170; investment 41 Green New Deal, UNEP 40–1, 152, 188 greenhouse gas emissions 18, 85, 86, 91, 92; absolute decoupling 89–92, 90, 92, 98–101, 100; dilemma of growth 210–11; vs. employment intensity 148; future visions 142, 151, 201–2, 220; Kyoto Protocol 18, 90; reduction targets 19–20; relative decoupling 87, 88, 89, 93, 98–101, 100 see also climate change Greenspan, Alan 35 gross domestic product (GDP) per capita 3–5, 15, 54; climate change 18; decoupling 85, 93, 94; financial crisis 27, 28, 32; green growth 163–5; life expectancy 74, 75, 78; as measure of prosperity 3–4, 5, 53–5, 54, 60–1; post-financial crisis 43, 44; post-growth economy 207; schooling 76; wellbeing 55–61, 58 see also income growth xxxvii; capitalism 105; credit 36, 178–80; decoupling 85, 96–101; economic stability 21, 24, 67, 80, 210; financial crisis 37, 38; future visions 209, 223, 224; inequality 177; labour productivity 111; moving beyond 165, 166; novelty 112; ownership 105; post-financial crisis slowing 43–7, 45; prosperity as 3–7, 23, 66; role of the state 195–9; sustainable investment 166–70; wellbeing 59–60; as zero sum game 57 see also dilemma of growth; engine of growth; green growth; limits to growth; post-growth macroeconomy growth imperative hypothesis 37, 174, 175, 177–80, 183 habit formation, acquisition as 68 Hall, Peter 106, 188 Hamilton, William 134 Hansen, James 17 happiness see wellbeing/happiness Happiness (Layard) 55 Hardin, Garrett 190–1 Harvey, David 189, 192 Hayek, Friedrich 187, 189, 191 health: Baumol’s cost disease 171, 172; inequality 72–3, 205–6, 206; investment 150–1; and material abundance 67, 68; personal choices for improvement 217; response to economic hardship 80; role of the state 193 see also basic entitlements Heath, Edward 66, 82 hedonism 120, 137, 196; alternatives 125–6 Hirsch, Fred xxxii–xxxiii historical perspectives: absolute decoupling 86, 89–96, 90, 92, 94, 95; relative decoupling 86, 87–9, 89 Holdren, John 96 holistic solutions, post-growth economy 175 household finances: house purchases 28–9; spending vs. saving behaviour 118–20, 119 see also credit household metaphor, government as 30, 42 HSBC Global Research report 41 human capabilities see capabilities for flourishing human happiness see wellbeing/happiness human nature/psyche 3, 132–5, 138; acquisition 68; alternative hedonism 125; evolutionary map of human heart 136, 136; intrinsic values 131; meaning/purpose 49–50; novelty/innovation 116; selfishness vs. altruism 133–8; short-termism/living for today 194; spending vs. saving behaviour 34, 118–21, 119; symbolic role of goods 69 see also intrinsic values human rights see basic entitlements humanitarian perspectives: financial crisis 24; growth 79; inequality 5, 52, 53 see also intrinsic values hyperbolic discounting 194 hyperindividualism 226 see also individualism hyper-materialisation 140, 157 I Ching (Chinese Book of Changes) 7 Iceland: financial crisis 28; life expectancy 74, 75; relative income effect 56; response to economic hardship 79–80; schooling 76; sovereign money system 157 identity construction 52, 69, 115, 116, 212, 219 IEA (International Energy Agency) 14, 152 IMF (International Monetary Fund) 45, 156–7 immaterial goods 139–40 see also intrinsic values; meaning/purpose immortality, symbolic role of goods 69, 104, 115, 212–14 inclusive growth see inequality; smart growth income 3, 4, 5, 66, 124; basic entitlements 72–9, 74, 75, 76, 78; child mortality 74–5, 75; decoupling 96; economic stability 82; education 76; life expectancy 72, 73, 74, 77–9, 78; poor nations 67; relative income effect 55–61, 58, 71, 72; tax revenues 81 see also gross domestic product INDCs (intended nationally determined commitments) 19 India: decoupling 99; growth 99; life expectancy 74, 75; philosophy 127; pursuit of western lifestyles 70; savings 27; schooling 76 indicators of environmental quality 96 see also biodiversity; greenhouse gas emissions; pollution; resource use individualism 136, 226; progressive state 194–7, 199, 200, 203, 207 see also freedom/autonomy industrial development 12 see also technological advances inequality 22, 67; basic entitlements 72; child mortality 75, 75; credible alternatives 219, 224; deflationary forces 44; fatalism 186; financial crisis 24; global 4, 5–6, 99, 100; financial system weaknesses 32–3; post-growth economy 174, 176–8; role of the state 198, 205–7, 206; selfishness vs. altruism 137; symbolic role of goods 71; wellbeing 47, 104 see also poverty infant mortality rates 72, 75 inflation 26, 30, 110, 157, 167 infrastructure, civic 150–1 Inglehart, Ronald 58, 59 innovation see novelty/innovation; technological advances inputs 80–1 see also capital; labour productivity; resource use Inside Job documentary film 26 instant gratification 50, 61 instinctive acquisition 68 Institute for Fiscal Studies 81 Institute for Local Self-Reliance 204 institutional structures 130 see also economic structures; governance intended nationally determined commitments (INDCs) 19 intensity factor, technological 96, 97 see also technological advances intentional communities 127–9 interconnectedness, global 91, 227 interest payments/rates 39, 43, 110; financial crisis 29, 30, 33, 39; post-growth economy 178–80 see also credit; debt Intergovernmental Panel on Climate Change (IPCC) 18, 19, 201–2 International Energy Agency (IEA) 14, 152 International Monetary Fund (IMF) 45, 156–7 intrinsic values 126–31, 135–6, 212; role of the state 199, 200 see also belonging; community; meaning/purpose; simplicity/frugality investment 107–10, 108; ecological/sustainable 101, 152, 153, 166–70, 220; and innovation 112; loans 29; future visions 22, 101–2, 140, 149–53, 158, 169, 208, 220; and savings 108; social 155, 156, 189, 193, 208, 220–3 invisible hand metaphor 132, 133, 187 IPAT equation, relative and absolute decoupling 96 IPCC (Intergovernmental Panel on Climate Change) 18, 19, 201–2 Ireland 28; inequality 206; life expectancy 74, 75; schooling 76; wellbeing 58 iron cage of consumerism see consumerism iron ore 94 James, Oliver 205 James, William 68 Japan: equality 206; financial crisis 27, 45; life expectancy 74, 76, 79; relative income effect 56, 58; resource use 93; response to economic hardship 79–80 Jefferson, Thomas 185 Jobs, Steve 210 Johnson, Boris 120–1 Kahneman, Daniel 60 Kasser, Tim 126 keeping up with the Joneses 115, 116, 117 see also relative income effect Kennedy, Robert 48, 53 Keynes, John Maynard/Keynesianism 23, 34, 120, 174, 181–3, 187–8; financial crisis 37–43; financial system reforms 157; part-time working 145; steady state economy 159, 162 King, Alexander 11 Krugman, Paul 39, 85, 86, 102 Kyoto Protocol (1992) 18, 90 labour: child 62, 154; costs 110; division of 158; elasticity of substitution 177, 178; intensity 109, 148, 208; mobility 123; production inputs 80, 109; structures of capitalism 107 labour productivity 80–1, 109–11; Baumol’s cost disease 170–2; and economic growth 111; future visions 220, 224; investment as commitment 150; need for investment 109; post-growth economy 175, 208; services as engine of growth 170; sustainable investment 166, 170; trade off with resource use 110; work-sharing 145, 146, 147, 148, 148, 149 Lahr, Christin 224–5 laissez-faire capitalism 187, 195, 196 see also free market Lakoff, George 30 language of goods 212; material footprint of 139–40; signalling of social status 71; and wellbeing 124 see also consumerism; material goods; symbolic role of goods Layard, Richard 55 leadership, political 199 see also governance Lebow, Victor 120 Lehman Brothers, bankruptcy 23, 25, 26, 118 leisure economy 204 liberal market economies 106, 107; financial crisis 27, 35–6 life expectancy: and income 72, 73, 74, 77–9, 78; inequality 206; response to economic hardship 80 see also basic entitlements life-satisfaction 73; inequality 205; relative income effect 55–61, 58 see also wellbeing/happiness limits, ecological 3, 4, 7, 11, 12, 20–2; climate change 17–20; decoupling 86; financial crisis 23–4; growth 21, 165, 210; post-growth economy 201–2, 226–7; role of the state 198, 200–2, 206–7; and social boundaries 141; wellbeing 62–63, 185 limits, flourishing within 61–5, 185; alternative hedonism 125–6; intrinsic values 127–31; moving towards 215, 218, 219, 221; paradox of materialism 121–23; prosperity 67–72, 113, 212; role of the state 201–2, 205; selfishness 131–8; shame 123–4; spending vs. saving behaviour 118–21, 119 see also sustainable prosperity limits to growth: confronting 7–8; exceeding 20–2; wellbeing 62–3 Limits to Growth report (Club of Rome) xxxii, xxxiii, 8, 11–16 ‘The Living Standard’ essay (Sen) 50, 123–4 living standards 82 see also prosperity Lloyd, William Forster 190 loans 154; community investment 155–6; financial system weaknesses 34 see also credit; debt London School of Economics 25 loneliness 123, 137 see also alienation long-term: investments 222; social good 219 long-term wellbeing vs. short-term pleasures 194, 197 longevity see life expectancy love 212 see also intrinsic values low-carbon transition 19, 220 LowGrow model for the Canadian economy 175 MacArthur Foundation 144 McCracken, Grant 115 Malthus, Thomas Robert 9–11, 132–3, 190 market economies: coordinated 27, 106; liberal 27, 35–6, 106, 107 market liberalism 106, 107; financial crisis 27, 35–6; wellbeing 47 marketing 140, 203–4 Marmot review, health inequality in the UK 72 Marx, Karl/Marxism 9, 189, 192, 225 Massachusetts Institute of Technology (MIT) 11, 12, 15 material abundance see opulence material goods 68–9; identity 52; language of 139–40; and wellbeing 47, 48, 49, 51, 65, 126 see also symbolic role of goods material inputs see resource use materialism: and fear of death 69, 104, 115, 212–15; and intrinsic values 127–31; paradox of 121–3; price of 126; and religion 115; values 126, 135–6 see also consumerism mathematical models/simulations 132; austerity policies 181; countercyclical spending 181–2, 182; decoupling 84, 91, 96–101; inequality 176–8; post-growth economy 164; stock-flow consistent 179–80 Mawdsley, Emma 70 Mazzucato, Mariana 193, 220 MDG (Millennium Development Goals) 74–5 Meadows, Dennis and Donella 11, 12, 15, 16 meaning/purpose 2, 8, 22; beyond material goods 212–16; consumerism 69, 203, 215; intrinsic values 127–31; moving towards 218–20; wellbeing 49, 52, 60, 121–2; work 144, 146 see also intrinsic values means and ends 159 mental health: inequality 206; meaning/purpose 213 metaphors: government as household 30, 42; invisible hand 132, 133, 187 Middle East, energy inputs 88 Miliband, Ed 199 Mill, John Stuart 125, 159, 160, 174 Millennium Development Goals (MDG) 74–5 mindfulness 128 Minsky, Hyman 34, 35, 40, 182, 208 MIT (Massachusetts Institute of Technology) 11, 12, 15 mixed economies 106 mobility of labour, loneliness index 123 Monbiot, George 84, 85, 86, 91 money: creation 154, 157, 178–9; and prosperity 5; as social good 140, 153–7, 158 see also financial systems monopoly power, corporations 106–7 The Moral Consequences of Economic Growth (Friedman) 82, 176 moral dimensions, good life 63 see also intrinsic values moral hazards, separation of risk from reward 35 ‘more fun with less stuff’ 129, 217 mortality fears 69, 104, 115, 212–15 mortality rates, and income 74, 74–6, 75 mortgage loans 28–9, 35 multinational corporations 106–7 national debt see debt, public-sector nationalisation 191; financial crisis 38, 188 natural selection 132–3 see also struggle for existence nature, rights of 6–7 negative emissions 98–9 negative feedback loops 16–17 Netherlands 58, 62, 206, 207 neuroscientific perspectives: flourishing 68, 69; human behaviour 134 New Climate Economy report Better Growth, Better Climate 18 New Deal, USA 39 New Economics Foundation 175 nickel, commodity prices 13 9/11 terrorist attacks (2001) 121 Nordhaus, William 171, 172–3 North America 128, 155 see also Canada; United States Norway: advertising 204; inequality 206; investment as commitment 151–2; life expectancy 74; relative income effect 58; schooling 76 novelty/innovation 104, 108, 113; and anxiety 116–17, 124, 211; crisis of commitment 195; dilemma of growth 211; human psyche 135–6, 136, 137; investment 150, 166, 168; post-growth economy 226; role of the state 196, 197, 199; as service 140, 141–4, 158; symbolic role of goods 114–16, 213 see also technological advances Nudge: Improving Decisions about Health, Wealth, and Happiness (Thaler and Sunstein) 194–5 Nussbaum, Martha 64 nutrient loading, critical boundaries 17 nutrition 67 see also basic entitlements obesity 72, 78, 206 obsolescence, built in 113, 204, 220 oceans: acidification 17; common pool resources 192 Offer, Avner 57, 61, 71, 194, 195 oil prices 14, 21; decoupling 88; financial crisis 26; resource constraints 15 oligarchic capitalism 106, 107 opulence 50–1, 52, 67–72 original sin 9, 131 Ostrom, Elinor and Vincent 190, 191 output see efficiency; gross domestic product; productivity ownership: and expansion 105; private vs. public 9, 105, 191, 219, 223; new models 223–4; types/definitions of capitalism 105–7 Oxfam 141 paradoxes: materialism 121–3; thrift 120 Paris Agreement 19, 101, 201 participation in society 61, 114, 122, 129, 137; future visions 200, 205, 218, 219, 225; work as 140–9, 148, 157, 158 see also social inclusion part-time working 145, 146, 149, 175 Peccei, Aurelio 11 Perez, Carlota 112 performing arts, Baumol’s cost disease 171–2 personal choice 216–18 see also freedom/autonomy personal property 189, 191 Pickett, Kate 71, 205–6 Piketty, Thomas 33, 176, 177 planetary boundaries see limits (ecological) planning for change 17 pleasure 60–1 see also wellbeing/happiness Plum Village mindfulness community 128 Polanyi, Karl 198 policy see governance political leadership 199 see also governance Political Economy Research Institute, University of Massachusetts 41 pollution 12, 21, 53, 95–6, 143 polycentric governance 191, 192 Poor Laws 10 poor nations see poverty population increase 3, 12, 63, 96, 97, 190; Malthus on 9–11, 132–3 porn industry 40 Portugal 28, 58, 88, 206 positional competition 55–61, 58, 71, 72 see also social comparison positive feedback loops 16–17 post-growth capitalism 224 post-growth macroeconomics 159–60, 183–4, 221; credit 178–80; degrowth movement 161–3; economic stability 174–6; green growth 163–5; inequality 176–8; role of state 181–3, 182, 200–8, 206; services 170–4; sustainable investment 166–70 see also alternatives; future visions; reform poverty 4, 5–6, 216; basic entitlements 72; flourishing within limits 212; life expectancy 74, 74; need for new economic model 101; symbolic role of goods 70; wellbeing 48, 59–60, 61, 67 see also inequality; relative income effect power politics 200 predator–prey analogy 103–4, 117 private credit see credit private vs. public: common good 208; ownership 9, 105, 191, 219, 223; salaries 130 privatisation 191, 219 product lifetimes, obsolescence 113, 204, 220 production: inputs 80–1; ownership 191, 219, 223 productivity: investment 109, 167, 168, 169; post-growth economy 224; services as engine of growth 171, 172, 173; targets 147; trap 175 see also efficiency measures; labour productivity; resource productivity profits: definitions of capitalism 105; dilemma of growth 211; efficiency measures 87; investment 109; motive 104; post-growth economy 224; and wages 175–8 progress 2, 50–5, 54 see also novelty/innovation; technological advances progressive sector, Baumol’s cost disease 171 progressive state 185, 220–2; contested 186–9; countering consumerism 202–5; equality measures 205–7, 206; governance of the commons 190–2; governance as commitment device 192–5; governmentality of growth 195–7; limit-setting 201–2; moving towards 197–200; post-growth macroeconomics 207–8, 224; prosperity 209 prosocial behaviour 198 see also social contract prosperity 1–3, 22, 121; capabilities for flourishing 61–5; and growth 3–7, 23, 66, 80, 160; and income 3–4, 5, 66–7; limits of 67–72, 113, 212; materialistic vision 137; progress measures 50–5, 54; relative income effect 55–61, 58, 71, 72; social perspectives 2, 22, 48–9; state roles 209 see also capabilities for flourishing; post-growth macroeconomics; sustainable prosperity; wellbeing prudence, financial 120, 195, 221; financial crisis 33, 34, 35 public sector spending: austerity policies 189; countercyclical spending strategy 181–2, 182; welfare economy 169 public services/amenities: common pool resources 190–2, 198, 199; future visions 204, 218–20; investment 155–6, 204; ownership 223 see also private vs. public; service-based economies public transport 41, 129, 193, 217 purpose see meaning/purpose Putnam, Robert 122 psyche, human see human nature/psyche quality, environmental 12 see also pollution quality of life: enterprise as service 142; inequality 206; sustainable 128 quality to throughput ratios 113 quantitative easing 43 Queen Elizabeth II 25, 32, 34, 37 quiet revolution 127–31 Raworth, Kate 141 Reagan, Ronald 8 rebound phenomenon 111 recession 23–4, 28, 81, 161–3 see also financial crisis recreation/leisure industries 143 recycling 129 redistribution of wealth 52 see also inequality reforms 182–3, 222; economic structures 224; and financial crisis 103; financial systems 156–8, 180 see also alternatives; future visions; post-growth economy relative decoupling 84–5, 86; historical perspectives 87–9, 89; relationship with absolute decoupling 96–101, 111 relative income effect 55–61, 58, 71, 72 see also social comparison religious perspectives 9–10, 214–15; materialism as alternative to religion 115; original sin 9, 131; wellbeing 48, 49 see also existential fear of death renewable energy xxxv, 41, 168–169 repair/renovation 172, 220 resource constraints 3, 7, 8, 11–15, 47 resource productivity 110, 151, 168, 169, 220 resource use: conflicts 22; credible alternatives 101, 220; decoupling 84–9, 92–5, 94, 95; and economic output 142–4; investment 151, 153, 168, 169; trade off with labour costs 110 retail therapy 115 see also consumerism; shopping revenues, state 222–3 see also taxation revolution 186 see also social stability rights: environment/nature 6–7; human see basic entitlements risk, financial 24, 25, 33, 35 The Road to Serfdom (Hayek) 187 Robinson, Edward 132 Robinson, Joan 159 Rockström, Johan 17, 165 romantic movement 9–10 Roosevelt, Franklin D. 35, 39 Rousseau, Jean Jacques 9, 131 Russia 74, 76, 77–80, 78, 122 sacred canopy 214, 215 salaries: private vs. public sector 130, 171; and profits 175–8 Sandel, Michael 150, 164, 218 São Paulo, Clean City Law 204 Sardar, Zia 49, 50 Sarkozy, Nicolas xxxi, 53 savage state, romantic movement 9–10 savings 26–7, 28, 107–9, 108; investment 149; ratios 34, 118–20, 119 scale, efficiencies of 104 Scandinavia 27, 122, 204 scarcity, managing change 16–17 Schumpeter, Joseph 112 Schwartz, Shalom 135–6, 136 schooling see education The Science of Desire (Dichter) 114 secular stagnation 43–7, 45, 173 securitisation, mortgage loans 35 security: moving towards 219; and wellbeing 48, 61 self-development 204 self-expression see identity construction self-transcending behaviours see transcendence The Selfish Gene (Dawkins) 134–5 selfishness 133–8, 196 Sen, Amartya 50, 52, 61–2, 123–4 service concept/servicization 140–4, 147–8, 148, 158 service-based economies 219; engine of growth 170–4; substitution between labour and capital 178; sustainable investment 169–70 see also public services SFC (stock-flow consistent) economic models 179–80 shame 123–4 shared endeavours, post-growth economy 227 Sheldon, Solomon 214 shelter see basic entitlements shopping 115, 116, 130 see also consumerism short-termism/living for today 194, 197, 200 signals: sent out by society 130, 193, 198, 203, 207; social status 71 see also language of goods Simon, Julian 13 simplicity/simple life 118–20, 127–9, 215–16 simulations see mathematical models/simulations slow: capital 170; movement 128 smart growth 85, 163–5 see also green growth Smith, Adam 51, 106–7, 123, 132, 187 social assets 220 social boundaries (minimum standards) 141 see also basic entitlements social care 150–1 see also caring professions social comparison 115, 116, 117 see also relative income effect social contract 194, 198, 199, 200 social inclusion 48, 69–71, 114, 212 see also participation in society social investment 155, 156, 189, 193, 208, 220–3 social justice 198 see also inequality social logic of consumerism 114–16, 204 social stability 24, 26, 80, 145, 186, 196, 205 see also alienation social status see status social structures 80, 129, 130, 137, 196, 200, 203 social tolerance, and wellbeing 59, 60 social unrest see social stability social wage 40 social welfare: financial reforms 182–3; public sector spending 169 socialism 223 Sociobiology (Wilson) 134 soil integrity 220 Solon, quotation 47, 49, 71 Soper, Kate 125–6 Soros, George 36 Soskice, David 106 Soviet Union, former 74, 76, 77–80, 78, 122 Spain 28, 58, 144, 206 SPEAR organization, responsible investment 155 species loss/extinctions 17, 47, 62, 101 speculation 93, 99, 149, 150, 154, 158, 170; economic stability 180; financial crisis 26, 33, 35; short-term profiteering 150; spending: behaviour of ordinary people 34, 119, 120–1; countercyclical 181–2, 182, 188; economic stability 81; as way out of recession 41, 44, 119, 120–1; and work cycle 125 The Spirit Level (Wilkinson and Pickett) 71, 205–6 spiritual perspectives 117, 127, 128, 214 stability see economic stability; social stability stagflation 26 stagnant sector, Baumol’s cost disease 171 stagnation: economic stability 81–2; labour productivity 145; post-financial crisis 43–7, 45 see also recession state capitalism, types/definitions of capitalism 106 state revenues, from social investment 222–3 see also taxation state roles see governance status 207, 209, 211; and possessions 69, 71, 114, 115, 117 see also language of goods; symbolic role of goods Steady State Economics (Daly) xxxii steady state economies 82, 159, 160, 174, 180 see also post-growth macroeconomics Stern, Nicholas 17–18 stewardship: role of the state 200; sustainable investment 168 Stiglitz, Joseph 53 stock-flow consistent (SFC) economic models 179–80 Stockholm Resilience Centre 17, 201 stranded assets 167–8 see also ownership structures of capitalism see economic structures struggle for existence 8–11, 125, 132–3 Stuckler, David 43 stuff see language of goods; material goods; symbolic role of goods subjective wellbeing (SWB) 49, 58, 58–9, 71, 122, 129 see also wellbeing/happiness subprime lending 26 substitution, between labour and capital 177–178 suffering, struggle for existence 10 suicide 43, 52, 77 Sukdhev, Pavan 41 sulphur dioxide pollution 95–6 Summers, Larry 36 Sunstein, Cass 194 sustainability xxv–xxvi, 102, 104, 126; financial systems 154–5; innovation 226; investment 101, 152, 153, 166–70, 220; resource constraints 12; role of the state 198, 203, 207 see also sustainable prosperity Sustainable Development Strategy, UK 198 sustainable growth see green growth sustainable prosperity 210–12; creating credible alternatives 219–21; finding meaning beyond material commodities 212–16; implications for capitalism 222–5; personal choices for improvement 216–18; and utopianism 225–7 see also limits (flourishing within) SWB see subjective wellbeing; wellbeing/happiness Switzerland 11, 46, 157; citizen’s income 207; income relative to wellbeing 58; inequality 206; life expectancy 74, 75 symbolic role of goods 69, 70–1; existential fear of death 212–16; governance 203; innovation/novelty 114–16; material footprints 139–40; paradox of materialism 121–2 see also language of goods; material goods system dynamics model 11–12, 15 tar sands/oil shales 15 taxation: capital 177; income 81; inequality 206; post-growth economy 222 technological advances 12–13, 15; decoupling 85, 86, 87, 96–8, 100–3, 164–5; dilemma of growth 211; economic stability 80; population increase 10–11; role of state 193, 220 see also novelty/innovation Teilhard de Chardin, Pierre 8 terror management, and consumption 69, 104, 115, 212–15 terrorist attacks (9/11) 121 Thailand, Buddhist monasteries 128 Thaler, Richard 194 theatre, Baumol’s cost disease 171–2 theology see religious perspectives theory of evolution 132–3 thermodynamics, laws of 112, 164 Thich Nhat Hanh 128 thrift 118–20, 127–9, 215–16 throwaway society 113, 172, 204 timescales for change 16–17 tin, commodity prices 13 Today programme interview xxix, xxviii Totnes, transition movement 128–9 Towards a Green Economy report (UNEP) 152–3 Townsend, Peter 48, 61 trade balance 31 trading standards 204 tradition 135–6, 136, 226 ‘Tragedy of the commons’ (Hardin) 190–1 transcendence 214 see also altruism; meaning/purpose; spiritual perspectives transition movement, Totnes 128–9 Triodos Bank 156, 165 Trumpf (machine-tool makers) Germany 146 trust, loss of see alienation tungsten, commodity prices 13 Turkey 58, 88 Turner, Adair 157 21st Conference of the Parties to the UN Framework Convention on Climate Change (2015) 19 UBS (Swiss bank) 46 Ubuntu, African philosophy 227 unemployment 77; consumer goods 215; degrowth movement 162; financial crisis 24, 40, 41, 43; Great Depression 39–40; and growth 38; labour productivity 80–1; post-growth economy 174, 175, 183, 208, 219; work as participation 144–6 United Kingdom: Green New Deal group 152; greenhouse gas emissions 92; labour productivity 173; resource inputs 93; Sustainable Development Strategy 198 United Nations: Development Programme 6; Environment Programme 18, 152–3; Green Economy initiative 41 United States: credit unions 155–6; debt 27, 31–32; decoupling 88; greenhouse gas emissions 90–1; subprime lending 26; Works Progress Administration 39 universal basic income 221 see also citizen’s income University of Massachusetts, Political Economy Research Institute 41 utilitarianism/utility, wellbeing 50, 52–3, 55, 60 utopianism 8, 38, 125, 179; post-growth economy 225–7 values, materialistic 126, 135–6 see also intrinsic values Veblen, Thorstein 115 Victor, Peter xxxviii, 146, 175, 177, 180 vision of progress see future visions; post-growth economy volatility, commodity prices 14, 21 wages: and profits 175–8; private vs. public sector 130, 171 walking, personal choices for improvement 217 water use 22 Wealth of Nations, An Inquiry into the Nature and Causes (Smith) 123, 132 wealth redistribution 52 see also inequality Weber, Axel 46 welfare policies: financial reforms 182–3; public sector spending 169 welfare of livestock 220 wellbeing/happiness 47–50, 53, 121–2, 124; collective 209; consumer goods 4, 21, 22, 126; growth 6, 165, 211; intrinsic values 126, 129; investment 150; novelty/innovation 117; opulence 50–2, 67–72; personal choices for improvement 217; planetary boundaries 141; relative income effect 55–61, 58, 71, 72; simplicity 129; utilitarianism 50, 52–3, 55, 60 see also capabilities for flourishing western lifestyles 70, 210 White, William 46 Whybrow, Peter 68 Wilhelm, Richard 7 Wilkinson, Richard 71, 205–6 Williams, Tennessee 213 Wilson, Edward 134 wisdom traditions 48, 49, 63, 128, 213–14 work: as participation 140–9, 148, 157, 158; and spend cycle 125; sharing 145, 146, 149, 175 Works Progress Administration, USA 39 World Bank 160 World Values Survey 58 youth unemployment, financial crisis 144–5 zero sum game, growth as 57, 71

Big Mistakes: The Best Investors and Their Worst Investments
by Michael Batnick
Published 21 May 2018

When you win one year, you don't quit; you want to win again.”15 The other issue is that it's virtually impossible to have fantastic success and keep your ego in check. We're all overconfident to begin with, and huge gains make our feet levitate off the ground. In the aftermath of the financial crisis and the Federal Reserve's quantitative easing program, Paulson turned to a new asset. He firmly believed the future would bring inflation, so he looked for something that would not be negatively impacted – in fact, he wanted to buy something that could become even more valuable in an inflationary environment. The answer was gold. So in the summer 2010, Paulson plowed $5 billion into gold‐related investments, becoming the largest owner of gold in the world.

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Hutton, founding, 17 Einhorn, David, 27 Ellis, Charlie, 38, 99 Emotions, control, 93 Endowment effect, 75 fund, Keynes control, 123 Energizer Holdings, value, 91 Enron, 113–114 eToys, valuation, 58 Exchange‐traded funds (ETFs), 157 Graham recognition, 7 leverage, 131, 159 proliferation, 57 Exchange‐traded notes (ETNs), proliferation, 57 Explorer Fund, decline, 50 Exxon Mobil, shareholder wealth, 109 Facebook acquisition, 150 Fairchild Camera, trading level, 70 FAZ, 159 Federal Reserve interest rate increase, 61 quantitative easing program, 134–135 Federal Reserve Bank of New York takeover, 42 Federal Reserve Board, 39 Federal Trade Commission (FTC), Herbalife charges, 93–94 Ferriss, Tim, 150 Fidelity Capital Fund, 68 Fidelity Capital, initiation, 71 Fidelity Funds, 68 Fight or flight system, 27 Financial commitments, 163 Financial crisis, aftermath, 134–135 First Index Investment Trust initiation, 51–52 performance, 52 Float, 79 Fooled by Randomness (Taleb), 42 Foreign stocks, 60–61 Frankel, Bethenny, 163 Freud, Sigmund, 9 Fundamentals, 100 Futures contracts, usage, 131 Galbraith, John Kenneth, 67, 121 Gates, Bill, 57 General Electric shareholder wealth, 109 stock market valuation, examination, 6 General Theory of Employment, Interest and Money, (Keynes), 121, 124 Generation Z, 151 George, David Lloyd, 122 Gerber, comparison, 91 Global monetary system, 122 Go‐go, term (usage), 49 Go‐Go years, 48–50, 59 Go‐Go Years, The, (Brooks), 68 Gold purchase, 105 value, loss, 135 Goodwyn, Jerry, 68 Google, compounding, 139–140 GoPro, 150 Gotham Partners, 88 closure, 89 Government Employees Insurance Company (GEICO), 78 Buffett interest, 78–79 Gracian, Baltasar, 131 Graham, Benjamin, 1, 3, 78, 157 Dean of Wall Street, 3 teachings, 11 Graham Corporation, arbitrage techniques, 7 Graham‐Newman Corporation, 9 Grant, Ulysses S., 29–30 Great Crash, The, (Galbraith), 67 Great Depression, 48, 52, 68, 126, 147 Dow value, losses, 142 Great Financial Recession, 142–143 Griffin, Dale, 81 Griffin, Tren, 81 Grove, Andy, 57 Gutfreund, John, 39 Haghani, Victor J., 39 Harris, Hutton & Company, 17 Harris, John B., 111 Hartford Accident Insurance Company (Twain investment), 28 Hartford Courant (Hawley ownership), 29 Hawking, Stephen, 37 Hawkins, Gregory, 39 Hawley, Joseph Roswell, 29 Heath, Thomas, 114 “Hedge Fund Miseries” (Steinhardt), 59 Heinze, Augustus/Otto, 19 Hemingway, Ernest, 28 Herbalife Ackman crusade, 3, 90–92 FTC charges, 93–94 sales, 91 stock, increase, 92 Heuristics, dangers, 16 H.H.

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(Twain investment), 28 No Bull (Steinhardt), 58, 60 Nocera, Joe, 90 Not safe for work (NSFW), Snapchat categorization, 151 Nudge (Thaler), 126 One‐decision stocks, 50 Options, usage, 131 Oreos, comparison, 91 Oregon Transcontinental Railroad, Twain share purchase, 29 O'Reilly Automotive, Sequoia holding, 111 Overconfidence, impact, 61, 75–76, 82 Overtrading, 159 Paige Compositor Manufacturing Company, 31 Paige, James, 30 Paine Webber, Livermore exit, 16 Palmolive, comparison, 91 Paulson & Co., founding, 132 Paulson, John, 3, 129, 131–132 merger/arbitrage, 133 Pearson, Mike, 113 Buffett, contrast, 114 Pellegrini, Paolo, 132–133 Penn Dixie Cement, shares (purchase), 58 Pershing Square Capital Management, 89 Pittsburgh National Bank, 101 Plasmon (Twain investment), 28 Polaroid, trading level, 70 Poppe, David, 114 Portfolio turnover, 69 Portugal, Ireland, Italy, Greece, Spain (PIIGS), 158 Post‐go‐go years meltdown, 147 Post III, William, 131 Price, Teddy, 19–20 Princeton University, 47–48 Private/public investing, history, 149 Profit sharing, 68 Prospect Theory (Kahneman/Tversky), 126 Pyramid schemes, 93 Qualcomm, gains, 57 Quantitative easing program, 134–135 Quantum Fund, 100, 103 Ramirez, Alberto/Rosa, 132 Rational thinking, suspension, 27 Recession, odds (calculation), 38 Renaissance Technologies, 135 Return on equity, term (usage), 4 Reverse crash, 100 Risk, arrival, 32 Risk management, 23 Roaring Twenties, bull market cycle, 7 Robertson, Julian, 58 Roche, Cullen, 99 Rockefeller, John, 30 Rogers, Henry (“Hell Hound”), 30–32 Rooney, Frank, 80, 81 Rosenfeld, Eric, 39, 41 Ruane, Bill, 4, 109, 112 Ruane & Cunniff, 112 Ruane, Cunniff & Goldfarb, 110–111 Russell 3000, 135 Russia, Quantum Fund loss, 103–104 Sacca, Chris, 145, 149–150 Salomon Brothers, 39 Buffett investment, 79 Samuelson, Paul (remarks), 51 San Francisco Call, 31 Schloss, Walter, 4 Schmidt, Eric, 150 Scholes, Myron, 39 Nobel Prize in Economics, 40–41 Schroeder, Alice, 80 Schwager, Jack, 159 Sears, Ackman targeting, 90 Sears Holdings, 109 Securities and Exchange Act, 7 Securities and Exchange Commission (SEC) 13D registration, 90 creation, 22 Security Analysis (Graham), 3–5 See's Candy Berkshire Hathaway purchase, 78 purchase, 142 Self‐esteem, satisfaction (impact), 75–76 Sequoia Fund, 107 operation, 110–111 Shiller, Robert, 75–76, 87 Short squeeze, 93 Silvan, Jon, 94 Simmons, Bill, 151 Simons, Jim, 135 Slack, Sacca investment, 149 Smith, Adam, 68, 121 Snapchat, 151 Snap, going public, 151 Snowball, The, (Schroeder), 80 Social activities, engagement, 87–88 Soros Fund Management, losses, 105 Soros, George, 58, 60, 100, 103 interaction, 102 reform, 121 South Sea Company shares, 37 Speculation, 15 avoidance, 28 SPY, 62 Stagecoach Corporate Stock Fund, 52 Stamp revenues, trading, 141–142 Standard Oil, 30 Standard & Poor's 500 (S&P500) ETF, 62 gains, 112, 114 performance, comparison, 119 shorting, 163 Valeant performance, comparison, 113 Steinhardt, Fine, Berkowitz & Company, opening, 58 Steinhardt, Michael, 55, 58 performance record, 59–60 Steinhardt Overseas Fund, 60 Stoker, Bram, 30 Stock market, choices, 114–115 Stocks crashing/reverse crashing, 100 return, 99 stock‐picking ability, 88 Stock trader, training, 18 Strategic Aggressive Investing Fund, 102 Sunk cost, 110 Sun Valley Conference, 57 “Superinvestors of Graham‐and‐Doddsville, The,” 111–112 Taleb, Nassim, 42 Target, Ackman targeting, 90 TDP&L, 50 Tech bubble, inflation, 57 Technivest, 50 Thaler, Richard H., 75, 126 Thinking, Fast and Slow, (Kahneman), 15 Thorndike, Dorain, Paine & Lewis, Inc., 48 Time horizons, 120 Time Warner, AOL merger, 49 Tim Ferriss Show, The, (podcast), 150 Tim Hortons, spinoff, 89 Tract on Monetary Reform, A, (Keynes), 125–126 Trader (Jones), 119 Trustees Equity Fund, decline, 50 Tsai, Jerry, 65, 68 stocks, trading, 69 ten good games, 71 Tsai Management Research, sale, 70 Tversky, Amos, 81 Twain, Mark (Samuel Clemens), 25, 27, 75 bankruptcy filings, 32 money, losses, 27–32 public opinion, hypersensitivity, 31 Twilio, Sacca investment, 149 Twitter, Sacca investment, 149–150 Uber, Sacca investment, 149 Undervalued issues, selection, 10 Union Pacific, shares (sale), 18 United Copper, cornering, 19 United States housing bubble, 132 University Computing, trading level, 70 US bonds international bonds, spreads, 41 value, decline, 61 U.S. housing bubble, impact, 132 U.S.

Angrynomics
by Eric Lonergan and Mark Blyth
Published 15 Jun 2020

And if central banks already have the power – which arguably the European Central Bank does – all they need to do is clearly explain how they will use it next time a recession strikes. MARK: We’ve said that you can cut interest rates, but that’s not working. You can also do what is called quantitative easing (QE), that is, you buy all the assets you can – bonds and stocks and other assets – and in so doing you boost their prices. This creates a “wealth effect” whereby because people with assets see gains, they feel richer and spend more money, and we hope that eventually that impacts on the wider economy as it trickles down to everyone else.

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The Germans have even suspended their quasi-mythic budgetary “black zero” rule in order to respond to the pandemic. So there is progress. At the ECB, after an initial faux pas at President Lagarde’s first press conference triggered a minor panic in European government bond markets, the ECB stepped up and collapsed eurozone sovereign spreads with an “unlimited” commitment to quantitative easing (again). This combination of low yields underpinned by the central bank and a suspension of the fiscal rules, means individual countries across Europe have lesser fiscal constraints on their ability to borrow, which is still more constrained for some (Italy) rather than others (Germany). Hence the ECB’s commitment to close spreads really matters if Italy is to respond effectively.

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AfD (Alternative für Deutschland) 114 Afghanistan 6 aging population 10, 13, 14, 95, 106–11 and consumption 109–10 and government bonds 138–9, 152 and inequality 56–7, 58, 107–10 and inter-generational transfer 106–107 and poverty 57, 107 as stressor 57, 91, 106, 110, 111, 116, 118 and technological change 90, 106, 122 AIG 85, 124 Amazon 96, 98, 104, 142, 143–4 Anderson, Elizabeth 176 anger 2–3, 7–9, 10, 11–12, 159, 161 misplaced 13 as opportunity 16 and play 153 private see private anger public see public anger reducing see calming strategies anxiety/stress 9, 13–14, 50, 53, 55–6, 88, 118, 161 and cognitive effort 89–90, 91 and job insecurity 95–6 three causes of 91 and uncertainty see uncertainty Apple 96, 142, 143 Aristotle 59, 153 artificial intelligence (AI) 14, 102–106, 142 Asian financial crisis (1998) 77, 140 asset ownership 130–31, 133, 136, 140–41 Atkinson, Tony 80, 173 austerity policies 2–3, 6, 15, 34–5, 41, 48, 84 and euro crisis 44–5 and low interest rates 135 Australia 125 Austria 3 baby boomers 107–108, 110, 111, 175 Bank of England 84, 103, 120, 145, 148 TFS scheme 149–50, 166 banks 1, 6, 15, 33–5, 42, 44, 48, 145–50 and capital/liquidity ratios 126 and direct support for consumption 145–8 and dual interest rates 149–50 and economic models 3, 4 failure of 119–21, 122 and helicopter money 131, 146 independence of 78, 79 and leverage see financial leverage and problem of low interest rates 120–21, 122, 131, 135 regulations on 125–6, 127, 129, 132 restrictions on 72, 77 see also financial crisis (2008) Beck, Aaron 171–2 Bernanke, Ben 6, 148 Biden, Joe 106 billionaires 4 Bitcoin 102, 103 Blackrock 165 blockchain technology 14, 103 Blyth, Mark 172, 175 bonuses 81, 85, 124 Brazil 11, 127 Brexit 4, 7, 11, 22, 24, 37, 38, 55, 117, 154 and austerity policies 41, 45 and immigration 111, 112, 114, 116 and job insecurity 100–101 Brill, Stephen 175 Britain (UK) 3, 38, 119, 155, 162, 164 aging population in 107, 110 austerity policies in 41 dual interest rates in 149–50 and EU see Brexit fear of immigration in 27 gig economy in 100 and government bonds 135, 140 government spending in 71 immigration in 111, 112, 114, 115–16 inequality in 6 interest rates in 145 nationalism in 23 Thatcherism in 75, 76 Brittan, Samuel 151 Brynjolfsson, Erik 173 budget deficits 71, 75 Buffett, Warren 130 calming strategies 12, 15, 118, 122, 123–57 and data dividend see data dividend and direct support for consumption 145–8 and dual interest rates 149–50 and economic diversity 153–6 and inequality see inequality, strategies to reduce and national wealth fund see NWF and regulations on banks 125–6, 127, 129, 132 and sustainable investment see sustainable investment Canada 125 cancer 53, 87, 88, 106 capital 4 cost of 137, 139, 153 and dispersion 97–98 as “fictitious” commodity 65 formation, rate of 108 global 40, 42, 43, 49, 50, 58 and labour 50, 60, 69, 72 and neoliberalism 75, 76, 77, 79 protection of, following financial crisis 85 versus capital 97, 98 Capital in the Twenty-First Century (Piketty) 49, 108–10 capital/liquidity ratios 126 capitalism 64–5 and commodities 65–6 capitalism as computer 11, 61–72 fixing 124–25 hardware of 62–3, 117 software of 63–4, 68–71 and unemployment/inequality 66–7 version 1.0 68–9 version 1.0 crash 64, 66, 67, 71, 73, 83, 118 version 2.0 69–73, 74, 75, 76, 116 version 2.0 crash 70–71, 73, 83–4, 118 version 3.0 74–80, 98–9, 117, 125, 140–41 version 3.0 crash 116 car industry 100–101 caring industry 104 Case, Anne 54, 176 centrism, political 38, 48, 118–19, 121, 160–61, 162 CEOs (chief executive officers) 4 Chamberlain, Joseph 66 Chile 3 China 42, 63, 64, 78, 93, 137, 151, 156 Citibank 81, 82 cities 55, 56 climate change 104, 111, 121, 129, 131, 153, 159–60 and investment see sustainable investment Clinton, Hillary 160 Coggan, Philip 172 cognitive effort 89–90, 91 Cold War 28, 48 ending/legacy of 5, 23, 26, 29, 30, 37, 116 communism 68, 71 competition/competitiveness 47, 65, 94, 95, 111, 116, 125 and technology 105 see also product market competition computer analogy see capitalism as computer constrained volatility 85 consumption, direct support for 145–8, 150–51, 160 consumption, distribution of 52–3, 58 Corbyn, Jeremy 119 corporations 6, 20, 57 and competition 95, 96 and data dividend see data dividend corruption 8, 29, 61, 130 Covid-19 163 culture 160 Czech Republic 146, 147, 155 data dividend 141–4, 160, 162 and monopolies 142, 143, 144 and privacy 141–2 and property rights 142–3 de-unionization 50, 95, 99 Deaton, Angus 54, 176 debt 75, 84, 120, 132, 145, 150 and demography 109, 111, 131 government 136–7, 151, 152 net 136 deflation 65, 69, 120, 128, 144, 148 demand management 44–5, 47, 126–7 democracy 16, 25, 29, 39, 40, 104, 117, 130 and markets 68 demography see aging population Denmark 64, 164 depression see recession deregulation 28, 40, 48, 50, 58, 75 and inflation 127 as micro-stressor 94, 96, 99, 101, 118 DGSE (dynamic stochastic general equilibrium) models 3–4 Doughnut Economics (Raworth) 131–2, 165 dual interest rates 131–2, 149–50, 174 Dublin (Ireland) 17–18 economic change 9–10, 29, 43, 153 see also fiscal reform; recession economic growth 2, 6, 41, 69, 71, 86 and demography 108–10 and immigration 116 and inequality 76, 79–80 and quality of jobs/wages 46, 47, 85 economic ideology 28 economics 12, 54–5 shortcomings of models 3–5, 6, 7 education 24, 53, 58, 135, 141 tuition fees/student loans 107, 111 electoral politics 5–6, 104 and demographics 107, 110 and tribalism 13, 22, 24–7, 29, 30, 31 electric vehicles 153 elites 2–3, 5, 6, 7, 9, 37 in cities 55, 56 and corruption 8, 29 and ethical norms 20 and financial crisis 43–4 manipulation of tribal identity by 22, 24, 61, 116, 161 policy failures of 48–9 Engbom, Niklas 175–6 environmental degradation 29, 161 see also climate change environmental and social governance 168 ethical norms 20 euro crisis 7, 37, 44, 77, 144 Europe 34, 42, 137, 140 inequality in 41, 53, 56, 58 migrant crisis in 7 tribalism in 30 European Central Bank (ECB) 34, 84, 146, 155, 164–5 TLTRO programme 147–8, 166 European Union (EU) 22, 33, 34–5, 37, 43, 119 austerity policies in 2, 36, 48 and financial crisis (2008) 82 micro-stressors in 47–8 and nationalism 154–6 and neoliberalism 76, 77 unemployment in 44–5 see also Brexit eurozone 45, 65, 83, 148, 151, 155 exchange rates 72, 134 Extinction Rebellion 8, 131–2 Facebook 27, 96, 98, 142, 143 fake news 26 Farage, Nigel 17, 161 Farmer, Roger 174 fascism 45–6, 66, 67–8, 71 fear 16, 17, 94, 113, 117, 150, 161 and media 26, 27 and politics 7, 45 financial crisis (2008) 1–2, 6, 26, 29, 30, 39, 48, 127, 163 and automation 102–103 and bail-out of banks 84 fragility of recovery from 46, 85, 89, 121 further reading on 172–3 and globalized financial system 84 and growth of populism 85 and inequality 79–80 and low interest rates 135 and regulation of banks 129 financial leverage 72, 81–3, 85, 99, 126, 157 and credit crunch 83 and interest rates 81–2 financial market deregulation 77 fiscal councils 150–51 fiscal reform 15, 150–53, 162 Fischer, Stan 148, 165 Florence (Italy) 87–8 foodbanks 6, 53 football fans 8, 19, 56 France 2, 3, 20, 55, 56, 71, 101, 154, 156 and NWF 135 Franklin, Benjamin 87 free markets 30, 69, 118 Friedman, Milton 118 full employment 40, 47, 60, 66, 71–2, 79, 85, 175 and inflation 73–4, 76 without inflation 121, 125, 126 future 101–102, 111 Garcia family, parable of 33–5, 43 Gates, Bill 130 GDP (gross domestic product) 5, 44, 76, 79, 100–101, 106, 151, 152 and NWF 135, 141 Germany 3, 11, 34, 38, 42, 62–3, 66, 151, 154, 156, 167 and migrant crisis 111, 113–14 and NWF 135 Gibley, Bruce Cannon 175 gig economy 94, 98, 99–100 global economy 12, 39–40, 50, 53, 58, 133 and nationalism 154 and neoliberalism 77 globalization 5, 39, 41, 42–3, 48, 77, 117 hyper- 40 and inequality 80 and inflation 127 and insecurity 101 and labour market 42, 43 and nationalism 154 Gold Standard 65, 67 Google 96, 98, 104, 142 government bonds 72, 131, 133, 135, 137, 138–9, 152 as insurance policies 139, 140 government borrowing 134–5, 137, 152–3 and cost of capital 137, 139, 153 and low inflation 128, 138–40, 150 and NWF 136–137, 138–40 Great Depression 40, 44, 66, 69, 120 Great Moderation 6, 120 Greece 35, 38, 44, 45, 106–07, 110, 144 green revolution see sustainable investment gross domestic product see GDP Guilluy, Christophe 55 Gulf States 133, 134 Hayek, Friedrich 118 healthcare 47, 53–4, 58, 123–4, 135, 139 and access to data 141–2 and NWF 141 and uncertainty/probability 92 hedge fund managers 4 helicopter money 131, 146, 166 Hildebrand, Philipp 165 Hong Kong 2–3, 140, 164 Hopkin, Jonathan 172 Hopkins, Ellen 123 housing 71, 113, 114, 135 Hungary 11, 23, 30 Iceland 1–2, 8, 20 immigration 5, 7, 26, 27, 111–17, 164 economic effects of 115–16 and housing/training 113, 114 and income distribution 112, 113, 114–15 and manipulation by media/politicians 111, 115 as stressor 113, 115 and technological change 106 and tribalism 95, 111, 112, 113 income see wages income distribution 43, 50, 51 and Keynesian economics 71 and neoliberalism 80, 81 independent fiscal councils 150–51 India 23, 127 individualism 29, 154 Indonesia 3 inequality 3, 4, 6, 15, 29, 30, 40–41, 43, 49–57, 58, 61, 79, 118 difficulties in measuring 50–53 and distribution of income/consumption 53–4 and financial crisis (2008) 79–80, 83, 85 further reading on 173, 176 intergenerational 56–7, 107–10 and populism 54–5 and uncertainty 49–50 inequality, strategies to reduce 121–2, 129–31, 132, 162 asset ownership 130–31, 133, 136, 140–41 and data dividend 141–4 National Wealth Fund see NWF optimal/effective 132–3 and universal basic income (UBI) 141, 144 wealth tax 130, 132 inflation 5, 40, 51–2, 53, 69 death of 126, 128 and full employment 73–4, 76, 121, 122, 125 and global financial markets 78 and interest rates 75, 81–2, 120 low see low inflation and oil prices 96–7 and printing money 78, 128, 145 and raising taxes 129 and recession 144–5 and regulation of banks 125–6, 127, 132 and stagflation 40, 74, 120, 128 inheritance 132, 133, 160 national 136 innovation see technological change insurance industry 93 interest rates 15, 33–4, 75, 81–2, 165–6 dual, and sustainable investment 131–2, 149–50 low, problem of 120–21, 122, 131, 132, 135, 146–8, 152 negative, problem of 15, 148, 149, 150 and spending 147 internet 25 investment spending 40, 60, 69 and future expectations 103 and global capital flows 77–8 and inflation 74 public sector 67, 70–71 sustainable see sustainable investment IRA (Irish Republican Army) 17 Iraq 6 Ireland 17–18, 23, 24 Islam 27 Italy 35, 37, 38, 39, 44, 66, 71, 87–8, 144, 156, 167 aging population in 110 poverty in 47 tribalism in 45–6 Japan 26, 84, 110, 137, 140, 148 job security/insecurity 34, 50, 56, 61, 94, 95–6, 100–101 and technology 102 Kalecki, Michał 60–61, 73–5, 120, 121, 127 Keynes, John Maynard/Keynesian economics 60, 66–7, 68–70, 92, 103, 118, 127, 151 General Theory of Employment, Interest and Money 66, 175 and inflation 67, 69, 128 labour market 35, 40–41, 42, 43, 44 and automation 102–106 deregulation 50, 95, 99, 122, 127 dispersion in 98–9 and full employment see full employment and immigration 115–16 in Keynesian system 71–2 and labour as commodity 59, 60, 65–6, 73, 85 and protectionism 59–61, 66 and secular stability 125, 126 and training 62–3 see also wages Lagarde, Christine 167 Lerner, Abba 118 libertarianism 63 Lonergan, Eric 174 Los Indignatios 85 low inflation 79, 134, 157 and full employment/secular stability 126 and government spending/borrowing 128, 138–40, 150, 152 and recession 144–5, 150, 162 Luce, Edward 164 Ludd, Ned/Luddites 102 machine learning (MI) 102–104 see also artificial intelligence macroeconomics 9, 13, 47, 89 failure of 119–20 and uncertainty 94 Macron, Emmanuel 162 Mair, Peter 172 markets 30, 59–61, 62, 66–7 and democracy 68 and quantity theory of money 68–9 see also labour market Mauss, Marcel 21–2 Mazzucato, Mariana 156 media 11, 43, 47 and technological change 98, 102–103, 105 and tribalism 24–5, 26–7, 29, 31, 61, 116, 161 Merkel, Angela 114 Mexico 63 micro-stressors 47–8, 53, 84, 91 and aging populations see aging populations and change 94 and fourth industrial revolution 94 and immigration see immigration microeconomics 9, 13–14, 160 migrant crisis 7, 111 Milanovic, Branko 52, 80 minimal group paradigm 21 Minsky, Hyman 128 mobile phones 53, 96, 97, 142 modern monetary theory (MMT) 118, 128–9 money, printing 78, 128, 145 monopolies 142, 143, 144 moral outrage 8, 13, 15, 35–6, 57–8, 117, 130, 161 and inequality see inequality as rational 36 and tribalism, compared 19, 20, 22, 29, 30–31, 36 triggers for 36 mortgages 34, 35, 38, 82, 111, 137, 145 nation state 39–40, 48, 50, 117, 119 national wealth fund see NWF nationalism 5, 11, 23, 29, 31, 39, 41, 116, 119 as positive 153–6 neoliberalism 4, 28–9, 37, 75–8, 122 and global capital flows 77–8 and inequality 51, 52, 53 NHS (National Health Service) 107 Nissan 100–101 Nixon, Richard 26 Northern Ireland 17–18, 23, 24 Norway 133, 134 Nussbaum, Martha 16, 35, 36 NWF (national wealth fund) 15, 132, 133–41, 143, 152, 168 and aging population 138–9 and asset ownership 133, 136, 140–41 and government borrowing/debt 136–7, 138–40 and growth of global stock market 137–8 and individual trust funds 135 and negative interest rates 134–5, 136 and risk 136, 137–8 sovereign 133–4 and trade surplus 134 Obama, Barack 29, 46 oil prices 96–7 Orban, Viktor 23, 30, 161 “Panama Papers” 2, 20 pensions 57, 63, 106–107, 138 perpetual loans 147–8 Philadelphia Eagles 20 Pickett, Kate 168 Piketty, Thomas 49, 52, 80, 108–10 play 153 Poland 11, 30 Polanyi, Karl 59–61, 64–5, 67, 175 political centrism 38, 48, 118–19, 121, 160–61, 162 political disengagement 29 political economy 12, 13 political identity 22–3, 29–30, 37, 48, 116, 117 further reading on 172 political parties 5–6, 7, 28 politics, new 15–16, 58, 160 populism 11, 27, 39 and financial crisis 86 three genres of 54–5 Portugal 35, 38, 44, 144 poverty 47, 67, 72, 80, 115 and demographics 57, 107 power 4, 48 powerlessness 9, 41 price stability 76, 79, 128, 147 private anger 7, 8, 9, 10, 13–14, 36, 117 and cognitive effort 89–90, 91 see also anxiety/stress private sector debt 131, 145 and government borrowing 134–5, 137, 138–40 investment 67, 70, 149–50, 151 liability in financial crisis 85, 127 privatization 28, 40, 96, 107 probability 91–3 product market competition 94, 95–8, 116, 125 and deregulation/privatization 96–7 and dispersion 97, 98–9 intensification of 96, 101 and technological change 96, 97–8, 99 productivity 40 and technological innovation 9, 10, 15, 102, 104–105 and wages 71, 72, 74, 76 profit margins 98, 101, 105, 143 property prices 34, 38 property rights 142, 143, 154 protectionism 59–60, 61, 66 public anger 7, 8–9, 10, 89, 98, 117–18 economic causes of 13 see also moral outrage; tribalism/tribal anger public housing 71, 113, 114 public sector investment 67, 70–71 public services 24, 115, 116 quantitative easing (QE) 146–7, 167 quantity theory of money 68–9, 78 racism 26, 54, 55, 115 Raworth, Kate 131–2, 173 Reagan, Ronald 26, 75, 118 recession 15, 29, 30, 34–5, 44, 49, 55, 58, 84, 152, 153 and dual interest rates 150 and interest rates 75, 120–21 and investment spending 60, 70, 71 and low inflation 144–5, 150, 162 and MMT 128–9 and stock markets 139, 140 see also euro crisis referenda 37 regeneration, economic 132 regional development 15, 115, 116, 149, 153, 156 Renzi, Matteo 37 risk 91–2, 127, 136, 137, 153 Roberts, Carys 174 robotics see artificial intelligence Rodrik, Dani 4, 39, 40 Russia 11, 41 Sahm, Claudia 150–51 Salvo, Francesca 87–8 Sandbu, Martin 174 Sanders, Bernie 128, 164 savings 93 scale economies 98, 99, 142 Scottish nationalism 7, 119 secular stability 125, 126, 127 service-based economy 52 Singapore 133, 134, 162 SMEs (small- and medium-sized enterprises) 164–5, 166 social democracy 63–4 social media 26, 27, 90, 98 Solow growth model 109 sovereign wealth funds 133–4 sovereignty 39 Spain 33–5, 38, 44, 45, 144 protests against austerity in 85 spending increasing 145, 147, 151 investment 40, 60 power 145 public sector 67, 70–71, 128, 151 restrictions on 41, 44, 149 sports fans 8, 19–20, 21, 25 sports industry 99 stagflation 40, 74, 120, 128 status-injury 36, 54 stock markets 63, 137–8, 139–40 stress see anxiety/stress strikes 73, 74 student loans 111 supply–demand 60, 96, 104 sustainable investment 131–2, 149–50, 152, 153 Sweden 63–4, 72–3 Syria 111, 113 Tavris, Carol 36, 171 taxes 40, 50, 57, 108, 116, 124 cuts in 34, 44, 111, 151 dodging 2, 6, 20, 132–3, 143 political opposition to 129, 130, 132, 133 raising 152 on wealth 129, 130, 132, 140 Tea Party movement 85 technocracy 37, 42–3, 48, 160–61 technological change 29, 58, 96, 109 and aging population 90, 106, 122 and competition 96, 97–8 and dispersion of returns 97 and fourth industrial revolution 94 further reading on 173–4 and inequality 50, 53 and labour market 102–104 and media 24–5, 27 as micro-stressor 88, 91, 94, 96, 97–8, 99, 101–102, 105, 116, 118 and productivity 9, 10, 15, 105, 122 and rate of diffusion 14 and uncertainty 101–102 telecommunications 96, 97, 142 terrorism 17, 18, 27 Thatcher, Margaret 75, 76, 118, 131 Thunberg, Greta 150 TLTRO programme (European Central Bank) 147–8 trade 21–2, 26, 42, 78, 154 and neoliberalism 78 trade surplus 134 trade unions 28, 42, 63, 66, 72, 73, 76, 79 trade wars 21–2, 26 training 62–3, 93, 113, 114, 141 tribalism/tribal anger 8–9, 11, 18–31, 41, 45–6, 117 and central/eastern Europe 23, 30 destructiveness of 24 and ethical norms 20 and fascism 68 and financial crisis 86, 89 and global politics 21–2, 26, 28–9 and immigration 95, 111, 112, 113 manipulation by politicians/media of 13, 22, 24–7, 29, 30, 31, 35, 61, 95, 116, 161 and minimal group paradigm 21 and moral outrage, compared 19, 20, 22, 29, 30–31, 36 and political identity 22–23, 29–30 social function of 20–21 and sport fans 19–20, 25 see also nationalism trickling down/up 79–80 trilemma, political 39 trucking industry 103 Trump, Donald 11, 22, 23, 25–6, 27, 33, 38, 119, 126, 161 and deregulation 129 election of 41–2, 54 tax cuts of 11 Turkey 11 universal basic income (UBI) 141, 144 Ukraine 11 uncertainty 9–10, 43, 49–50, 65, 91–4, 99, 118, 161 and aging populations see aging populations and emerging technologies 102–103, 106 and healthcare 92 and immigration see immigration reducing 93–4 and risk/probability 91–3 and skills development 93 unemployment 2, 30, 34, 44–5, 48, 58, 66, 72, 84, 167 and inflation/interest rates 74, 75, 125 unfairness 25, 36, 105 United States (US) 3, 38, 93, 118, 129, 164 aging population in 107–108, 110, 111 automation in 103, 104–105 financial crisis in (2008) 82–3, 84, 85 gig economy in 100 healthcare in 47–8, 53–4, 58, 106, 123–4 independent fiscal councils in 150–51 inequality in 50, 51, 53–4, 58, 80–81 Keynesian system in 71, 72–3 labour market in 42, 44, 46, 62 micro-stressors in 47–8 neoliberalism in 76 and NWF 135 stock market in 63 tribalism in 23, 25, 29 wealth tax in 130 US Federal Reserve 6, 46, 84, 108, 110, 120, 148, 151 voice, loss of 37–9, 43, 48, 58 Volcker, Paul 75, 81–2 voting 37–8 see also electoral politics wages 2, 60 and automation 105 and competition 96–7, 98 and consumption 53–4, 58, 72 distribution of see income distribution growth in, without inflation 125 and immigration 115–16 and inequality 4, 50–53, 58 and neoliberalism 76, 77 and oil prices 96–7 and productivity 72, 76 stagnation in 34, 47, 58, 80–81, 83, 84, 85 and supply/demand 65–6 Wall Street Crash 67 Warren, Elizabeth 130, 132 Watson’s Analytics 19 wealth, distribution of 4, 15, 29, 30 welfare state 71 WhatsApp 2 Wilkinson, Richard 176 wind power, investment in 150 Wolf, Martin 80, 173 World Trade Organization (WTO) 42 Wren-Lewis, Simon 151 Yates, Tony 151 “Yellow Jackets” protests 2, 20, 55, 56

The London Problem: What Britain Gets Wrong About Its Capital City
by Jack Brown
Published 14 Jul 2021

What’s more, the capital came through the crash with its economy relatively unharmed. Some argue that this was the result of deliberate policy choices made by central government coming to the aid of the nation’s mostly London-based financial services with ‘implicit subsidies’, bailouts, and monetary expansion through quantitative easing and bank rate reductions.36 Shortly afterwards, in 2009, the MPs’ expenses scandal further undermined trust in the occupants of London’s other ancient city: Westminster. None of this was the fault of the average Londoner, of course, but a mounting anti-establishment feeling was beginning to find its geographical focus in the capital.

…

Martin, ‘Rebalancing the Spatial Economy: The Challenge for Regional Theory’, Territory, Politics, Governance (2015) 3:3, p.237. 34.L. Dalingwater, ‘Regional Performance in the UK under New Labour’, Observatoire de la société britannique (2011) 10, pp.115–136. 35.P. Mandler, ‘Britain’s EU Problem is a London Problem’, Dissent, 24/6/16. 36.I. R. Gordon, ‘Quantitative easing of an international financial centre: how central London came so well out of the post-2007 crisis’, Cambridge Journal of Regions, Economy and Society (2016) 9:2, pp.335–353. 37.Although politicians had fallen hard, bankers were making a surprising comeback. See Ipsos MORI, ‘Trust in politicians falls sending them spiralling back to the bottom of the Ipsos MORI Veracity Index’, Ipsos MORI, 26/11/19. 38.

The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance)
by Feng Gu
Published 26 Jun 2016

We then statistically relate for each year, over the past 60 years, the market values (the product of stock price and the number of shares outstanding) of all US public companies with the required data to their recent respective earnings and book value (see the Appendix for a more formal discussion of this analysis). Market values (capitalization) of companies reflect, of course, multiple sources of information, such as interest rates, industry conditions (e.g., depressed real estate in the financial crisis), and monetary policy (the Fed’s “quantitative easing”), in addition to The Widening Chasm between Financial Information and Stock Prices 33 companies’ earnings and book values. Accordingly, our statistical methodology (a regression analysis) enables us to answer the following question: Of all the information items reflected in companies’ market values (stock prices), how much is attributed to corporate earnings and book values?

…

Pretty good for a back-of-the-envelope forecast, even compared with the 17 54 MATTER OF FACT financial analysts following Exxon—all experts on Exxon and the oil and gas industry—which had in January 2012 a mean (consensus) full-year earnings estimate of $46.27 billion, overshooting actual earnings by 3.1 percent. Surprise—you are in the same league as the experts. One can devise, of course, more sophisticated models to predict earnings than the above: last-year’s earnings plus average growth. Taking into account expected events—like the termination of the Fed’s “quantitative easing,” leading to higher interest rates, or an impending corporate acquisition—will likely improve the accuracy of the forecast. But our aim in this chapter is not to devise the best earnings prediction model, but rather, to focus on the ability or usefulness of reported earnings to predict those in the future.

…

Even a far larger disaster, British Petroleum’s (BP) 2010 oil spill in the Gulf of Mexico, costing the company tens of billions of dollars, didn’t dethrone BP from its membership in the group of major international oil companies. The current (2016) oil glut and price drops may prove more consequential to oil companies. 7. As an aside, any prediction model that incorporates other predictions (like the expected rising interest rates post quantitative easing) is subject to additional inaccuracies from the errors of those predictions. So our prediction, based solely on adjusted reported earnings, may perform quite well compared with “more sophisticated” ones. See, for example, Joseph Gerakos and Robert Gramacy, Regression-Based Earnings Forecasts, working paper (Chicago: University of Chicago, 2013). 8.

The Lost Decade: 2010–2020, and What Lies Ahead for Britain
by Polly Toynbee and David Walker
Published 3 Mar 2020

It was an augury of a period when the public willed and wanted incompatible things, then lashed out when they couldn’t get them. Johnson’s cake-ism caught the spirit of the times.) The authorities lowered interest rates, making money cheaper, which pumped up the price of shares and houses. Inequality trailed in the wake of quantitative easing. But no one counted the winners and losers. In hindsight, a banker-punishing crash – had it been short and sharp – might have made Brexit less likely. Letting rip would have hurt property dealers and the wealthy, and might, just might, have provided a kind of national catharsis. Professor Nicholas Crafts of the University of Warwick argued that the UK economy was up to 16 per cent of GDP smaller than it would have been if bankers had not gambled and been bailed out.

…

The impotence of the Financial Conduct Authority was laid bare when Neil Woodford, a year after paying himself and his business partner £36.5 million, refused to waive the gargantuan daily fee paid by the investors whom he was barring from withdrawing their money after his funds plummeted. It may sound extraordinary to suggest the Old Lady of Threadneedle Street was cognitively impaired, but the evidence comes in the shape of ‘quantitative easing’. Neither its governors nor the Treasury fully understood what they were doing and certainly did not anticipate that it would plump up the feathers of the rich and turbo-charge house prices. Perhaps Osborne did grasp how the latter spread good feeling (and a tolerance of austerity and a willingness to vote Tory) across the land.

…

His firm has 1,500 employees in fifty countries, from Switzerland to Botswana, China and Luxembourg to South Africa. His base is in Dubai, which is where he was when we spoke to him, but he lived, he said, mainly on planes. ‘It’s been very good for the markets: low interest rates, low inflation and, yes, quantitative easing as well.’ QE had dramatic redistributive effects, as we saw, and inflated the value of assets. ‘Clients’ accounts have done very well.’ Green had few worries about protectionism or nationalisation or clamping down on tax havens: ‘You can’t fight globalism. It won’t stop.’ Brexit was an error, but Johnson at the helm meant less tax: ‘People need encouragement.

How to Spend a Trillion Dollars
by Rowan Hooper
Published 15 Jan 2020

It’s what the United States spends every year and a half on the military, or in less time if there’s a big war on. It is an amount that can be quite easily rustled up through the smoke and mirrors of quantitative easing, which officially is the mass purchase of government bonds but which looks suspiciously like the spontaneous creation of money. After the 2008 financial crash, more than $4.5 trillion was quantitatively eased in the US alone.1 All the other major economies made their own money in this ghostly way. And it is not just governments that have this kind of money. Two of the world’s biggest companies, Microsoft and Amazon, are each worth over $1 trillion; Apple Computer stock is valued at $2 trillion.

…

In June 2020, the International Energy Agency estimated that governments worldwide would be spending $9 trillion in a matter of months on firing up their post-pandemic economies; another estimate put that figure at $12 trillion.4 In 2020, globally, more than $6 trillion was created through quantitative easing.5 Right now, tens of trillions of dollars in economic stimulus packages are being chopped up, partitioned, allocated, siphoned. What if we could spend that cash? If only we could divert some of it, scrape a bit here and there from governments and banks, or quantitatively ease a trillion dollars into existence and spend it before anyone noticed. Imagine the possibilities. Imagine what we could achieve. What, say, could the World Health Organization (which has an annual budget of just $4.8 billion) do with $1 trillion for a global SARS-CoV-2 vaccination and treatment campaign?

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

Traditional monetary policy involved setting interest rates and supplying or reducing liquidity in the banking system through ‘open market operations’ – trading in the government’s own debt. The more recent policy, known as ‘quantitative easing’, involves the central bank buying assets from the financial sector – not just banks, and not necessarily only government securities. Though this policy enjoyed little success in stimulating the Japanese economy when it was first tried there in the 1990s, quantitative easing has been extensively adopted since 2009 by the Federal Reserve Board and the Bank of England. The balance sheet of the Federal Reserve System totalled just under $900 billion in 2007: by 2014 this figure had risen fivefold to almost $4.5 trillion.7 The Bank of England’s balance sheet has been multiplied by ten, from £39 billion to £399 billion.8 While British government debt of around £1.4 trillion is the highest it has ever been, the Bank of England itself is by far the largest holder of this debt.

…

But such information asymmetry is a benefit rather than a problem: if the British government knows it is not going to default on debt when the bond market believes otherwise, a state that can issue as much short-term debt (money) as it likes can use the misapprehension to refinance its debt on favourable terms, buying back its own long-term debt for subsequent reissue. The policy has been followed during quantitative easing, but at the wrong time, for the wrong reasons and with the wrong consequences. Far from being abnormally high in anticipation of a possible default, long-term interest rates in developed economies are at historically unprecedented lows. The governments of Britain, France, Germany and the USA can today borrow for decades ahead at low or even negative real interest rates.

…

Gerald 242 Countrywide Financial 150, 152, 293 Craig, James 26 credit cards companies 27, 210 debt 54 origin of 185–6 profitability 113 credit default swaps 41, 60, 61, 64, 73, 100, 101, 119, 120, 121, 139, 152, 153, 223 credit expansion 54, 98 Crédit Lyonnais 33 credit ratings 21, 101, 248 credit risk 42, 75, 177, 192 Crédit Suisse First Boston 167, 292 credit-scoring 84, 87, 290, 291 Crosby, James 125 crowd-funding 81 D Dad’s Army (television series) 12 Dahinden, Vincent 124 Daschle, Tom 230 debit cards 186 debt reduction 241 debt securities 101, 107 debt-to-value ratio 149 democracy 4, 52, 308 deposit channel 25–6, 147–8, 173–94 activities of 188–94, 189, 192 directed by retail banks 291 household wealth 173–80, 175, 179 the payment system 181–8 ring-fencing 194, 287 simplification needed 213 deposit insurance 25, 121 deposit protection schemes 135 Derbyshire Building Society 90 deregulation 13, 28, 31, 149–50, 151, 246–7, 292 derivative contracts 191, 192, 323n11 derivatives market 2, 19, 35, 38, 110 portfolios 98 regulation 57, 234 securities 2, 15, 17, 41, 71, 131 Detroit, Michigan 254 Deutsche Bank 33, 104, 136–8, 166, 169, 191–2, 192, 193, 200, 219, 222, 266, 282, 286, 303, 323n11 Diamond, Bob 34, 35, 261, 267, 295, 300 Dickens, Charles: Martin Chuzzlewit 201 Dimon, Jamie 14–15, 35, 231 Dirks, Ray 228 Disney, Walt 70, 71 diversification 21, 27, 28, 29, 32, 33, 45, 95–9, 153 ‘alternative assets’ 98 building societies 151 buying all available stocks 99 coin-tossing game 96 correlation 96, 97–8 Exchange Traded Funds 99 hedge funds 98–9 passive funds 99 diversification divorce 74 DLJ 313n15 Dodd-Frank regulatory regime 236–7, 271 Doerr, John 167 dollar devaluation (1971) 14, 36 Donoghue, Mrs 283 dot.com boom 40 Draghi, Mario 42, 139 Dreamworks 21 Drexel Burnham Lambert 46 drug use 22 ‘Dutch book’ 68, 116 E eBay 187 economic policy 240–69 the British dilemma 262–9 consumer protection 259–62 financial markets and economic policy 248–52 Maestro 240–48 pensions and inter-generational equity 252–9 Economist, The 115 ‘Edge, the’ 114–18, 288 Edinburgh Britain’s second financial centre 11, 263 investment trusts in 26 Edison, Thomas 196 education 253, 259 efficient market hypothesis (EMH) 69–70, 99 Einstein, Albert 129 El Paso oil business 117–18, 232 electricity 245–6, 278 eligible counterparty 282–3 Elizabeth II, Queen 161 Emanuel, Rahm 301 embezzlement 127 emerging markets 39, 42 Emerson, Ralph Waldo: The Conduct of Life 181 emperor’s guard’s new clothes, the 309–10 empire, decline of 13 Enron 123, 124, 126, 127, 158, 176–7, 197, 246, 317n5 Equitas 107 Equity Funding 228 equity markets 23, 85, 168–9, 249, 288 Ericsson 108 Espirito Santo 271 Eurodollar market 13, 20, 120, 121 European Central Bank 42, 98, 138, 139, 183, 243, 244 European Commission 184, 289 European Monetary System 184 European Parliament 184, 328n6 European Union (EU) 194, 220, 226, 228, 273, 287 Eurostat 250 Eurozone 158, 183, 243, 250 creation of 129 crisis 41–2, 139, 301 indebtedness in 184 exchange rates fixed 18 flexible 18 forward 73 Exchange Traded Funds (ETFs) 99 synthetic 99 exchange-traded funds 280 Exchequer Partnerships 158, 159 extended family 78 Exxon Mobil 96, 101, 120, 134, 161, 163, 164, 189, 196 F Facebook 81, 162–3, 166, 167, 185, 196 ‘fair value’ 125–6, 191 fallacy of composition 89 Fama, Eugene 69 family support 79 Fannie Mae 75, 91, 135, 152, 230, 317–18n5 Farkas, Lee 152, 293 FBI 131 febezzle (‘functionally equivalent bezzle’) 127, 128, 132, 136, 176, 177, 190 Federal Deposit Insurance Corporation (FDIC) 25, 135, 247 Federal Reserve Bank of Kansas City symposium (Jackson Hole, Wyoming, 2005) 56–7, 58, 73, 79, 102, 181, 236, 256, 280 Federal Reserve Bank of New York 57, 183, 232, 242, 243 Federal Reserve Board 5, 41, 56, 57, 58, 134, 183, 231, 240, 243, 245, 247 Federal Reserve System 13, 40, 90, 98, 150, 183, 245 Federated Department Stores 204 fee structures 204 Ferguson, Charles 236 Feynman, Richard P. 276, 327n3 Fidelity 109, 199, 200, 213 finance sector a bias to action 203–8 control of risk 6, 7 economic significance 6 excess in the industry 6 export contribution 265 greedy individualism 24 growth of 1–2, 33 heavy criticism of 233 as just another business 5 labour force 263 lack of sanction application 7 lobbying 230, 302, 306 major role in politics 4 management of household financial affairs 6 matching of borrowers and lenders 6, 7 past and current attitudes in 23–4 payments system 6, 7, 25, 281 profitability 132–40, 134 qualitative assessment 265 recurrent crises 35, 307 regarded as having unique status 4–5 remuneration 54, 112 role of 143 search 144 sense of personal entitlement 24, 300 share in GDP 264–5 skills 15 stewardship 144 structural reform 7 taxation 266–7 work incentives 7 workers in finance 6–7, 125 finance theory 5 Finance Watch 328n6 financial advisers 197, 199, 291 Financial Conduct Authority 230, 237, 261 Financial Products Group 293 financial sector, regulation of see regulation Financial Services Authority 243, 247, 303 Financial Services Compensation Scheme 260 Financial Times 68, 115 financialisation 4–7, 36, 45, 72, 163, 165, 172, 259 and complexity 276, 278 conflation of roles of agent and trader 198 and the conglomeration 133 direct impact of 176 effect on corporate behaviour 78 and emergence of large asset management companies 200 emphasis on monetary policy 241 in Germany 169 and hedge funds 289 and housing 149 national and international 39 and risk 55 and secondary markets 170 and social security 255 Summers supports 57 transition from agency to trading 84 two main componenents of 16 Fink, Larry 200 First Boston 200 First Data Corporation 186 First World War 221 fiscal arbitrage 122, 123, 223 FISIM (financial services indirectly measured) 264 Fitch rating agency 313n6 Fitzgerald, Scott: The Great Gatsby 17, 297 FitzPatrick, Sean 156, 293–4 Five Star Movement 306 fixed commissions 29 fixed interest, currency and commodities (FICC) 22, 107, 110, 111, 118, 125, 160, 191, 194, 288 fixed-interest securities 190, 193 Flaubert, Gustave: Sentimental Education 80 Florida land boom (1920s) 201 Forbes magazine 204, 231 Ford, Henry 45, 70, 71 foreign exchange transactions speculators in 18–19 value of 2 Fortune magazine 23 ‘four horsemen’ 167, 168 Fox, Justin 70 fractional reserve banking 88 France corporatism 303–4 defeat of Sarkozy 248, 249 downgraded bonds 248, 249, 250 housing 149, 174 ‘trente glorieuses’ 36 Frankfurt financial centre 26 Freddie Mac 75, 135 free market 18, 59, 238, 247, 302 Frick, Henry Clay 44 Friedman, Milton 60, 63 Free to Choose 56 front running 28 FrontNational 306 Frost, Robert: ‘Provide, Provide’ 252 FT Alphaville 16 Fuld, Dick 24, 32, 72–3, 75, 231, 293 full employment 241 fund managers 66, 86, 108, 115, 206, 209, 212 future of finance 297–308 futures 19 G G8 and G20 economic summits 220 Galbraith, J.K. 127, 201 Galton, Francis xi gambling 130–31, 289 close regulation of 71, 72 Lloyd’s coffee house 71–2 lottery 65, 66, 68, 72 Gates, Bill 174, 268 Gaussian copula 22 GEC 48, 51 GEICO 107 Geithner, Timothy 57–8, 73, 75–6, 92, 104, 183, 230, 232, 239, 276, 306, 307 Geithner doctrine 271 Gemeinschaft 17, 61, 255 General Electric 46, 196 General Motors 45, 49 general share price indexes 98 Generali 27 Generally Accepted Accounting Principles (GAAP) 193 Gensler, Gary 288 Germany corporatism 303, 304 ‘economic miracle’ 36 housing 149, 174 indebtedness to 183–4 Landesbanken 169 Mittelstand 52, 168, 169, 170, 171, 172 role of Bundesbank 243 social market economy 219 state pensions 253 Gesellschaft 17, 61, 255 Gingrich, Newt 230 Glass-Steagall Act (1933) 25, 28, 33 Glaxo 96 global financial crisis (2007–9) and bank assets 91 bankers’ cognitive dissonance 102 begins in the USA 41 causes of 194, 220, 271 collapse of asset-backed securities market 21 collapse of sub-prime mortgages 109 costs of 285 and derivative contracts 192 and diversification 32 emergency measures 285–6 Gaussian copula 22 and liquidity 188, 278, 286 misallocation of housing finance 148 most culpable figures 293 unprecedented public intervention 41 the worst financial crisis since the Great Depression 15 globalisation 13 of capital flows 176, 180 of financial markets 17 and income inequality 53–4 pressure on regulatory structures 14 ‘gnomes of Zurich’ 18 gold standard 13, 18, 36, 181, 241 Golden Dawn 306 Goldman Sachs 1, 14, 31, 55, 57, 59, 63, 104–5, 114, 115, 117, 118, 120, 135, 143, 158, 160, 164, 232, 233, 250, 258, 266, 282, 283, 284, 288, 294, 300, 306 Code of Business and Ethics 118 Goldsmith, Oliver: The Deserted Village 49 goodwill 31, 258–9 Goodwin, Fred 14, 34, 149, 156, 169, 231, 293 Google 80, 83, 162, 167, 196 Gould, Jay 44 government assets and liabilities 000 government bonds 17, 42, 86, 155, 178, 208, 222, 290 government debt 128, 178, 190, 203, 245, 250, 251 government spending 253 Graham, Ben 176 Grasso, Dick 49 Great Depression 12, 15, 25, 36, 57, 218, 221, 225, 258, 308 ‘Great Moderation, the’ 40, 57, 104 Greece accounting manipulation 158, 250 adoption of a common currency 41 government debt 42, 128 refinancing of Greek credit 42 Greenspan, Alan 57, 63, 104, 119, 181, 245, 276 and Ayn Rand 79, 240 and ‘Black Monday’ 242 chairman of the Federal Reserve Board 56, 58, 181, 240–41, 242 and Fed priorities 247–8 and the Markowitz model 68–9 and mortgage defaults 97 and risk 73 testimony to Congress 67–8, 240 ‘Greenspan doctrine’ 56, 60, 67, 68, 71, 87, 101, 249 ‘Greenspan put, the’ 242, 249 Grillo, Bepep 306 Grimaldis of Monaco 123 gross domestic product (GDP) 251, 256, 264–5, 265, 266 gross national income (GNI) 265–6 gross value added (GVA) 265 group insurance 76–7 Grubman, Jack 293 H Haldane, Andrew 139, 264 Halifax Building Society 31, 32, 140, 164, 258–9 becomes a public company 124 competition for the ‘talent’ 193–4 ‘the Edge’ established in wholesale financial markets 114 and fixed-interest securities 190, 193 Group Treasury 106, 107, 111, 129 origins 106 rescued by the British government 124 response to changing times (1990s) 129 takes over the Bank of Scotland 124, 125 the world’s largest mortgage lender 106 worthless windfall shares 127–8 Hamamatsu Photonics 168 Hambrecht & Quist 167 Hambros Bank 158 Hanson 45, 46–7 ‘hard’ commodities 17 Harding, David 111–12, 124 Hartlepool nuclear power station, northeast England 158 Harvard University 5, 14–15 Harvey-Jones, Sir John 51 Hawkins, Sir Henry 61, 64, 116 Hayek, Friedrich 225 HBoS 32, 91, 124, 125, 135 healthcare 77, 78, 79, 253, 257–8 hedge fund managers 23, 99, 109, 282 Hedge Fund Research 323n9 hedge funds 27, 98–9, 110, 191, 194, 284, 289, 323n9 hedge fund centre, Mayfair, London 263 Helyar, John 46, 164 Henderson, David 58 ‘hidden champions’ 168 high-frequency trading 2, 111, 280, 305 Hill, Lord 322n14 Hope, Bob 160 Hornby, Andy 14 horse-racing 72, 116 House of Commons library 115 House of Lords 283 House of Morgan 25, 35 Household International 34–5 housing 148–54, 290 causes of crisis in housing finance 153 collapse of thrifts 150 equity release 54 house prices (US) 41, 43, 174, 259 houses as physical assets 146–7 low-cost 79 mortgage defaults 97 owner-occupied housing stock 53, 149, 151 specialist lenders 150 HSBC 1, 24, 34–5, 286, 328n22 Hubler, ‘Howie’ 130 Hurricane Katrina (2005) 79, 256 I Ibsen, Henrik: An Enemy of the People 285 Iceland: bank and compensation scheme collapse 260 ICI 45, 46–8, 51, 78 Iksil, Bruno 35, 130 ‘I’ll be gone, you’ll be gone’ culture 125, 128, 129, 131, 133, 152, 156, 204, 273 imperialism 13, 218 income distribution 52–4, 53 Independent Commission on Banking 139, 287 India, economic growth in 53 inflation 36, 54, 178, 241–2, 258 information asymmetry 60, 74, 76, 251, 317n2 information technology 18, 19–20, 31, 168, 185 infrastructure, property and 154–60 initial public offering (IPO) 113 Inside Job (film) 236 insurance companies 16, 27, 29, 120, 197, 199, 208, 213, 264 Intel 29, 167 interest rates and inflation 241, 242 long-term 251 intergenerational accounting 258 intermediation 80–105 bad intermediaries 81–2 competition 271 direct/indirect 82, 83 and diversification 96 facilitating 7 and the internet 81 leverage 100–105 managed 83, 201, 212–13 the role of the middleman 80–99 total costs of 207 transparent 83, 84, 201–2, 203 International Financial Reporting Standards (IFRS) 193 International Labour Organization (ILO) 263 International Monetary Fund (IMF) 13–14, 38, 39, 56, 58, 139, 220, 302 international reply coupons 131 International Swaps and Derivatives Association (ISDA) 61, 119, 193 internet 182, 183, 185 connectedness 81, 83 and intermediation 81 Interstate Commerce Commission 233, 237 investment banking FICC trading 107 global expansion of American banks 33 investment trusts 26, 27 relationships 16 within commercial banks 22 investment banks boutique 205 ‘dark pools’ 29 economists in 248–9 legal partnerships 30 modern objectives 197 and rating agencies 249 and search 197 investment channel 26, 148, 174, 175, 195–213 a bias to action 203–8 fails to meet the needs of businesses and households 213 investable assets 202–3, 203 the role of the asset manager 208–13 simplification needed 213 and sovereign wealth funds 253 stewardship 195–203, 203 investment companies 26, 27, 96, 177, 197, 199, 200, 201, 202 investment funds closed-end (managed) 212 open-ended (transparent) 212 Investor B 108 investors allocation of risk 57, 60, 73 and credit ratings 21 foreign 39 institutional 23, 28, 46 large 98 and leverage 101 long-term 94 losses of 43 private 28 property 99 retail 66 small 30, 99 sophisticated 23 Ireland bank workers’ strike (1970) 182 collapse of banking system (2008) 42, 138, 182 Isaacson, Walter 71 Ishmael, Stacy-Marie 16 Israel defence forces 171 high-technology start-up sector 117 It’s a Wonderful Life (film) 12–13 ITT 45 J Japan credit expansion 98 economic growth 36, 39 imagined competitive threat from 221 and quantitative easing 245 speculative bubble (late 1980s) 38–9, 280 jobbers 25, 28, 29–30 Jobs, Steve 70, 71, 162, 196 Johnson, Simon 302 Jordan Marsh department store 46, 90 J.P. Morgan 14, 25, 35, 113, 120, 123–4, 130, 134, 191, 192, 193, 197, 200, 286, 294–5 J.P. Morgan Chase 231 junk bonds 46, 292 jurisdictional arbitrage 122–3, 223 ‘just culture’ 238 K Kahn, Alfred 238 Kahneman, Daniel 66 Kaupthing bank 294 Kay, John Obliquity 48 The Long and the Short of it 208 The Truth about Markets 240 Keating, Charles 292 Kerviel, Jérôme 50, 130 ‘ketchup economics’ 5, 15, 57, 69, 80 Keynes, John Maynard 67, 87, 110, 226, 307 The General Theory of Employment, Interest and Money 65, 297 Keynesianism 241 Kinder Morgan 117–18, 232 Knight, Frank 67 ‘known unknowns’ 67 Kohn, Don 56–7, 58, 73, 101 Kuznets, Simon 263 L Lagos, Nigeria: scammers in cyber cafés 118 Landesbanken 33, 169 large companies 160–64 Latin American states, default of (1980s) 37 Lazard family 217 Lazard Frères 205 Lazards 134 Leeds United FC 21 Leeson, Nick 130 Legal & General 200 Legg Mason 109 Lehman Brothers 24, 32, 34, 43, 75, 91, 121, 122, 135, 231, 277, 280–81, 293 ‘lender of the last resort’ 90, 244, 275 leverage 100–105, 282 central to modern financial crises 104 debt element of risk 101 defined 100 and derivative contracts 191 equity element of risk 101 forms of 101 and a high return on equity 137–8 ‘out of the money option’ 102, 103 and property transactions 155, 156 refinancing established companies 166 and shareholder value 211 tailgating strategy 102, 103, 104 the ‘winner’s curse’ 103, 104 Levin, Sen.

Global Financial Crisis
by Noah Berlatsky
Published 19 Feb 2010

These will effectively give Europe a fiscal capacity that is, for all intents and purposes, equivalent to that of the U.S. Treasury. Second, given the deflation problem, the European Central Bank can now follow the Bank of England and the Swiss National Bank by entering the next tier of quantitative easing, expanding its balance sheet and starting to buy those crisp new EU bonds in the primary market. (Quantitative easing, which is simply a generic way of referring to all the recent attempts to boost money supply when interest rates fall close to zero, becomes in this particular case a euphemism for “printing money,” with the unusual characteristic that this time, inflation is exactly what we are looking for.

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As you read, consider the following questions: 1. According to Edward Hugh, what might Spanish unemployment rise to in 2010? 2. Which two Eastern European nations face the current worst-case economic scenarios in Europe, according to Hugh? 3. According to Hugh, in the current economic situation, for what is “quantitative easing” a euphemism? A s [Russian novelist] Leo Tolstoy might put it, all of Europe’s economies are feeling pretty unhappy right now, but each is unhappy in its own unique way. Nowhere have the Edward Hugh, “The Center Cannot Hold,” Foreign Policy, March 1, 2009. Copyright © 2008 Foreign Policy.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers
Published 17 Nov 2020

Uppsala, March 2020 Abbreviations ABP Associated British Ports ABPI Association of the British Pharmaceutical Industry AWS Amazon Web Services BAT British American Tobacco BIA BioIndustry Association BIG British Infrastructure Group BNOC British National Oil Corporation CAA Civil Aviation Authority CAGR Compound annual growth rate CAP Common Agricultural Policy CCT Compulsory competitive tendering CGT Capital gains tax CHPI Centre for Health and the Public Interest CMA Competition and Markets Authority CRC Community Rehabilitation Company CRE Commercial real estate CSU Commissioning support unit DEFRA Department for Environment, Food and Rural Affairs DHSC Department of Health and Social Care DRC Democratic Republic of Congo DTI Department of Trade and Industry ECU European Currency Unit FBA Fulfillment By Amazon FSA Financial Services Authority GDP Gross domestic product GLC Greater London Council GNP Gross national product GOS Gross operating surplus GVA Gross value-added HMRC Her Majesty’s Revenue and Customs HR Human resources IFA Intangible fixed asset IP Intellectual property IPPR Institute for Public Policy Research IWGB Independent Workers’ Union of Great Britain KPI Key performance indicator LSE London Stock Exchange LSEG London Stock Exchange Group MHCLG Ministry of Housing, Communities and Local Government MoD Ministry of Defence NAO National Audit Office NFC National Freight Corporation NIC National Infrastructure Commission NIDP National Infrastructure Delivery Plan OE Oxford Economics OECD Organisation for Economic Co-operation and Development Ofcom Office of Communications Ofgem Office of Gas and Electricity Markets OFT Office of Fair Trading Ofwat Water Services Regulation Authority ONS Office for National Statistics Opec Organization of the Petroleum Exporting Countries OSI Oxford Sciences Innovation OUI Oxford University Innovation PFI Private Finance Initiative QE Quantitative easing R&D Research and development REIT Real estate investment trust ROSCO Rolling stock company RPI Retail price index SIC Standard industrial classification SMEs Small and medium-sized enterprises SPC Supplementary protection certificate SPV Special purpose vehicle TfL Transport for London TOC Train operating company TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights UKCS UK Continental Shelf VAT Value-added tax WTO World Trade Organization Preface Few people in the United Kingdom, let alone further afield, have heard of Arqiva.

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As he writes, ‘the price of real estate and [financial] stocks fell to historically low levels in the aftermath of World War II … After 1950’, however, ‘these asset prices gradually recovered, with an acceleration after 1980’.41 Needless to say, there was nothing ‘natural’ about such acceleration, which, in the UK, has in recent years been especially pronounced with respect to land values, and where unconventional post–financial crisis monetary policy, in the shape of so-called quantitative easing, has latterly played a crucial role. Asset price acceleration has occurred, as Piketty observes of Western societies under neoliberalism more generally, ‘in a political context that was on the whole more favourable to private wealth than that of the immediate postwar decades’.42 In the UK, the most emphatic articulation of this greater favourability to private wealth accumulation came in 1998 when Peter Mandelson, during his brief tenure as secretary of state for trade and industry, famously expressed New Labour’s standpoint thus: ‘We are intensely relaxed about people getting filthy rich as long as they pay their taxes.’

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Demand for capital did not exactly dry up, but its upward momentum was certainly checked – reflected in the post-2008 trend in UK-based bank asset volumes shown in Figure 1.1. More significantly still, monetary policy entered entirely new territory. Out went the contractionary bias of neoliberal convention, to be replaced by its very opposite, an expansionary monetary policy known as quantitative easing (QE). I will have more to say about QE and its relation to financial rentierism later in the chapter, but its explicit aim was to lower interest rates in order to stimulate borrowing in the ‘real’ (non-financial) economy. If the latter objective has met with only limited success – again, see Figure 1.1 – the former one has been resoundingly successful.

The Bank That Lived a Little: Barclays in the Age of the Very Free Market
by Philip Augar
Published 4 Jul 2018

CHRISTMAS COMES AGAIN For William 2009 had been another good year. When he had run his numbers after the 2008 year-end holiday, he had decided that the stock market undervalued Barclays and other banks. In March 2009 the Bank of England began its quantitative easing programme – buying up financial assets – pumping billions into the markets. The Bank hoped that quantitative easing would trickle back into the real economy, but William believed that the influx of so much new money into markets would mostly serve to put a floor under asset prices and help investment banks such as Barclays Capital. As he did his sums, he realized that having caused the crisis in the first place, the banks would now be the first to benefit from the cure.

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MINISTERS TAKE A LOOK Monday 19 January 2009 was a wet and miserable winter morning in London, fitting the mood in Parliament as Chancellor Darling announced the government’s second rescue package for the banks. The Bank of England was given £50 billion to buy assets such as corporate bonds, commercial paper and some asset backed securities to strengthen the banks’ balance sheets. When this operation began in March 2009 it became known as ‘quantitative easing’. In addition, various credit guarantees to encourage inter-bank lending were extended and access to the Bank’s short-term liquid funds was facilitated. An Asset Protection Scheme was announced by which, in return for a fee, the government offered future protection against credit losses to banks lending to business and private customers.3 It was a powerful package designed to improve confidence, liquidity and capital ratios and to encourage lending to the real economy.

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Conventional monetary policy was ineffective. Despite interest rates of only 0.5 per cent, the economy remained stubbornly unresponsive. Only one group of people seemed unaffected by this crisis: the very people who had caused it. The principal beneficiaries of the coordinated bank rescues and quantitative easing were the banks themselves. The flood of government money stimulated market activity and the investment banks made hay. Profits in market-related businesses bounced back from the credit write-offs of 2008 and the bankers expected to get paid. But they had misjudged public opinion. The boring safe industry moved off the City pages of the newspapers into the headlines and the mood turned ugly when people read about their bonuses.1 The country was paying the price for their recklessness but the culprits appeared immune.

The Tyranny of Nostalgia: Half a Century of British Economic Decline
by Russell Jones
Published 15 Jan 2023

And so, following hubris, the UK pitched once again back to its nemesis: back to a hardline anti-Keynesian stance that sought to grow the economy by shrinking it as fast as possible. The austerity gamble of the Cameron and Osborne years failed miserably, and in its wake British politics fractured. The Bank of England heroically kept the ship afloat during this period through large-scale interventions and endless rounds of quantitative easing, but the state was continually trying to bore a hole in the ship at the same time. Public and private investment fell, wages stagnated, productivity effectively stopped, regional inequalities and wealth inequalities multiplied, and bullshitter politicians weaponized the sense of grievance that all this produced outside of London and channelled it into a new fetish: Brexit.

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Keynes was disparaging of laissez-faire economics, characterizing it as being divorced from the practical realities of the day, and likely to be a source of misery to much of the population. He hated the reality of poverty in the midst of plenty. As an alternative, Keynes put the case for active monetary management to stabilize the domestic price level. He even explored how central banks might use purchases of long-term government securities – what we know today as quantitative easing, or QE – to go about this when short-term interest rates approached the zero bound.8 He also became an outspoken supporter of using fiscal policy to support monetary interventions, especially when the latter lost their potency and the private sector remained reluctant to spend more. His particular focus was on the use of a programme of public investment spending to support aggregate demand, and in conjunction with his Cambridge University colleague Richard Kahn he developed a theory about how government investment outlays would cascade through an economy such that their aggregate effects could greatly exceed the initial sum spent.9 In his 1936 magnum opus The General Theory of Employment, Interest, and Money, Keynes sought to demolish the ‘classical’ approach to economics once and for all.10 He challenged the notion that markets were close to perfect.

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Both of these represented major policy errors – errors that were perhaps even on a par with the Federal Reserve’s decision to raise the US discount rate to maintain the US dollar’s fixed link to gold at the height of the Great Depression. The employment of central bank bond purchase programmes and forward interest rate guidance to reduce long-term interest rates, moderate credit spreads and increase the supply of money: so called quantitative easing and credit easing. In late 2008 and early 2009, US credit spreads were at levels last seen in the early 1930s, and they threatened to encourage an economic collapse of similar proportions to the Great Depression. They had to be brought back down closer to earth. Discretionary fiscal stimulus to supplement the operation of the automatic stabilizers.

Seven Crashes: The Economic Crises That Shaped Globalization
by Harold James
Published 15 Jan 2023

But this 2009 stalemate was nothing like the deadlock a year later, at the G20’s Seoul summit, November 11–12, 2010. On the eve of the meeting, the controversy between the United States and the rest of the world was given additional fuel by the Federal Reserve’s announcement, after the policy meeting on November 3, of an additional $600 billion purchase of longer-term Treasury securities (Quantitative Easing, or QE) “to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its [the Fed’s] mandate.” One of the concerns raised in the meeting was that the major mechanism through which QE might be expected to work was through depreciation of the exchange rate—was that not a declaration of currency war?

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One striking feature was that there was some protectionist edge to the new monetary regimes, in that they were expected to produce currency depreciation and hence gains for exporters and for manufacturing employment. After March 2001, with the Japanese economy in recession and prices falling at faster rates than before, the Bank of Japan (BOJ) had cut its policy rate to zero. Along with this move, the BOJ announced a “quantitative easing policy,” built on three pillars: first, to make the operating target the outstanding balances held by financial institutions at the BOJ; second, to adhere to the new policy until the core consumer price index (excluding food prices) stopped falling; and third, to increase purchases of long-term Japanese government bonds.

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At their next meeting in December 2008, the Federal Open Market Committee released a statement that took the federal funds rate target down to what it believed to be the lower bound of 0 –0.25 percent. In March 2009, the Fed expanded the asset purchase program to “up to” $1.75 trillion, including purchases of $1.25 trillion of MBS, $200 billion of agency debt, and $300 billion of Treasuries. The purpose of this action, which subsequently became known as Quantitative Easing 1 (QE1), was formulated more broadly as “to help improve conditions in private credit markets.” Total QE1 purchases were equivalent to 12 percent of GDP. In addition, Fed policy statements in December 2008 began to include explicit references to the likely path of the federal funds interest rate, a policy that came to be known as “forward guidance.”

Ethics in Investment Banking
by John N. Reynolds and Edmund Newell
Published 8 Nov 2011

Calculated as the discount rate that makes the net present value of all future cash flows zero Investment banking: providing specialist investment banking services, including capital markets activities and M&A advice, to large clients (corporations and institutional investors) Glossary xi Investment banking adviser: see Adviser Islamic banking: banking structured to comply with Shariah (Islamic) law Junior debt: debt that is subordinated or has a lower priority than other debt Junk bond: see High yield bond Lenders: providers of debt finance Leverage: debt Leveraged acquisition: acquisition of a company using high levels of debt to finance the acquisition LIBOR: London Inter-Bank Offered Rate, the rate at which banks borrow from other banks Liquidity: capital required to enable trading in capital markets M&A: mergers and acquisitions; typically the major advisory department in an investment bank Market abuse: activities that undermine efficient markets and are proscribed under legislation Market capitalism: a system of free trade in which prices are set by supply and demand (and not by the Government) Market maker: a market participant who offers prices at which it will buy and sell securities Mis-selling: inaccurately describing securities (or other products) that are being sold Moral hazard: the risk that an action will result in another party behaving recklessly Moral relativism: the concept that morals and ethics are not absolute, and can vary between individuals Multi-notch downgrade: a significant downgrade in rating or recommendation (by a rating agency) Natural law: the concept that there is a universal moral code Net assets: calculated as total assets minus total liabilities Net present value (NPV): sum of a series of cash inflows and outflows discounted by the return that could have been earned on them had they been invested today NYSE: New York Stock Exchange Operating profit: calculated as revenue from operations minus costs from operations P:E: ratio used to value a company where P (Price) is share price and E (Earnings) is earnings per share Price tension: an increase in sales price of an asset, securities or a business resulting from a competitive situation in an auction xii Glossary Principal: equity investor in a transaction Principal investment: proprietary investment Private equity: equity investment in a private company Private equity fund: investment funds that invest in private companies Proprietary investment: an investment bank’s investment of its own capital in a transaction or in securities Qualifying instruments: securities covered by legislation Qualifying markets: capital markets covered by legislation Quantitative easing: Government putting money into the banking system to increase reserves Regulation: legal governance framework imposed by legislation Restructuring: investment banking advice on the financial restructuring of a company unable to meet its (financial) liabilities Returns: profits Rights-based ethics: ethical values based on the rights of an individual, or an organisation SEC: the Securities and Exchange Commission, a US regulatory authority Sarbanes–Oxley: the US “Company Accounting Reform and Investor Protection Act” Senior debt: debt that takes priority over all other debt and that must be paid back first in the event of a bankruptcy Shariah finance: financing structured in accordance with Shariah or Islamic law Sovereign debt: debt issued by a Government Speculation: investment that resembles gambling; alternatively, very short-term investment without seeking to gain management control Socially responsible investing (SRI): an approach to investment that aims to reflect and/or promote ethical principles Spread: the difference between the purchase (bid) and selling (offer) price of a security Subordinated debt: see Junior debt Syndicate: group of banks or investment banks participating in a securities issue Syndication: the process of a group of banks or investment banks selling a securities issue Takeover Panel: UK authority overseeing acquisitions of UK public companies Too big to fail: the concept that some companies or sectors are too large for the Government to allow them to become insolvent Glossary xiii Unauthorised trading: trading on behalf of an investment bank or other investor without proper authorisation Universal bank: an integrated bank Utilitarian: ethical values based on the end result of actions, also referred to as consequentialist Volcker Rule: part of the Dodd–Frank Act, restricting the proprietary investment activities of deposit-taking institutions Write-off: reduction in the value of an investment or loan Zakat: charitable giving, one of the five pillars of Islam This page intentionally left blank 1 Introduction: Learning from Failure There has been significant criticism of the ethics of the investment banking sector following the financial crisis.

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LIBOR – the cost of money being loaned between banks – in normal market conditions trades closely in line with central bank base rates. During the financial crisis this gap widened dramatically, for example to 4–5 percentage points above base rates. LIBOR only reduced as Governments actively intervened to reduce rates through measures such as Quantitative Easing (QE). This involves a Government putting money into the banking system to increase reserves by buying financial instruments, typically Government bonds. Governments have historically been in a position, when they wish, for example as an implied result of a democratic mandate, to determine how industrial and commercial sectors should operate.

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Index ABACUS, 7, 16–17, 46, 63–4, 68, 73, 78 Abrahamic faiths Christianity, 52–4 Islam, 54–5 Judaism, 56 abuse market, 14, 70, 75, 84–8 personal, 159 of resources, 127–8 abusive management practices, 157 abusive trading, 93 adult entertainment, 56 advisers financial, 109 investment banking, 111 sell-side, 107, 111–13 trusted, 108–9, 125 advisory fees, 119, 124 advisory markets, 73 agents, 65 aggressive behaviours, 118–19 Alpha International, 9 American Bar Association, 19 Anderson, Geraint “CityBoy”, 8 Anglican Communion, 53 Anglicanism, 53 annual general meeting (AGM), 29, 54 Aquinas, Thomas, 34, 37 Aristotle, 34 Arjuna, 57 attrition rate, 132 authorisation, informal, 81, 98 BAE Systems, 48 bait and switch, 102–3, 158 bank debt, 82–3, 120 banking regulations, 16 Bank of America, 16 Bank of Credit and Commerce International (BCCI), 12 Bank of England, 25 Barclays Capital, 139 Bar Council, 19 Bayly, Daniel, 8 Bear Stearns, 5, 16, 76 beauty parade, 110 behaviours aggressive, 118–19 discriminatory, 129–31 of Hedge fund, 12 investment banking, 3 management, 131–2 market, 71 misleading, 86 unethical, 68 virtuous, 37 Benedict XVI, Pope, 6, 52 Bentham, Jeremy, 36 Bernanke, Ben S., 96 Besley, Tim, 42 Beyond the Crash (Brown), 4 Bhagavad Gita, 57 bid price, 64 big cap, 65, 85 black box approach, 114 Blackstone Group, 20 Blankfein, Lloyd, 47, 63–4, 68, 78 bluffing, 113 Boesky, Ivan, 12 bonds government, 23 investment grade, 118 junk, 118 bonus pools in public ownership, 136–9 Bootle, Roger, 4 Bribery Act 2010, 129 British Academy, 42 Brown, Gordon, 4, 135 Buddhism, 57 bullying, 159 170 Index business ethics of fiduciary duties, 27 of financial crisis, 12–32 within governments, 59 of market capitalism, 12–14 of regulation, regulatory changes and, 18–21 of religion, 51–62 of shareholders, 27–9 strategic issues with, 30–1 Business Ethics Center, 56 Business Judgment Rule, 20 Business Standards Report, 46 buy recommendation, 115 capitalism market, 12–14 modern, 54 see also casino capitalism capital markets, 155 advisory markets vs., 73 conflicts of interest in, 112–14 cardinal virtues, 37 Caritas in Veritate (Benedict), 6, 52 cash compensation, 132, 134 casino capitalism emergence of, 43 in investment banking, 3 speculative, 16, 93 categorical imperative, 34, 59, 69 Caterpillar, 48 Central Finance Board of the Methodist Church (CFB), 54, 59 chief executive officer (CEO), 116 Christianity, 52–4 Anglican Communion, 53 Methodist Church, 53 Roman Catholic Church, 53 Christian Old Testament, 34 Church Investors’ Group (CIG), 135 Church of England, 9, 53, 58 Citigroup, 19, 112 claiming credit, 134 clients confidential information, 120 conflicts of interest, 105–10 171 duty of care, 105 engagement letters, 122–3 fees, 115–18 financial restructuring, 119–20 hold-out value, 120–1 honesty, 101–5 margin-calls, 121 practical issues, 110–15 promises, 100–1 restructuring fees, 121–2 syndication, 118–22 truth, 101–5 Code of Ethics, 47–50, 147–51 for Goldman Sachs business principles, 46 in investment banking, 47–9 Revised, 47 collatoralised debt obligations (CDOs), 30, 42, 75 command economies, 13 commercial banking, 19–21, 25 communication within markets, 88 Companies Act 2006, 27 compensation cash, 132, 134 defined, 132 for employees, 135 internal issues on, 8 for junior bankers, 136 levels of, 132–3, 138 objectivity of, 144 political issues with, 6, 137 restrictions on, 10 competitors, 113 compliance corporate, 20 danger of, 20 frameworks for, 68, 146 regulatory, 18 requirements of, 6 confidential information, 120 conflicts of interest, 105–10, 158 with capital markets, 109–10 with corporate finance, 107–8 personal, 47 with pre-IPO financing, 110 with private equity, 110 172 Index conflicts of interest – continued reconciling, 68–70 of trusted advisers, 108–9 consequentialist ethics, 36–7, 42 corporate compliance, 20 Corporate/Compliance Social Responsibility (CSR), 7 corporate debt, 17 corporate entertainment, 128–9, 159 corporate finance, 107–8 Corporate Sustainability Committee, 152 Costa, Ken, 9 Cox, Christopher, 96–7 creative accounting, 12 credit crunch, 17 credit default swap (CDS), 71 credit downgrade, 17, 76 Credit Lyonnais, 12 creditors, restricted, 121 credit rating, 75–7 calculating, 76 inaccurate, 5 manipulating, 75, 156, 158 unreliability of, 17 credit rating agencies, 76 Crisis and Recovery (Williams), 53 culture, 46, 136, 151 customers, 69 Daily Telegraph, 84 Debtor in Possession finance (DIP finance), 80 debts bank, 82–3, 120 corporate, 17 junior, 118 rated, 77 senior, 118 sovereign, 17 deferred equity, 5 deferred shares, 133 Del Monte Foods Co., 107 deontological ethics, 34–6 stockholders, 41–2 trust, 40–1 derivative, 27, 30 dharma, 63–4 Dharma Indexes, 57 discounted cash flow (DCF), 27 discount rate, 27 discriminatory behaviour, 129–31 distribution, 15, 35, 66 Dodd–Frank Wall Street Reform and Consumer Protection Act, 25 dotcom crisis, 94 dotcom stocks, 17 Dow Jones, 55–6 downgrade credit, 17, 76 defined, 76 multi-notch, 17, 76 duties, see rights vs. duties duty-based ethics, 66–8 duty of care, 105 Dynegy, 8 Earnings Before Interest Tax Depreciation and Amortisation (EBITDA), 27 economic free-ride, 5, 21 economic reality, 137 effective tax rate (ETR), 140 emissions trading, 14 employees, compensation for, 135 Encyclical, 52 engagement letters, 122–3, 159 Enron, 8, 12, 17, 20, 76 enterprise value (EV), 27 entertainment adult, 56 corporate, 128–9, 159 sexist, 159 equity deferred, 5 private, 2–3, 12, 110 equity research, 88–9, 113–15 insider dealing and, 83–4 ethical behaviour, 38–9 Ethical Investment Advisory Group (EIAG), 53, 58 ethical investment banking, 145–7 ethical standards, 47 Index ethics consequentialist, 36–7, 42 deontological, 34–6 duty-based, 66–8 exceptions and, effects of, 89–90 financial crisis and, 4–8 in investment banking, 1 in moral philosophy, 1 performance and, 8–10 rights-based, 66–8 virtue, 37–8, 43–4 see also business ethics; Code of Ethics Ethics Helpline, 48 Ethics of Executive Remuneration: a Guide for Christian Investors, The, 135 European Commission, 89 European Exchange Rate Mechanism (ERM), 17 exceptions, 89 external regulations, 19, 31 fair dealing, 45 Fannie Mae, 43 Federal Home Loan Mortgage Corporation, 43 Federal National Mortgage Association, 43 fees, 115–18 advisory, 107, 116 restructuring of, 121–2 2 and 20, 13 fiduciary duties, 27–8 financial advisers, 109 Financial Conduct Authority (FCA), 26 financial crisis, business ethics during CDOs during, 90 CDSs during, 90 ethics during, 4–8, 12–34 investment banking and, necessity of, 14–15 market capitalism, 12–14 necessity of, 14–15 non-failure of, 21 positive impact of, 18 problems with, 15–17 reality of, 16 speculation in, 91 173 Financial Crisis Inquiry Commission, 76 Financial Policy Committee (FPC), 25 financial restructuring, 119–20 Financial Services Modernization Act, 19 Financial Stability Oversight Council, 25 firm price, 67 Four Noble Truths, 57 Freddie Mac, 43 free-ride defined, 26 economic, 5, 21 in investment banking, 24 FTSE, 55 Fuhs, William, 8 General Board of Pension and Health Benefits, 54, 59 German FlowTex, 12 Gift Aid, 141 Glass–Steagall Act, 19 Global Settlement, 113 golden parachute arrangements, 133 Golden Rule, 35, 150 Goldman Sachs, 7, 16, 45, 63 Business Principles, 45–6 charges against, 78 Code of Business Conduct and Ethics, 45, 68 Code of Ethics for, 47–8 Goldsmith, Lord, 27 government, 59 business ethics within, 60 guarantees of, 24 intervention by, 22–3 government bonds, 23 greed, 4–5 Green, Stephen, 8–9 gross revenues, 59 Hedge fund behaviour of, 12 failure of, 21 funds for, raising, 2 investment fund, as type of, 3 rules for, 133 174 Index Hennessy, Peter, 42 Her Majesty’s Revenue and Customs (HMRC), 140–1 high returns, 28, 110 Hinduism, 56–7 Hobbes, Thomas, 36 hold-out value, 120–1 honesty, see trust hospitality, 128–9 hot IPOs, 94 hot-stock IPOs, 94 HSBC, 9, 28, 152 Ijara, 55 implicit government guarantee, 22–3 Independent Commission on Banking, 25 inequitable rewards, 6 informal authorisation, 81, 98 Initial Public Offering (IPO), 7 of dotcom stocks, 17 hot, allocation of, 94 hot-stock, 94 insider dealings, 83–4, 155 equity research and, 83–4 ethics of, 66, 70 laws on, 84 legal prohibition on, 82 legal restrictions on, 10 legal status of, 82 legislation on, 74 restrictions on, 83 rules of, 82, 90 securities, 70 insider trading, 12 insolvency, 24–5 institutional greed, 4 integrated bank, 28 integrated investment banking, 2, 30, 67, 106, 108 interest payments, 59–60 interest rate, 60 internal ethical issues, 126–43 abuse of resources, 127–8 corporate entertainment, 128–9 discriminatory behaviour, 129–31 hospitality, 128–9 management behaviour, 131–2 remuneration, 132–9 tax, 139–41 internal review process, managing, 134 investment banking, 94 casino capitalism in, 3 Code of Ethics in, 47–9 commercial and, convergence of, 20–1 defined, 2 ethics in, 1 free-ride in, 24 integrated, 2, 30, 67, 108, 112 in market position, role of, 65–6 moral reasoning and, 38 necessity of, 14–15 non-failure of, 19–20 positive impact of, 18 recommendations in, 94–7 sector exclusions for, 58–9 investment banking adviser, 121 investment banking behaviours, 3 investment banking ethics committee, 151–3 investment bubbles, 95 investment fund, 3 investment grade bonds, 118 investment grade securities, 76 investment recommendations, 94 investments personal account, 128, 156 principal, 15, 28 proprietary, 29 IRS, 140 Islam, 54–5 Islamic banking, 6, 54–5 Jewish Scriptures, 34 Joint Advisory Committee on the Ethics of Investment (JACEI), 54 JP Morgan, 16 Judaism, 56 junior bankers, 139 junior debt, 118 junk bond, 118 “just war” approach, 38 Index Kant, Immanuel, 35, 69 karma, 57 Kerviel, Jérôme, 44, 80 Krishna, 57 Law Society, 19 Lazard International, 9 leading adviser, 41 Leeson, Nick, 12, 44, 81 legislative change, 25–6 Lehman Brothers, 5–6, 15, 21, 23, 31, 43, 76 lenders, 26, 131 lending, 59–60 leverage levels of, 25 over, 75, 80, 119 Levin, Carl, 17, 63–4, 68 light-touch regulations, 4 liquidity market, 95 orderly, 25 withdrawal of, 24 loan-to-own, 80 Locke, John, 34 London Inter-Bank Offered Rate (LIBOR), 23 London School of Economics, 43 London Stock Exchange, 65, 71, 84 long-term values, 147 Lords Grand Committee, 27 LTCM, 23 lying, 101 MacIntyre, Alasdair, 38 management behaviour, 131–2 margin-calls, 121 market abuse, 14, 70, 75, 86–8, 155 market announcements, 88 market behaviours, 74 market capitalism, 12–14 market communications, 88 market liquidity, 95 market maker defined, 65–7 investment bank as, 66 primary activities of, 65 175 market manipulation, 75 market position, role of, 104 market rate, 117 markets advisory, 73 capital, 73, 117–18, 158 communication within, 88 duties to support, 71–2 primary, 103 qualifying, 70, 82 secondary, 103 market trading, 41 Maxwell, Robert, 12 Meir, Asher, 56 mergers and acquisitions (M&As), 41, 79 Merkel, Angela, 93 Merrill Lynch, 8, 16 Methodism, 53 Methodist Central Finance Board, 59 Methodist Church, 54 Midrash, 56 Milken, Michael, 12 Mill, John Stuart, 36 Mirror Newspaper Group, 12 misleading behaviours, 86, 105 mis-selling of goods and services, 77–9, 155 modern capitalism, 54 moral-free zones, 31 moral hazard, 22, 70 moral philosophy, 1 moral reasoning, 38 moral relativism, 38–9, 49, 68 Morgan Stanley, 47 multi-notch downgrade, 17, 79 natural law, 34, 37 natural virtues, 37 necessity of investment banking, 14–15 New York Stock Exchange (NYSE), 65, 71 New York Times, 8 Noble Eightfold Path, 57 Nomura Group Code of Ethics, 47 normal market trading, 71 Northern Rock, 43 176 Index offer price, 64 off-market trading, 71–3, 90, 155 Olis, Jamie, 8 on-market trading, 70–1 oppressive regimes, 61 option value, 121 Orderly Liquidation Authority, 25 orderly liquidity, 25 out-of-pocket expenses, 127–8 over-leverage, 75, 80, 119, 158 overvalued securities, 155 patronage culture, 131, 142 Paulson, Henry M., 86 Paulson & Co., 78 “people-based” activity, 67 P:E ratio, 27 performance, 8–10 personal abuse, 159 personal account investments, 128, 156 personal account trading, 128 personal conflicts of interest, 45 pitching, 102, 159 Plato, 37 practical issues, 110–15 competitors, relationships with, 113 equity research, 113–15 pitching, 111 sell-side advisers, 111–13 pre-IPO financing, 110 prescriptive regulations, 31, 145 price tension, 79, 113 primary market, 103 prime-brokerage, 2 principal investment, 15, 28 private equity, 2–3, 12, 110 private trading, 94 Project Merlin, 133, 141 promises, 100–1 proprietary investment, 29 proprietary trading, 15, 25, 66, 150, 155 Prudential Regulation Authority (PRA), 26 public ownership, bonus pools in, 136–9 “pump and dump” strategy, 86 qualifying instruments, 70, 87 qualifying markets, 70, 82 quality-adjusted life year (QALY), 36 Quantitative Easing (QE), 23 Queen Elizabeth II, 42 Qu’ran, 54 rated debt, 77 rates attrition, 132 discount, 27 interest, 60 market, 117 tax, 140 rating agencies, 76 Rawls, John, 35, 136 recognised exchanges, 71 Regal Petroleum, 84 regulations banking, 16 compliance with, 28 external, 19, 31 light-touch, 4 prescriptive, 31, 145 regulatory changes and, 18–20 securities, 114 self, and impact on legislation, 19 regulatory compliance, 18 religion, business ethics in, 51–62 Buddhism, 56 Christianity, 52–4 Governments, 59 Hinduism, 56–7 interest payments, 59–60 Islam, 54–5 Judaism, 56 lending, 59–60 thresholds, 60 usury, 59–60 remuneration, 132–9 bonus pools in public ownership and, 136–9 claiming credit, 134 ethical issues with, 142–3 internal review process, managing, 134 1 Timothy 6:10, 135–6 Index research, 156 resources, abuse of, 127–8 restricted creditors, 120 restructuring of fees, 121–2 financial, 119–20 syndication and, 118–22 retail banks, 16 returns, 28, 156 Revised Code of Ethics, 47 right livelihood, 57 rights-based ethics, 66–8 rights vs. duties advisory vs. trading/capital markets, 73 conflict between, reconciling, 68–70 duty-based ethics, 66–8 off-market trading, ethical standards to, 71–2 on-market trading, ethical standards in, 70–1 opposing views of, 63–74 reconciling conflict between, 68–70 rights-based ethics, 66–8 Roman Catholic Church, 52 Royal Dutch Shell, 85 Sarbanes–Oxley Act, 20 Schwarzman, Stephen, 20 scope of ethical issues, 7–8 secondary market, 103 sector exclusions for investment banking, 58–9 securities investment grade, 76 issuing, 103–5 overvalued, 155 Securities and Exchange Commission (SEC), 7, 16 Goldman Sachs, charges against, 78 rating agencies, review by, 77 short-selling, review of, 96–7 securities insider dealing, 70 securities mis-selling, 77–9 securities regulations, 114 self-regulation, 19 sell recommendation, 115 177 sell-side advisers, 107, 111–13 Senate Permanent Subcommittee on Investigations, 46 senior debt, 118 sexist entertainment, 159 shareholders, 27–9 shares, deferred, 133 Shariah finance, 55 short-selling, 94–7, 154–5 Smith, Adam, 14, 35–6 social cohesion, 53 socially responsible investment (SRI), 56 Société Générale, 44, 80 solidarity, 53 Soros, George, 17 South Sea Bubble, 90 sovereign debt, 17 speculation, 91–4, 155 in financial crisis, 93 traditional views of, 91–3 speculative casino capitalism, 16, 91 spread, 21 stabilisation, 89 stock allocation, 94–7 stockholders, 41–2 stocks, dotcom, 17 Strange, Susan, 43 strategic issues with business ethics, 30–1 syndication, 119 and restructuring, 118–22 systemic risk, 24–5 Takeover Panel, 109 Talmud, 56 taxes, 139–41 tax optimisation, 158 tax rates, 140 tax structuring, 140 Terra Firma Capital Partners, 79, 112 Theory of Moral Sentiments, The (Smith), 14 3iG FCI Practitioners’ Report, 51 thresholds, 60 1 Timothy 6:10, 135–6 178 Index too big to fail concept, 21–7 ethical duties, and implicit Government guarantee, 22–3 ethical implications of, 26–7 in government, 22–3 insolvency, systemic risk and, 24–5 legislative change, 25–6 Lehman, failure of, 23 systemic risk, 24–5 toxic financial products, 5 trading abusive, 93 emissions, 14 insider, 12 market, 41 normal market, 71 off-market, 71–83, 90, 155 on-market, 70–1 personal account, 128 private, 94 proprietary, 15, 25, 66, 150, 155 unauthorised, 7 “trash and cash” strategy, 86 Travellers, 19 Treasury Select Committee, 26 Trinity Church, 53 Trouble with Markets, The (Bootle), 4 trust, 40, 53 trusted adviser, 108–9, 125 truth, 101–5 bait and switch, 102–3 misleading vs. lying, 101 securities, issuing, 103–5 2 and 20 fee, 13 UBS Investment Bank, 9 unauthorised trading, 7, 80–1, 155 unethical behaviour, 68 UK Alternative Investment Market, 89 UK Business Growth Fund, 133 UK Code of Practice, 141 UK Independent Banking Commission, 4, 22 United Methodist Church, 54, 59 United Methodist Investment Strategy Statement, 59 US Federal Reserve, 24, 25 US Financial Crisis Inquiry Commission, 4 US Open, 126 US Senate Permanent Subcommittee on Investigations, 64, 73 US Treasury Department, 132 universal banks, 2, 21, 28, 67 untoward movement, 85 usury, 59–60 utilitarian, 84 utilitarian ethics, 49, 84, 139 values, 9, 46, 119–21, 148 Vedanta, 57 victimless crime, 82 virtue ethics, 37–8, 43–4 virtues, 9, 34 virtuous behaviours, 37 Vishnu, 57 Volcker, Paul, 25 Volcker Rule, 2, 25 voting shareholders, 29 Wall Street, 12, 19, 53 Wall Street Journal, 20 Wealth of Nations, The (Smith), 14 Wesley, John, 53 Wharf, Canary, 18 Williams, Rowan, 53 Wimbledon, 127 WorldCom, 12, 17, 20, 76 write-off, 80 zakat, 55 zero-sum games, 118–22 

House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It From Happening Again
by Atif Mian and Amir Sufi
Published 11 May 2014

There was the $150 billion Term Auction Facility (TAF); $50 billion in swap lines for foreign central banks; the $200 billion Term Securities Lending Facility (TSLF); the $20 billion Primary Dealer Credit Facility (PDCF); the $700 billion Commercial Paper Funding Facility (CPFF); and the $1 trillion Term Asset-Backed Securities Loan Facility (TALF).11 The largest and longest-lasting program introduced by the Fed was the Large-Scale Asset Purchase (LSAP) program. Also known as “quantitative easing,” it involves the Fed buying long-term assets that include agency debt, mortgage-backed securities, and long-term treasuries from banks. It has been enormous by any standard. By the middle of 2013, these Fed purchases had increased the size of its balance sheet from around $800 billion in 2007 to a whopping $3.3 trillion.

…

Once again, the natural forces of the economy move against inflation and toward deflation during a severe economic downturn. Monetary policy fights an uphill battle. Are central banks willing to act irresponsibly enough to win? The evidence suggests no. The European Central Bank has been conservative in its approach, as has the Bank of England. The Federal Reserve has pushed the envelope with aggressive quantitative easing and conditional guidance language in its statements. But as former chair of the Council of Economic Advisers Christina Romer put it, “The truth is that even these moves were pretty small steps . . . the key fact remains that the Fed has been unwilling to do a regime shift. And because of that, monetary policy has not been able to play a decisive role in generating recovery.”14 Relying on monetary policy to generate inflation through expectations may work beautifully in macroeconomic models.

…

See lowest 20 percent Porter, David, 110 Posner, Eric, 203n44 precautionary savings, 194n5 Preston, Steve, 136 Primary Dealer Credit Facility (PDCF), 125 principal write-downs, 147 private debt. See household debt private-label securitization (PLS), 97–98, 105; appearance of safety in, 98–101, 115, 170; credit-rating scores and, 103–4; originator misrepresentation in, 101–5, 198n13; servicers of, 137–39, 145–46. See also securitization market quantitative easing, 125 Racionero, Maria, 206n9 real business cycle theory, 194n2. See also fundamentals view reallocation, 55, 59; exporting effect in, 66–67; flexible wages and, 58, 59 recessions, 1–13; animal spirits view of, 10; banking crises in, 7–9, 192n20; bank-lending view of, 10–11, 31–35, 59, 127–34, 177; bank reserves in, 155–57; collapse in housing prices in, 12–13, 17–30; debt and bubbles in, 106–16, 149, 169–70; fundamentals view of, 9–10, 47–49, 52–53, 59, 194n2; government stimulus spending in, 162–65, 205n19; household debt and spending patterns in, 3–9, 44–45, 192n20; inflation in, 153–62; levered-losses framework of, 46–59, 134, 170; risk sharing and, 168–87.

This Is Not Normal: The Collapse of Liberal Britain
by William Davies
Published 28 Sep 2020

The first thing to note is that the ‘emergency’ of 2008 was never allowed to become a proper crisis, in the sense of a turning point or conclusive judgement. It was bad and scary, but in rescuing the situation, policymakers ensured that nothing would fundamentally change. Crucially, the nature of the rescue (and subsequent policies such as negative interest rates, austerity measures, national bailout and quantitative easing) meant that debt obligations were upheld at all costs. Rather than learn from the mistakes of the past and start afresh (through debt write-offs and bankruptcies) in a different direction, this absolutist respect for debts means that the power relations of the past (between creditor and debtor) are sustained and exacerbated.

…

But one of Corbyn’s solutions is difficult to argue with – namely, the resurrection of fiscal policy as a central tool of social and economic transformation, following twenty-five years in which both parties were paranoid about being tagged as ‘tax and spend’ fanatics. For the last ten years central bankers have pleaded with politicians to use fiscal policy more liberally in order to relieve the macroeconomic burden on monetary policy, but their call has fallen on deaf ears, especially in Europe. Coming in the wake of quantitative easing, one of the most technically obscure economic policies ever devised, the return of fiscal policy is welcome, both economically and politically. Corbyn has forced the Conservatives’ hand on this, turning austerity into a toxic political issue. During the 1980s and 1990s, theorists such as Fredric Jameson argued that capitalism had brought about a fundamental change in the way cultural and political history are experienced.

…

The mentality is one of pulling up the draw-bridge, and cashing in your chips. This suggests that Johnson-Farage is a symptom of prolonged financialisation, in which capital pulls increasingly towards unproductive investments, relying on balancesheet manipulation, negative interest rates and liquidity for its returns (aided substantially by quantitative easing over the past decade). To put that more starkly, these are seriously morbid symptoms, in which all productive opportunities have already been seized, no new ideas or technologies are likely, and there are no new spheres of social or environmental life left to exploit and commodify. These are socially nihilistic interests whose only concern with the future involves their children and grandchildren, but otherwise believe that everything good is in the past.

Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies
by Nik Bhatia
Published 18 Jan 2021

Treasuries, many of which had been newly issued in order to finance enormous deficits resulting from economic recession, tax shortfalls, and corporate bailouts. Large-scale expansion of second-layer money by the Fed was a response to contraction elsewhere in the system; it had to meet the collapse in interbank trust and liquidity with its own reliable liquidity. The Fed called it Quantitative Easing (QE), but we can refer to it as second-layer money creation. Interbank trust only decayed in the years after the financial crisis of 2007–2009. Banks started dialing back their exposure to each other during the fourth quarter of each year to prepare for year-end regulatory snapshots. Divergences in key money market interest rate spreads—like when LIBOR split from Fed Funds and others in August 2007—occurred more often, especially around calendar events such as the end of each quarter and United States tax deadlines.

…

Treasuries with longer maturities (ten to thirty years) suddenly lost a bid despite their typical safe-haven status because of all the chaos in the markets.17 Members of the Fed panicked: a malfunctioning Treasury market was a recipe for disaster. What followed was a wave of U.S. Treasury purchases and reserve creation by the Fed that made the 2008–2010 Quantitative Easing programs look like a practice run. The Fed convened over the weekend and announced a new, unlimited QE program of Treasury purchases without any defined maximum in order to mollify all concerns that the Fed might let the world’s most important security market experience any sustained disturbance.

Unfinished Business
by Tamim Bayoumi

It generated such a large shock that it rapidly overwhelmed the micro-prudential buffers required of individual firms. The resulting recession was so large that policy interest rates in the United States and Europe were rapidly driven down to zero. With no more room to cut rates and the economy still weakening, central banks were forced to experiment with “unconventional” monetary policies such as quantitative easing, in which central banks buy large amounts of assets such as government bonds by printing money. This eased financial conditions by reducing the supply of assets available to private investors, forcing them to either accept a lower interest rate on government bonds or move their money into riskier assets such as equities or foreign paper, thereby lowering long-term interest rates, raising equity prices, and depreciating the exchange rate, all of which supported activity.

…

* * * Expanding the Focus of Macroeconomics The rapid switch back to giving central banks the primary responsibility for combatting macroeconomic fluctuations after fiscal stimulus ended in 2010 is particularly striking given the lackluster economic performance subsequently. Over the following years, inflation remained well below US and Euro area targets and growth was substandard. In addition, central banks across the advanced world have yet to start shedding the assets they bought as part of quantitative easing. Equally importantly, assigning macroeconomic stability solely to the central bank is not intuitive. Indeed, before the 1980s the macroeconomic orthodoxy embraced an integrated approach in which monetary and fiscal policies were used simultaneously achieve full employment (“internal balance”) and a desirable trade position (“external balance”).

…

INDEX Abe, Shinzo, (i) ABM AMRO (Dutch bank), (i) accounting standards, (i) Alaska (US state), (i) Amalienborg castle, Denmark, (i) Andreotti, Giulio, (i) Anglo-Irish Bank, (i) Argentina, (i) Asia financial crisis (1990s), (i), (ii), (iii) inflows, (i) asset prices and bubbles, (i), (ii), (iii) Australia banking system, (i) seeks to revive MAP, (i) Austria expansion in assets, (i) trade boost, (i) Baer, Gunter, (i) Bagehot, Walter, (i) Baker, James, (i) Balladur, Edouard, (i) Baltic region: banking crashes, (i) Banco Nazionale di Lavoro, (i) Banco Português de Negócios, (i) Bank of America (US bank) assets, (i) as national bank, (i), (ii) as regulated bank, (i) strongly capitalized, (i) Bank Brussels Lambert, (i) Bank of England handles government finances, (i) stabilizes failing banks, (i) Bank Holding Company Act (US, 1956), (i) Bank for International Settlements, (i), (ii) Bank One Corporation (US bank), (i) Bankers Trust (US bank), (i), (ii) Bangkok International Banking Facility, (i) Bankia (Spanish bank), (i) Banking Act (US, 1933), (i) Bankruptcy Abuse and Consumer Protection Act (US, 2005), (i) banks accounting standards and practices, (i) borrowing rates, (i) capital buffers, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) capital standards, (i), (ii), (iii) collateral in repo deals, (i) commercial and investment separated, (i), (ii), (iii), (iv) deposits and loans, (i) dual system (US), (i) equity and total assets, (i) European interest rates, (i) failures and corrective action (US), (i) government support for, (i) herding, (i) internal discipline, (i), (ii), (iii) liquidity standards redefined, (i), (ii) market opportunities, (i) and North Atlantic crisis, (i), (ii) proposed union in Europe, (i) regulation in Europe, (i), (ii), (iii), (iv), (v) risk models, (i), (ii), (iii), (iv), (v) shadow (US), (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) system reformed after North Atlantic crisis, (i) US national (interstate), (i), (ii), (iii), (iv) see also central banks Banque de France, (i) Barclays (UK bank) acquires Lehman Brothers post-bankruptcy remnants, (i) backing, (i) competes with major US banks, (i) as LTCM creditor, (i) Baring Brothers (UK bank), (i), (ii) Basel Committee on Banking Supervision and banking regulation, (i), (ii), (iii), (iv), (v), (vi), (vii) and creation of Euro mega-banks, (i) on internal risk models and capital buffers, (i) and market risk, (i) and measures of capital buffers, (i) membership, (i) and repo market, (i) rules upgraded, (i) and US housing market collapse, (i) and voluntary regulation, (i), (ii) Basel 1 Accord, (i), (ii), (iii), (iv) Basel 2 Accord, (i), (ii), (iii) Basel 2.5 system, (i) Basel 3 agreement, (i), (ii) Basel (i), (ii) BBVA (Spanish bank), (i), (ii), (iii), (iv), (v) Bear Stearns (US investment bank) assets, (i) bankruptcy, (i) and European competition, (i), (ii) as investement bank, (i), (ii) lightly capitalized, (i), (ii) merges, (i) as regulated bank, (i) rescued, (i), (ii) and upgrading of Basel (i), (ii) Belgium bank assets, (i) banking expansion, (i), (ii), (iii) banking system (2002), (i), (ii) close economic ties with Germany, (i) debt ratio, (i) in European Coal and Steel Community, (i) and financial crisis, (i) and investment banking, (i) and monetary union, (i), (ii) trade boost, (i) Benelux countries (Belgium, Netherlands, Luxembourg), (i) benign neglect, (i), (ii), (iii) Berlin Wall: falls (1989), (i), (ii), (iii) Bernanke, Ben, (i) Better Regulation Action Plan (UK, 2005), (i) BIS, see Bank for International Settlements Bismarck, Prince Otto von, (i) Black Wednesday (Europe, September 16, 1992), (i) BNP Paribas (French bank) assets reduced, (i) competes with major US banks, (i) expansion, (i), (ii), (iii), (iv) suspends Net Asset Value calculation, (i) BNP Paribas ABS EONIA, (i) BNP Paribas ABS EURIBOR, (i) Brandt, Willy, (i) Brazil debts, (i) exchange rate collapse (1999), (i) Bretton Woods break-up of system, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) conference, (i), (ii), (iii) fixed exchange rate system, (i), (ii), (iii) and monetary policy, (i) Brexit, (i) broker-dealers, (i), (ii), (iii), (iv), (v), (vi) see also investment banking; USA: shadow banks Brown, Gordon, (i) Bryan, William Jennings, (i) budgets: planning, (i) Buffet, Warren, (i) Bundesbank ceases support for pound and lira, (i), (ii) on cooperation of fiscal and monetary policy, (i) and European exchange rate system, (i), (ii) and European integration, (i), (ii) and European monetary union, (i) and formation of European Central Bank, (i) Frankfurt location, (i) and German reunification, (i) on independence of European Central Bank, (i) raises interest rates, (i) Burns, Arthur, (i) Bush, George W., (i) business cycle, (i), (ii), (iii), (iv) California: house price fall, (i) Canada banking system, (i) in Basel Committee, (i) and Louvre Accord, (i) Case Shiller house price index, (i) central banks and effect of inflation, (i), (ii) failure to apologise for crisis, (i) and fiscal expansion, (i) independence, (i), (ii) and inflation targeting, (i) and monetary policy, (i), (ii) and quantitative easing, (i) responsibility for controlling macroeconomic fluctuations, (i) responsibility for delivering low inflation, (i) revive growth and inflation, (i) role, (i) see also European Central Bank Centre for Economic Policy Decisions, (i) Chaebol (South Korea), (i) Charlemagne, Emperor, (i) Chase Manhattan Bank (US bank), (i) Chemical Bank (US bank), (i) China currency depreciation, (i) Euro area trade with, (i) in G20 group, (i) investments in US, (i) joins World Trade Organization, (i), (ii) rise as economic power, (i) Citigroup (US bank), (i), (ii), (iii) assets, (i) banking model, (i) low capital buffer, (i) as national bank, (i) rescued, (i) strongly capitalized, (i) collateralized debt obligations (CDOs), (i), (ii) Collins amendment (US), (i) see also Dodd–Frank Act Commerzbank (German bank), (i), (ii), (iii) Commodity Futures Trading Commission (US), (i) Comptroller of the Currency (US) see Office of the Comptroller of the Currency Congressional Research Service (US), (i) Consolidated Supervision Entities (CSE), (i) Consumer Financial Protection Bureau (US), (i), (ii) Consumer Protection Act (US, 2010), (i) Continental Illinois Bank and Trust Company (US bank) Bank of America acquires, (i) failure (1984), (i), (ii) Copenhagen European leaders summit (1978), (i) copyright, (i) Council of Governors (Committee of Governors of the Central Banks; Europe), (i), (ii) Cox, Christopher, (i) Credit Agricole (French bank), (i), (ii) Credit Suisse First Boston (Swiss/US bank), (i), (ii) Cummings, Christine, (i) currency unions, (i), (ii) see also European Monetary Union Cyprus, (i) dealers see broker-dealers debt flows (international), (i), (ii) debts: repayment, (i) Declaration of Strengthening the Financial System (G20, 2009), (i) Delors, Jacques advocates strong franc, (i) Committee and Report, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and common currency, (i) as President of European Commission, (i) Denmark accepts Basel capital rules, (i) and currency fluctuations, (i) invited to join European Economic Community, (i) rejects European Monetary Union, (i), (ii) in Scandinavian monetary union, (i) Depository Institutions Deregulation and Monetary Control Act (US, 1980), (i) deposits: uninsured, (i) derivatives, (i), (ii) Deutsche Bank (German bank) assets reduced, (i) backing, (i) branches abroad, (i) and capital buffers, (i) capital ratios, (i) competes with US major banks, (i) expansion, (i), (ii), (iii), (iv), (v) international scope, (i) power, (i), (ii) under pressure to accept reform, (i) Deutsche mark appreciates against dollar, (i) dominance, (i), (ii) revalued, (i) Dexia (French/Belgian bank), (i), (ii), (iii), (iv), (v) Dodd–Frank Act (US, 2010), (i), (ii), (iii), (iv) Doha round of trade talks (2001), (i) dollar appreciates (early 1980s), (i) devalued, (i) and fixed exchange rate system, (i), (ii) as central currency, (i) oil priced in, (i) value pegged to gold, (i) Draghi, Mario, (i), (ii), (iii) Duisenberg, Wim, (i), (ii) dynamic stochastic general equilibrium models (DSGE models), (i), (ii), (iii), (iv) East Germany: Ostmarks converted to Deutsche marks, (i), (ii) eastern Europe and labor market, (i) trade with Euro area, (i) economic models distort policymaking, (i), (ii) see also dynamic stochastic general equilibrium models ‘Economists’ (Euro area): differences from ‘Monetarists’, (i), (ii), (iii), (iv), (v) efficient market hypothesis, (i), (ii) Eichengreen, Barry, (i) Emergency Home Finance Act (US, 1970), (i) Emminger, Otmar, (i) employment: and fiscal and monetary policy, (i) Euro area (and Europe) accepts Basel 3 framework, (i) bank assets reduced since 2008, (i) bank internal risk models, (i), (ii) bank lending expansion, (i) bank resolution system (2014), (i) banking system expansion and transformation (1985–2002), (i), (ii), (iii) banking system in 2002, (i), (ii) banking system shrinks since 2009, (i) and banking union, (i) banks fund US housing bubble, (i) banks under ECB supervision, (i) banks’ overseas expansion, (i), (ii), (iii) bond yields, (i), (ii) borrowing rates converge, (i) business cycles, (i) capital gains, (i) causes of financial crisis, (i) causes of regional separation, (i) centralized bank regulation and support, (i), (ii), (iii), (iv) core and periphery banks, (i), (ii), (iii) debt breaks, (i) depression, (i) domestic (national) banking, (i) early national banking system (1980), (i) effect of post-crisis changes on banks, (i), (ii) and exchange rate instability, (i) failure to achieve integrated banking, (i) financial reform in, (i) fiscal deficits limited, (i), (ii), (iii) fiscal policies tightened, (i) foreign banks in, (i) foreign trade, (i) growth forecasts, (i) house prices, (i), (ii) inadequate fiscal buffers, (i), (ii) inflation rates, (i) institutional changes, (i) internal exchange rates, (i) investment spending, (i) labor markets and migration, (i) lends to US, (i), (ii) limited support for troubled banks, (i) mega-banks, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) member countries, (i) monetary (currency) union, (i), (ii), (iii), (iv), (v), (vi), (vii) move to banking union, (i), (ii), (iii) move to economic integration, (i) need for area-wide bank support system, (i) and origins of World War I, (i) outflows, (i), (ii) output losses, (i), (ii) overbanked, (i) political divisions, (i) post 2002 financial boom, (i) product market, (i) and proposed leverage ratios, (i) residential spending, (i) resolution fund for insolvent banks, (i) responsibility for macroprudential policies, (i) single currency, (i), (ii), (iii), (iv), (v) spending boom, (i) stock market fall from 2007, (i), (ii) surveillance of members reduced, (i) trade balance, (i) universal bank expansion in US, (i), (ii) unprepared for crisis, (i) Euro (currency) as boost to integrated economy, (i), (ii) introduced (1999), (i), (ii), (iii), (iv) European Banking Authority (EBA), (i) European Central Bank (ECB) agreed by Delors Committee, (i) aided by expansion, (i) and bank supervision, (i), (ii), (iii) committed to low inflation, (i) effect of, (i) financial supervision centralized in, (i) and Greek debt crisis, (i) guiding principles, (i) ignores US financial problems, (i) injects liquidity into markets, (i) Joint Supervisory Team, (i) and Maastricht Treaty, (i) and move to banking union, (i) non-adoption of leverage ratio, (i) policy rate, (i) raises rates, (i) vets European Stability Mechanism, (i) weakness, (i) European Coal and Steel Community, (i) European Commission Brussels location, (i) confederated structure, (i) created, (i) European Capital Adequacy Directive, (i) and European integration, (i) Monetary Committee, (i) plans for integrated banking system, (i) and proposed monetary union, (i), (ii) rules on excessive debts, (i) Second Banking Directive, (i), (ii), (iii), (iv) and Stability and Growth Pact, (i) vets European Stability Mechanism, (i) European Community Council of Ministers (ECOFIN), (i) European Council, (i), (ii) European Currency Unit (ECU), (i), (ii) see also Euro European Economic Community Common Agricultural Policy, (i) currency fluctuations, (i) customs union, (i) fixed exchange rates, (i) formed, (i), (ii) and free movement of capital, (i) see also European Union European Financial Stabilisation Mechanism, (i) see also European Stability Mechanism European Financial Stability Facility, (i) see also European Stability Mechanism European Monetary Cooperation Fund, (i), (ii) European Monetary Fund, (i), (ii) European Monetary Union (EMU) and bank deposit insurance, (i) design, (i) and fall of interest rates, (i), (ii), (iii) future, (i), (ii) and increasing economic integration, (i) initial members, (i) long-term expectation, (i) Maastricht Treaty initiates, (i) positive effects, (i), (ii) principles and flaws, (i) reduces risk premiums, (i) trade and single currency, (i) European Reserve Fund, (i) European Stability Mechanism (ESM), (i), (ii) European System of Central Banks (ESCB), (i), (ii), (iii) European Union alterations at times of distress, (i) and banking regulation, (i), (ii), (iii), (iv), (v) commitment to closer (federated) union, (i) economy contracts, (i) and free movement of goods, services, labor and capital, (i) implements Basel (i), (ii) integrated banking system, (i), (ii) name adopted, (i), (ii) single currency (Euro), (i), (ii) on supervision of investment banking groups, (i) see also European Economic Community Evian, Switzerland, (i) Exchange Rate Mechanism (ERM) Balladur proposes reforms, (i) and Bretton Woods fixed exchange rate system, (i), (ii), (iii), (iv) crisis (1992-3), (i), (ii), (iii), (iv), (v) and Delors Committee, (i), (ii) and German reunification, (i) introduced, (i), (ii), (iii) suffers from speculative attacks, (i) exchange rates determined by private markets, (i) Europe introduces, (i) and floating exchange rate system, (i) and international debt flows, (i) Fannie Mae (government-sponsored enterprise, US) capital buffers, (i) collapses, (i) dominates securitization market, (i) expansion, (i) formed, (i) issues mortgage-backed securities, (i), (ii), (iii) nationalized, (i), (ii) profits squeezed, (i) upper loan limits, (i) Federal Deposit Insurance Corporation (FDIC, US), (i), (ii), (iii), (iv) Federal Deposit Insurance Corporation Improvement Act (US, 1991), (i) Federal Home Loans Banks (US), (i) Federal Reserve Bank see United States Federal Reserve Bank financial crises causes and effects, (i) and regulation reform, (i) see also North Atlantic crisis financial markets see markets (financial) Finançial Services Agency (UK), (i) Financial Stability Board (earlier Forum), (i) Financial Stability Oversight Council (FSOC, US), (i), (ii) Finland escapes crisis, (i) expansion in assets, (i) trade boost, (i) fiscal policy, (i), (ii), (iii), (iv), (v), (vi) FleetBoston Financial Corporation (US bank), (i) Ford, Gerald, (i) Fortis (Belgium/Netherlands bank), (i), (ii) France agricultural lobby, (i) aims for integrated Europe, (i) bank assets, (i) bank branches in other countries, (i) banking expansion, (i), (ii), (iii) banking system (2002), (i) banking system nationalized under President Mitterrand, (i), (ii) close economic ties with Germany, (i) differences with Germany over monetary union, (i), (ii), (iii), (iv), (v), (vi), (vii) and ERM crisis (1992), (i) in European Coal and Steel Community, (i) and European exchange rate system, (i), (ii) favours political control of central bank, (i) and financial crisis, (i) franc fort policy, (i) high inflation, (i), (ii), (iii), (iv) interest rates, (i) internal risk models, (i) leaves and rejoins snake, (i) and investment banking, (i) outflows, (i) reduces fiscal deficit, (i) and single currency, (i), (ii), (iii) status in European Commission, (i) suspends sanctions for high fiscal deficits, (i) Freddie Mac (government-sponsored enterprise, US) capital buffers, (i) dominates securitization market, (i) expansion, (i) mortgage-backed securities, (i), (ii) nationalized, (i), (ii) profitability, (i) upper loan limits, (i) Friedman, Milton, (i) funding corporations, (i) G7 leaders’ summits, (i) Hokkaido Toyako (2008), (i) Venice (1987), (i) G20 group Chengdu (2016), (i) London (2009), (i), (ii) Pittsburg (2009), (i) and fiscal stimulus, (i), (ii) and Financial Stability Board, (i) and policy cooperation, (i), (ii) and reform of banking system, (i) regular meetings, (i) Geithner, Timothy, (i) General Agreement on Tariffs and Trade (GATT), (i) General Motors: share value, (i) Genscher, Hans-Dietrich, (i), (ii) Germany accepts monetary union, (i) aims for integrated Europe, (i) bank assets, (i) bank branches in other countries, (i) banking expansion, (i), (ii), (iii) banking system (2002), (i) controls inflation, (i) debts move to, (i) differences with France over monetary union, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) dominance in monetary union, (i) Dutch exports to, (i) empire founded (1871), (i) enforces rules, (i) and European exchange rate system, (i) export-led economy, (i) favours independent central bank, (i) favours national bank supervision, (i) and financial crisis, (i) foreign banks in, (i) interest rates, (i), (ii), (iii) internal risk models, (i), (ii) Landesbanken, (i) and ERM crisis, (i) and investment banking, (i) reluctance to support periphery countries, (i) response to financial crisis, (i) reunification following fall of Berlin Wall, (i), (ii), (iii), (iv) and single currency, (i), (ii) small banks, (i) and snake, (i) status in European Commission, (i) strength of currency, (i) supply chain with eastern Europe, (i) suspends sanctions for high fiscal deficits, (i) tax reforms under Louvre Accord, (i) and value of currency, (i) warns of effect of Greek debt, (i) Giscard d’Estaing, Valérie, (i), (ii), (iii), (iv), (v), (vi) Glass–Steagall Act (US, 1933), (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Glicenstein, Gilles, (i) globalization, (i), (ii), (iii) gold and Long Depression, (i) standard, (i), (ii) and US dollar, (i), (ii) Gold Pool, (i) Goldman Sachs (US investment bank) applies for bank holding company status, (i) assets, (i) becomes regulated bank, (i) competes as investment bank, (i) and competition with European banks, (i) lightly capitalized, (i) as LTCM creditor, (i) as shadow bank, (i) government borrowing, (i) government-sponsored enterprises (GSEs, US), (i), (ii), (iii), (iv), (v), (vi) Graham–Leach–Bliley Act (US, 1999), (i) Great Depression (1930s), (i), (ii), (iii), (iv) great moderation, the, (i), (ii) Greece accepts Basel capital rules, (i) adopts Euro, (i) fall in interest rate, (i) in currency union periphery, (i) economic recovery program, (i) in Euro area, (i) European aid to, (i), (ii) excessive borrowing and debts, (i), (ii), (iii), (iv), (v), (vi), (vii) expansion in assets, (i) financial crisis in, (i), (ii), (iii) fiscal mismanagement, (i) high interest rates, (i) joins Euro area, (i) loans from other countries, (i) product market improvements, (i) reduces fiscal deficit, (i) role of central government, (i) Greenspan, Alan on bank supervision and regulation, (i), (ii) on bank regulation, (i) favors reform of Basel (i), (ii) and predictability of policies, (i) on risks posed by investment banks, (i) The Age of Turbulence, (i) Group of Ten, (i) GSEs, see government-sponsored enterprises Hawaii, (i) HBV (German bank), (i) hedge funds, (i), (ii) helicopter money, (i) Hoechst (corporation), (i) homo economicus, (i), (ii) Hong Kong: and Asian crisis, (i) house purchases and prices, (i), (ii) see also United States of America households: in economic theory, (i) houses: investment value, (i) Housing and Urban Development Act (US, 1968), (i) HSBC (UK bank): in US, (i) Hugo, Victor, (i) human beings fads and crazes, (i) sociability, (i), (ii) IFRB (accounting standards), (i) IKB Deutsche Industriebank AG (German bank), (i), (ii) Illinois (US state): state banking regulations, (i) incomes: stagnation, (i) Indonesia, (i), (ii), (iii) inflation rates, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) information technology and financial procedures, (i) and investment banks, (i) ING (Netherlands bank) accepts government capital injection, (i) expansion, (i), (ii), (iii), (iv), (v) Institute for International Finance, (i) insurance: and mortgage-backed assets, (i) interest rates and borrowing costs, (i) capped in US, (i), (ii), (iii) and exchange rate, (i) and inflation, (i) reduced to zero, (i) International Monetary Fund (IMF) and perceived anti-China measures, (i) on benefits from open capital markets, (i) and European Stability Mechanism loans, (i) and exchange rate, (i) funds increased, (i) support in Asia crisis, (i) loans available, (i) as model for European Monetary Fund, (i) output gaps, (i) resources fall behind increase in world trade, (i) on size of global economy, (i) international monetary system debt flows, (i) history of crises, (i) International Swaps and Derivatives Association, (i) Intesa Sanpaolo (Italian bank), (i), (ii), (iii) investment banking see also shadow banking benefit from nontraditional cash deposits, (i) funding, (i) and hedge funds, (i) and information technology, (i) regulation, (i) role and conduct, (i) Ireland accepts Basel capital rules, (i) bankers in, (i) banking expansion, (i), (ii) borrowing excesses, (i) as ‘Celtic tiger’, (i) and currency fluctuations, (i) in currency union periphery, (i) in Euro area, (i) European aid to, (i) invited to join European Economic Community, (i) expansion in bank assets, (i) financial crisis in, (i), (ii), (iii) foreign investments in, (i) ‘light touch’ regulation, (i), (ii), (iii), (iv), (v) reduces fiscal deficit, (i) successful effect of reforms, (i) Italy borrowing interest rate, (i) commercial loans, (i) connected firms in, (i) in currency union periphery, (i) debt ratio, (i) in Exchange Rate Mechanism, (i) expansion in bank assets, (i) financial crisis in, (i), (ii) high interest rates, (i) housing boom, (i) inflation rises, (i), (ii) joins European Coal and Steel Community, (i) large outflows, (i) leaves Exchange Rate Mechanism, (i) low growth, (i) and monetary union, (i) product market improvements, (i) reduces fiscal deficit, (i) supports suspension of sanctions for high fiscal deficits, (i) ten-year bonds, (i) see also lira ITT (corporation), (i) Japan banking system, (i) in Basel Committee, (i) controls inflation, (i) debts outflow to, (i), (ii) depression, (i) economic growth, (i) floating exchange rates, (i) and Louvre Accord, (i) Prime Minister Abe’s economic reforms (‘Abenomics’), (i), (ii), (iii) JP Morgan Chase (US bank), (i) acquires Bear Sterns, (i) assets, (i) banking model, (i) as national bank, (i), (ii) Keynes, John Maynard, (i), (ii) King, Mervyn, (i), (ii), (iii) Kohl, Helmut, (i), (ii), (iii), (iv), (v) Kohn, Donald L., (i) labor markets: Euro area versus US, (i) Lamfalussy, Alexandre, (i) Larosière, Jacques de, (i) Latin America: debt crisis, (i), (ii), (iii), (iv), (v), (vi) Latin League (1865), (i), (ii) Lawrence, T.E.

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

Financial economists were mocked for their ‘efficient markets hypothesis’, the claim that asset prices captured all currently known information about future returns, so that their future movements could only be random. Needless to say, I revised Soulful to acknowledge these shortcomings (Coyle 2010). But the GFC has cast a long shadow. We have been living with its consequences ever since, particularly the way central banks’ use of ‘quantitative easing’—buying (mainly) government bonds to put money into the economy—has kept interest rates ultra-low, pumped up other asset prices to the delight of financial markets and rich asset owners, and plunged many pension funds into crisis. Having started ruminating on the role of finance and on the culpability of policy mistakes for what had happened, this became my subject when I was invited to give the 2012 Tanner Lectures on Human Values in Oxford.1 What was the role of academic economics in creating and unleashing Frankenfinance—could its ideas have given birth to the monster?

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On the other hand, an independent central bank does not face the same short-run pressures, and indeed can be structured so that its reputation depends on long-term economic outcomes. This could include, for instance, term limits on appointments. Central bank independence has become part of the landscape in democracies, albeit undermined in some eyes by the length and scale of quantitative easing, requiring vast central bank purchases of government bonds. The UK’s Office for Budget Responsibility is a more recent institution addressing a credibility problem in commitment to fiscal policy. Other countries have different structures, such as the Congressional Budget Office in the United States, or the Central Planning Bureau (now more accurately self-described as the Bureau for Economic Policy Analysis) in the Netherlands, evaluating political parties’ policies.

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This debate between competing anti- and pro-austerity schools in the 2010s was eerily similar to the Keynesian versus monetarist arguments of the equally crisis-ridden late 1970s, when I started my career in economics. Should western governments be engaging in budget austerity or in Keynesian stimulus? Is the current recession different in kind from one that does not result from a banking crisis? Should there be more quantitative easing or not? One can find more than one answer to each of these questions in the macro literature. When macroeconomists have such directly opposing views, held so strongly and expressed so bitterly on social media and blogs, we are far from the realm of hard science and evidently do not know the answers.

99%: Mass Impoverishment and How We Can End It
by Mark Thomas
Published 7 Aug 2019

On the assumption, however, that he was speaking figuratively, and that what he meant was that money can’t simply be created out of nothing, then his comment bore no relationship to the reality of the economy over which he presided. First, and most obviously, the Bank of England has the power to create money out of nothing and indeed has done so – in the form of so-called quantitative easing – to the tune of £375 billion.9 That is over four times the total budget of the NHS. As the Bank of England explained: The Bank of England electronically creates new money and uses it to purchase gilts from private investors such as pension funds and insurance companies… Quantitative easing [QE] was first used by the MPC [Monetary Policy Committee of the Bank of England] in March 2009. In other words, the Bank of England absolutely has the power – and exercised its power when it wanted to avoid undershooting the inflation target – to create money out of nothing (and without even the expense of printing banknotes).

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The Global Financial Crisis and the subsequent Great Recession has affected the current national mood. Many people now expect the next generation to be worse off than the last24 and, as we have seen, although this outcome is not inevitable, their fears are not without reason. The official response to the Global Financial Crisis has had two main planks: Quantitative Easing (QE) and austerity. The benefits of QE went disproportionately to the top 5 per cent,25 while the costs of austerity were felt mainly at the bottom. There is no sense of shared sacrifice but an increasing tendency to blame. We blame the baby-boomers. We blame Generation X. We blame the unemployed.

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives)
by David Birch
Published 14 Jun 2017

Subsequent Chinese rulers, unburdened by Kublai’s fiscal rectitude, were responsible for the most dangerous implementation of the technology of paper money: the fractional reserve. They calculated that so long as the merchants believed in the paper money, it didn’t actually matter if there was any gold or silver or gems or pearls in the imperial strongroom. They therefore succumbed to the inevitable temptation of quantitative easing and began to print money willy, and very probably, nilly. Their paper currency system eventually collapsed in hyperinflation (as I suppose they all do in the end) in the fourteenth century and was not independently rediscovered by the next great crucible for monetary experiment – the New World – until the Massachusetts Bay Colony began to issue fiat paper in 1698.

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A genuine fake banknote from Sachsenhausen. Now, printing four billion quid’s worth of worthless paper money not backed by anything might sound like a reasonable way to destabilize the economy, but I don’t think it would have worked. Following the recent financial crisis, under what is now known as ‘quantitative easing’ (QE) rather than ‘counterfeiting’, the Bank of England printed more than two hundred billion imaginary pounds (i.e. fifty times as much as the Nazis) and rather than crash the economy, they stabilized it. Many other central banks have also done this on a large scale. And yes, I know, QE isn’t actually printing.

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It achieves this by adding to bank balances (i.e. those of the companies that the assets are purchased from) because, as we will discuss in Part III, money is actually created by commercial banks, not central banks (McLeay et al. 2014). It is impossible not to observe that some people think that Hitler’s roll-out method (i.e. dropping the money from planes) would have had a more positive impact on economic growth than the method used by many central banks (i.e. giving the money to banks who, by and large, kept it). So is quantitative easing a sound government policy or a secret plot to destroy our economy? Were the Khan’s successors printing real or counterfeit money? That depends on your perspective. I will leave the topic by highlighting the final supreme irony of Hitler’s attempt to ruin sterling: Laurence Malkin points out that after the war the Jewish underground passed on thousands of the counterfeit banknotes to help Holocaust survivors fleeing to the British Mandate for Palestine and purchasing war matériel for the nascent Israeli army (Malkin 2008)

DIY Investor: How to Take Control of Your Investments & Plan for a Financially Secure Future
by Andy Bell
Published 12 Sep 2013

How sustainable annuities will be in years to come is anyone’s guess, but for the time being there remains a competitive market, even if rates do look unattractive. Income drawdown has grown in popularity in recent years as annuity rates have steadily declined, forced down by increases in longevity, lower interest rates and stricter rules governing how much capital insurance companies offering them have to hold. The government’s policy of quantitative easing – printing money – has accelerated the downward trend in annuity rates. In June 2008 a 65-year-old male with a £100,000 pension pot could have bought a level annuity paying over £7,800 a year for life. By September 2012 the same £100,000 pot would buy an income of less than £5,700 a year – a fall of over 26 per cent.

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figure 18.2 Correlation between major asset classes between July 2004 and June 2007 Source: Shares Magazine You will see that UK equities and global equities have the highest positive correlation, whereas UK equities and UK gilts have the largest negative correlation. I have taken poetic licence in my choice of time frame, as since 2008 UK equities and UK gilts have ‘behaved’ due to exceptional factors such as the credit crunch, quantitative easing and the euro debt crisis. A final thought on risk and portfolio construction There is a lot of analysis about model portfolios and portfolio construction, much of which you will choose to ignore. My golden rule, above all others, is to diversify. Spread your assets across several sectors and investment types and you are less likely to come unstuck than someone who goes for a punt on a specific sector of the market with everything they have.

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Appendix Annuity factors for capped drawdown Source: Government Actuary’s Department Index AER (annual equivalent rate) Alternative Investment Market (AIM), 2nd, 3rd, 4th, 5th, 6th, 7th annuities, 2nd, 3rd, 4th, 5th, 6th guaranteed annuity rates income drawdown or lifetime, 2nd tax asset allocation, 2nd, 3rd, 4th bankruptcy banks, 2nd, 3rd, 4th bank accounts see cash fixed-rate bonds, 2nd, 3rd Bed and breakfast, 2nd Bed and ISA, 2nd Bed and SIPP Bed and spouse bonds see corporate bonds and gilts borrowing, 2nd, 3rd building societies accounts see cash fixed-rate bonds, 2nd, 3rd PIBS, 2nd buyer beware, 2nd Canadian shares capital gains tax, 2nd annual exemption, 2nd, 3rd, 4th, 5th, 6th, 7th Bed and breakfast, 2nd Bed and ISA, 2nd Bed and SIPP Bed and spouse corporate bonds Dealing Account, 2nd death equities, 2nd ETFs, 2nd exempt assets, 2nd funds, 2nd gifts to spouse or civil partner, 2nd, 3rd gilts investment trusts, 2nd ISAs, 2nd, 3rd, 4th, 5th, 6th losses, 2nd, 3rd, 4th rates of, 2nd, 3rd SIPPs, 2nd, 3rd, 4th, 5th takeovers venture capital trusts capital protection funds cash, 2nd, 3rd, 4th, 5th best-buy savings accounts bonus rates cash/money market funds, 2nd, 3rd inflation risk, 2nd investment platforms, 2nd, 3rd, 4th, 5th, 6th ISAs, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th merged banks and building societies, 2nd NS&I, 2nd overseas banks security of cash accounts, 2nd caveat emptor (buyer beware), 2nd charges and costs Bed and ISA bond funds bonds, retail corporate cash funds comparison sites: pricing of platforms, 2nd equities, 2nd, 3rd, 4th ETFs, 2nd, 3rd, 4th funds see charges under funds investment trusts, 2nd, 3rd ISAs, 2nd, 3rd, 4th, 5th Level 2 market data re-registration, 2nd SIPPs, 2nd, 3rd, 4th stakeholder pensions tracker funds children civil partner, 2nd, 3rd, 4th gifts to, 2nd, 3rd closed-end funds, 2nd investment trusts see separate entry commercial property, 2nd, 3rd, 4th SIPPs, 2nd, 3rd company pension schemes, 2nd final or career average salary scheme, 2nd, 3rd contracts for difference (CFDs) corporate bonds and gilts, 2nd, 3rd, 4th, 5th, 6th, 7th funds, 2nd, 3rd, 4th, 5th gilts, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th history of mechanics of buying, holding and selling research, 2nd risks of bonds and impact on value, 2nd, 3rd tax, 2nd terminology costs see charges and costs Crown employees, 2nd currency risk, 2nd de-rampers Dealing Account, 2nd, 3rd, 4th Bed and breakfast Bed and ISA, 2nd Bed and SIPP charges investment platforms, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th joint names tax, 2nd, 3rd what you can invest in, 2nd, 3rd, 4th workings of death annuities, 2nd SIPPs, 2nd tax, 2nd defined benefits/final salary schemes, 2nd, 3rd defined contribution/money purchase schemes company scheme SIPP see separate entry diary notes, 2nd directors’ share purchases and sales discount brokers, 2nd diversification, 2nd, 3rd dividends, 2nd, 3rd, 4th, 5th dividend yield ratio, 2nd investment trusts payout ratio reinvesting, 2nd, 3rd, 4th, 5th, 6th tax, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th divorce double taxation agreements, 2nd DYOR (Do Your Own Research) efficient market hypothesis emerging markets, 2nd, 3rd, 4th, 5th, 6th, 7th emigration emotional investing, avoiding, 2nd employment contracts EMS (exchange market size), 2nd enterprise investment schemes (EISs), 2nd, 3rd equities, 2nd, 3rd, 4th, 5th AIM-listed, 2nd, 3rd, 4th, 5th, 6th, 7th charges, 2nd, 3rd, 4th convertibles dividends, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th exchange market size (EMS) financial ratios, 2nd, 3rd FTSE 100, 2nd, 3rd FTSE 250/mid-cap stocks FTSE 350 FTSE SmallCap history of Level 2 market data, 2nd liquidity, 2nd, 3rd open offer ordinary shares overseas markets, 2nd, 3rd preference shares, 2nd price, 2nd research, 2nd, 3rd, 4th rights issues risks of settlement period shareholder perks, 2nd spreads, 2nd stop loss and limit orders takeover tax, 2nd, 3rd, 4th, 5th tips in financial press, 2nd, 3rd, 4th types who’s who is trading process ethical investor ex-dividend date exchange market size (EMS), 2nd exchange-traded funds (ETFs), 2nd, 3rd, 4th, 5th, 6th, 7th costs and charges, 2nd, 3rd, 4th default history of major players mechanics of buying and selling ‘reporting status’ risks tax, 2nd websites exchange-traded products (ETPs), 2nd, 3rd ETFs see exchange-traded funds executive pension plans, 2nd exit charges: ISAs final or career average salary schemes, 2nd, 3rd financial advisers, 2nd, 3rd, 4th, 5th, 6th, 7th Financial Conduct Authority (FCA) financial crisis, 2nd Financial Ombudsman Service financial ratios, 2nd, 3rd, 4th Financial Services Compensation Scheme (FSCS), 2nd, 3rd, 4th, 5th France, 2nd FTSE 100, 2nd, 3rd FTSE 250/mid-cap stocks FTSE 350 FTSE SmallCap fund supermarkets, 2nd funds, 2nd, 3rd, 4th changes to structure of charges and costs, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th ‘clean’ and ‘dirty’ share classes, 2nd, 3rd, 4th, 5th, 6th, 7th conversions, share class fraud history information overload insolvency of fund manager mechanics of buying, holding and selling money market/cash, 2nd, 3rd multi-manager negligence OEICs, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th passive or active management performance fees RDR, 2nd, 3rd, 4th, 5th, 6th, 7th sectors share classes, 2nd, 3rd, 4th, 5th, 6th, 7th soft-closing star fund managers, 2nd, 3rd tax, 2nd, 3rd, 4th types of unit trusts, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th valuation point, 2nd websites, 2nd, 3rd see also tracker funds Funds & Shares Account see Dealing Account gearing/borrowing, 2nd, 3rd General Investment Account (GIA) see Dealing Account Germany gilts/government bonds see corporate bonds and gilts Google alerts gross rate (interest) group personal pension schemes growth funds guaranteed annuity rates holiday homes, 2nd hyperbolic discounting incapacity/serious ill-heath and SIPPs income drawdown from SIPPs, 2nd, 3rd, 4th capped, 2nd, 3rd flexible, 2nd, 3rd, 4th, 5th income funds income tax bonds and gilts dividends, 2nd, 3rd, 4th, 5th EISs, 2nd funds gifts to spouse or civil partner interest income, 2nd, 3rd investment trusts, 2nd onshore life insurance investment bonds pension income venture capital trusts index-linked gilts, 2nd, 3rd inflation, 2nd, 3rd, 4th, 5th cash on deposit, 2nd index-linked gilts, 2nd, 3rd inflation-linked corporate bonds inheritance tax, 2nd, 3rd, 4th AIM shares, 2nd Junior ISAs SIPPs, 2nd, 3rd insolvency of product providers insurance interest cover ratio interest rates, 2nd bonds: effect of, 2nd cash ISAs, 2nd investment platforms, 2nd intestacy investment accounts Dealing Account see separate entry ISA see separate entry SIPP see separate entry investment grade bonds, 2nd, 3rd investment platforms, 2nd, 3rd, 4th cash accounts, 2nd, 3rd, 4th, 5th, 6th charges, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th choosing complaints dividends, 2nd, 3rd equities, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th ETFs initial charge on funds, 2nd, 3rd, 4th, 5th insolvency, 2nd investment trusts, 2nd, 3rd ISAs, 2nd, 3rd, 4th, 5th, 6th Level 2 market data management charge: commission to, 2nd, 3rd, 4th, 5th, 6th, 7th model portfolios, 2nd, 3rd, 4th overseas equities, 2nd, 3rd rebates to investors, 2nd, 3rd, 4th, 5th, 6th retail corporate bonds RNS alerts by email or text shareholder perks, 2nd SIPPs, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th stop losses and limit orders venture capital trusts investment trusts, 2nd, 3rd, 4th, 5th, 6th, 7th borrowing/gearing, 2nd charges, 2nd, 3rd corporate actions discounts, 2nd, 3rd, 4th, 5th, 6th dividends exchange market size (EMS) history mechanics of buying and selling net asset value (NAV), 2nd performance premiums, 2nd, 3rd REITs research risks, 2nd sectors covered by share price split-capital trusts, 2nd, 3rd, 4th structure subscription shares tax, 2nd venture capital trusts, 2nd, 3rd warrants, 2nd investments advanced DIY investor cash see separate entry corporate bonds and gilts see separate entry equities see separate entry funds see separate entry investment trusts see separate entry ISAs: permitted, 2nd, 3rd, 4th, 5th, 6th, 7th SIPPs, 2nd, 3rd, 4th, 5th, 6th, 7th tracker funds see separate entry ISA (Individual Savings Account), 2nd, 3rd, 4th, 5th, 6th Bed and, 2nd cash, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th charges, 2nd, 3rd, 4th, 5th finding a provider history of investment platforms, 2nd, 3rd, 4th, 5th, 6th Junior paying money in permitted investments, 2nd, 3rd, 4th, 5th, 6th, 7th SIPP or, 2nd, 3rd stocks and shares, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th tax, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th, 14th, 15th transferring existing, 2nd who can pay into why have workings of ISIN number junk bonds, 2nd, 3rd KIID (Key Investor Information Document) life expectancy, 2nd, 3rd, 4th life insurance investment bonds long-term buy and hold, 2nd long-term investing market makers, 2nd, 3rd medium-term investing model portfolios, 2nd, 3rd, 4th money market/cash funds, 2nd, 3rd money purchase schemes company schemes SIPP see separate entry Morningstar, 2nd National Insurance contributions SIPPs, 2nd, 3rd National Savings & Investments (NS&I), 2nd Newcits nominees, 2nd, 3rd objectives portfolio building occupational pension schemes see company pension schemes OEICs (open-ended investment companies) see funds onshore and offshore life insurance investment bonds open-ended funds exchange-traded funds (ETFs) see separate entry unit trusts and OEICs see funds ORB (Order Book for Retail Bonds), 2nd overseas banks overseas investments, 2nd, 3rd SIPPs overseas residents P/E ratio, 2nd, 3rd P60 form passive funds see tracker funds pensions annuities, 2nd, 3rd, 4th auto-enrolment into workplace bankruptcy calculators on internet final or career average salary schemes, 2nd, 3rd impact on fund of charges money purchase schemes see separate entry objectives overseas schemes SIPP see separate entry stakeholder, 2nd Pensions Advisory Service Pensions Ombudsman PEPs (Personal Equity Plans) performance fees, 2nd permanent interest bearing shares (PIBS), 2nd perpetual sub bonds (PSBs), 2nd personal pension schemes SIPP see separate entry political and regulatory risk portfolio construction, 2nd pound-cost averaging, 2nd property commercial see separate entry residential, 2nd, 3rd, 4th QROPS (Qualifying Recognised Overseas Pension Scheme) quantitative easing rampers rating agencies, 2nd, 3rd, 4th ratios, financial, 2nd, 3rd, 4th re-registration investment platforms ISAs SIPPs, 2nd Real Estate Investment Trusts (REITs) reckless caution regulatory and political risk resident abroad residential property holiday homes, 2nd REITs Retail Distribution Review (RDR), 2nd, 3rd, 4th, 5th, 6th, 7th, 8th retirement, 2nd pensions see separate entry rights issues risk appetite, 2nd objectives, strategy and risks, 2nd AIM shares building risk adjusted portfolio cash and inflation, 2nd corporate bonds and gilts, 2nd, 3rd, 4th, 5th equities, 2nd, 3rd, 4th ETFs FTSE SmallCap investment trusts, 2nd overseas equities pound-cost averaging, 2nd structured products RNS (Regulatory News Service) alerts by email or text salary sacrifice scrip dividend Section 32 plan, 2nd SEDOL number self assessment tax return, 2nd, 3rd, 4th shares see equities ‘shelf-space’ deals SIPP (Self-Invested Personal Pension), 2nd, 3rd, 4th, 5th Bed and benefits see SIPP, taking benefits from borrowing charges, 2nd, 3rd, 4th complaints contributions death and assets in, 2nd divorce full or full fat, 2nd, 3rd history investment platforms, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th investments, 2nd, 3rd, 4th, 5th, 6th, 7th ISA or, 2nd, 3rd loans by overview, 2nd reasons to have or not recycling, 2nd salary sacrifice tax and SIPPs see separate entry transferring existing pensions into/out of see separate entry VAT SIPP, taking benefits from capped drawdown, 2nd, 3rd flexible drawdown, 2nd, 3rd, 4th, 5th incapacity, 2nd income drawdown, 2nd, 3rd, 4th, 5th, 6th, 7th lifetime allowance, 2nd lifetime annuities see annuities normal minimum pension age overview partial drawdown protected pension age protected tax-free lump sum protection from lifetime allowance serious ill-health small funds withdrawal tax on pensions tax-free lump sum, 2nd, 3rd, 4th transitional protection, 2nd smaller companies, 2nd, 3rd, 4th, 5th, 6th specialist funds split-capital trusts, 2nd, 3rd, 4th spouse, 2nd, 3rd, 4th, 5th gifts to, 2nd, 3rd income drawdown, 2nd spread betting stamp duty, 2nd, 3rd, 4th, 5th, 6th AIM shares ETFs, 2nd investment trusts star fund managers, 2nd stock transfer form stockbrokers, 2nd, 3rd stocks see equities stop loss and limit orders, 2nd strategies for investing, 2nd growth income long-term buy and hold, 2nd objectives, risk appetite and passive value structured products takeovers tax, 2nd, 3rd AIM shares Bed and breakfast, 2nd Bed and ISA, 2nd Bed and SIPP Bed and spouse Dealing Account, 2nd, 3rd death, 2nd dividends, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th EISs, 2nd equities, 2nd, 3rd, 4th, 5th ETFs, 2nd funds, 2nd, 3rd, 4th gifts to spouse or civil partner, 2nd interest income, 2nd, 3rd, 4th, 5th investment trusts, 2nd ISA or SIPP, 2nd ISAs, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th, 14th, 15th Junior ISAs and inheritance National Savings certificates onshore and offshore life insurance investment bonds overseas equities PIBS rebates of commission to investors, 2nd, 3rd REITs SIPPs see tax and SIPPs stamp duty see separate entry takeovers VAT, 2nd venture capital trusts, 2nd withholding tax and SIPPs, 2nd, 3rd, 4th, 5th, 6th Bed and SIPP bond income or gains contributions and tax relief, 2nd, 3rd, 4th death, 2nd enhanced protection, 2nd excess over lifetime allowance fixed protection interest on cash, 2nd, 3rd investments, 2nd pension income, 2nd serious ill-health tax-free lump sum, 2nd, 3rd, 4th, 5th unlisted shares TESSAs (Tax-Exempt Special Savings Accounts) time commitment tips in financial press, 2nd, 3rd, 4th total expense ratio (TER), 2nd, 3rd, 4th tracker funds, 2nd, 3rd, 4th, 5th, 6th active vs passive debate, 2nd emotion taken out of investing exchange-traded funds (ETFs) see separate entry indices, 2nd structure of transferring existing pensions into/out of SIPP charges and transfer penalty, 2nd defined benefits, 2nd guaranteed annuity rates in-specie transfers, 2nd issues to consider options at retirement overseas schemes partial transfers pensions in payment, 2nd protected pension age rules on pension transfers transitional protection, 2nd types of pension scheme with-profits investments, 2nd Trustnet, 2nd, 3rd, 4th UCIS (Unregulated Collective Investment Schemes), 2nd, 3rd, 4th UCITS (Undertakings for Collective Investments in Transferable Securities), 2nd, 3rd, 4th unit trusts see funds United States, 2nd unquoted shares SIPPs, 2nd, 3rd, 4th, 5th, 6th value investor VAT (value added tax), 2nd venture capital trusts (VCTs), 2nd, 3rd warrants, 2nd websites, 2nd, 3rd, 4th, 5th advanced DIY investor equities, 2nd, 3rd ETFs funds, 2nd, 3rd gilts investment trusts, 2nd ISAs PIBS pricing of platforms, 2nd retail corporate bonds risk-profiling tools savings accounts, 2nd PEARSON EDUCATION LIMITED Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk First published 2013 (print and electronic) © Andy Bell 2013 (print and electronic) The right of Andy Bell to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

The Establishment: And How They Get Away With It
by Owen Jones
Published 3 Sep 2014

But one side effect of this was to allow banks to make more profit by lending at higher rates. Money was pumped into the financial sector by another means, too: quantitative easing. QE is not, as it is sometimes described, the printing of money, because it does not involve the physical production of notes. Instead, the Bank of England creates electronic money and then uses it to buy up government bonds. Financial institutions can then sell the bonds, adding money to their balance sheets. By 2013 the Bank of England had used quantitative easing to pump an eye-watering £375 billion into the financial system. QE proved a phenomenal subsidy for the rich – especially those with financial assets.

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QE proved a phenomenal subsidy for the rich – especially those with financial assets. Whilst the Bank estimated that the poorest tenth of Britain’s population each lost £779 because of quantitative easing, the richest 10 per cent enjoyed a £322,000 jump in the value of their assets.12 A study by the British macroeconomist Chris Martin found that though QE ‘produced a limited but temporary gain for the financial sector … it has been of no help to the wider business community or individuals and families struggling against inflation and unemployment’.13 Back in the 1970s, when the trade unions were wrongly scapegoated for Britain’s economic troubles, they faced exceptionally punitive measures.

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Ewald Engelen et al., After the Great Complacence: Financial Crisis and the Politics of Reform (Oxford, 2011), p. 147. 11. http://www.nao.org.uk/highlights/taxpayer-support-for-uk-banks-faqs. 12. http://blogs.spectator.co.uk/coffeehouse/2012/08/qe-the-ultimate-subsidy-for-the-rich. 13. http://www.bath.ac.uk/news/2012/10/09/quantitative-easing. 14. James Meadway, Why we Need a New Macroeconomic Strategy (London, 2013), pp. 10–12. 15. http://blogs.spectator.co.uk/coffeehouse/2013/11/the-tories-have-piled-on-more-debt-than-labour. 16. Prem Sikka, ‘Five Tips for George Osborne on Banking Reform’, The Guardian, 26 November 2013. 17.

Tenants: The People on the Frontline of Britain's Housing Emergency
by Vicky Spratt
Published 18 May 2022

‘if you want a house, stop buying avocado toast’: Sam Levin, ‘Millionaire tells millennials: if you want a house, stop buying avocado toast’, Guardian, 15 May 2017, www.theguardian.com/lifeandstyle/2017/may/15/australian-millionaire-millennials-avocado-toast-house ‘the young have never had it so good’: James Delingpole, ‘The gilded generation – why the young have never had it so good’, Spectator, 10 May 2014, www.spectator.co.uk/article/the-gilded-generation---why-the-young-have-never-had-it-so-good ‘QE-fuelled asset bubble’: Quantitative easing is a monetary policy which the Bank of England leaned into after the financial crisis. It involves buying bonds to lower the interest rates on savings and loans with a view to stimulating spending in the economy. See the Bank of England, ‘What is quantitative easing?’, www.bankofengland.co.uk/monetary-policy/quantitative-easing only 7 per cent of the British population go to private school: Elitist Britain 2019: The educational backgrounds of Britain’s leading people, Sutton Trust/Social Mobility Commission (2019).

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It was a precis of the ‘pull yourselves up by your bootstraps’ mentality of those who had benefited from relatively low house prices in the 1980s, which fails to recognise that it’s impossible to pull yourself up by the bootstraps if you can’t afford the boots in the first place. That article was just one of countless of a similar ilk. Some commentators, like James Delingpole in the Spectator in 2014, even tried to argue that ‘the young have never had it so good’. He wrote, ‘Yes, it’s true that the current QE [quantitative easing]-fuelled asset bubble is driving house prices unsustainably high, but otherwise news on the home front is good. Mortgages have never been cheaper, which more than compensates for higher prices.’ This was not only completely incorrect, it made no sense. You can’t reap the benefits of cheap credit if your rent is so high that you can’t save for a deposit to get on to the housing ladder in the first place.

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned?
by Steve Keen
Published 21 Sep 2011

A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data available eISBN 9781780322209 CONTENTS Tables, figures and boxes Preface to the second edition Preface to the first edition 1 Predicting the ‘unpredictable’ 2 No more Mr Nice Guy Part 1 Foundations: the logical flaws in the key concepts of conventional economics 3 The calculus of hedonism 4 Size does matter 5 The price of everything and the value of nothing 6 To each according to his contribution Part 2 Complexities: issues omitted from standard courses that should be part of an education in economics 7 The holy war over capital 8 There is madness in their method 9 Let’s do the Time Warp again 10 Why they didn’t see it coming 11 The price is not right 12 Misunderstanding the Great Depression and the Great Recession Part 3 Alternatives: different ways to think about economics 13 Why I did see ‘It’ coming 14 A monetary model of capitalism 15 Why stock markets crash 16 Don’t shoot me, I’m only the piano 17 Nothing to lose but their minds 18 There are alternatives Bibliography Index TABLES, FIGURES AND BOXES Tables 2.1 Anticipations of the housing crisis and recession 3.1 ‘Utils’ and change in utils from consuming bananas 3.2 Utils arising from the consumption of two commodities 3.3 The commodities in Sippel’s ‘Revealed Preference’ experiment 4.1 Demand schedule for a hypothetical monopoly 4.2 Costs for a hypothetical monopoly 4.3 Sales and costs determine the level of output that maximizes profit 4.4 Cost and revenue for a ‘perfectly competitive’ industry identical in scale to hypothetical monopoly 5.1 Input and output data for a hypothetical firm 5.2 Cost drawings for the survey by Eiteman and Guthrie 5.3 Empirical research on the nature of cost curves 7.1 Sraffa’s hypothetical subsistence economy 7.2 Production with a surplus 7.3 Relationship between maximum and actual rate of profit and the wage share of surplus 7.4 The impact of the rate of profit on the measurement of capital 10.1 Anderson’s ranking of sciences 12.1 The alleged Money Multiplier process 13.1 A hypothetical example of the impact of decelerating debt on aggregate demand 13.2 The actual impact of decelerating debt on aggregate demand 14.1 A pure credit economy with paper money 14.2 The dynamics of a pure credit economy with no growth 14.3 Net incomes 14.4 A growing pure credit economy with electronic money 15.1 Von Neumann’s procedure for working out a numerical value for utility 15.2 The Allais ‘Paradox’ 15.3 The Allais ‘Paradox’ Part 2 16.1 The solvability of mathematical models 17.1 Marx’s unadjusted value creation table, with the rate of profit dependent upon the variable-to-constant ratio in each sector 17.2 Marx’s profit distribution table, with the rate of profit now uniform across sectors 17.3 Steedman’s hypothetical economy 17.4 Steedman’s physical table in Marx’s value terms 17.5 Steedman’s prices table in Marx’s terms 17.6 Profit rate and prices calculated directly from output/wage data 17.7 Marx’s example where the use-value of machinery exceeds its depreciation Figures 2.1 US inflation and unemployment from 1955 2.2 Bernanke doubles base money in five months 2.3 Private debt peaked at 1.7 times the 1930 level in 2009 3.1 Rising total utils and falling marginal utils from consuming one commodity 3.2 Total utils from the consumption of two commodities; 3.3 Total ‘utils’ represented as a ‘utility hill’ 3.4 The contours of the ‘utility hill’ 3.5 Indifference curves: the contours of the ‘utility hill’ shown in two dimensions 3.6 A rational consumer’s indifference map 3.7 Indifference curves, the budget constraint, and consumption 3.8 Deriving the demand curve 3.9 Upward-sloping demand curve 3.10 Separating out the substitution effect from the income effect 3.11 Engel curves show how spending patterns change with increases in income 3.12 A valid market demand curve 3.13 Straight-line Engel ‘curves’ 3.14 Economic theory cannot rule out the possibility that a market demand curve may have a shape like this, rather than a smooth, downward-sloping curve 4.1 Leijonhufvud’s ‘Totems’ of the Econ tribe 4.2 Stigler’s proof that the horizontal firm demand curve is a fallacy 4.3 Profit maximization for a monopolist: marginal cost equals marginal revenue, while price exceeds marginal cost 4.4 Profit maximization for a perfectly competitive firm: marginal cost equals marginal revenue, which also equals price 4.5 A supply curve can be derived for a competitive firm, but not for a monopoly 4.6 A competitive industry produces a higher output at a lower cost than a monopoly 4.7 The standard ‘supply and demand’ explanation for price determination is valid only in perfect competition 4.8 Double the size, double the costs, but four times the output 4.9 Predictions of the models and results at the market level 4.10 Output behavior of three randomly selected firms 4.11 Profit outcomes for three randomly selected firms 4.12 Output levels for between 1- and 100-firm industries 5.1 Product per additional worker falls as the number of workers hired rises 5.2 Swap the axes to graph labor input against quantity 5.3 Multiply labor input by the wage to convert Y-axis into monetary terms, and add the sales revenue 5.4 Maximum profit occurs where the gap between total cost and total revenue is at a maximum 5.5 Deriving marginal cost from total cost 5.6 The whole caboodle: average and marginal costs, and marginal revenue 5.7 The upward-sloping supply curve is derived by aggregating the marginal cost curves of numerous competitive firms 5.8 Economic theory doesn’t work if Sraffa is right 5.9 Multiple demand curves with a broad definition of an industry 5.10 A farmer who behaved as economists advise would forgo the output shown in the gap between the two curves 5.11 Capacity utilization over time in the USA 5.12 Capacity utilization and employment move together 5.13 Costs determine price and demand determines quantity 5.14 A graphical representation of Sraffa’s (1926) preferred model of the normal firm 5.15 The economic theory of income distribution argues that the wage equals the marginal product of labor 5.16 Economics has no explanation of wage determination or anything else with constant returns 5.17 Varian’s drawing of cost curves in his ‘advanced’ microeconomics textbook 6.1 The demand for labor curve is the marginal revenue product of labor 6.2 The individual’s income–leisure trade-off determines how many hours of labor he supplies 6.3 An upward-sloping individual labor supply curve 6.4 Supply and demand determine the equilibrium wage in the labor market 6.5 Minimum wage laws cause unemployment 6.6 Demand management policies can’t shift the supply of or demand for labor 6.7 Indifference curves that result in less work as the wage rises 6.8 Labor supply falls as the wage rises 6.9 An individual labor supply curve derived from extreme and midrange wage levels 6.10 An unstable labor market stabilized by minimum wage legislation 6.11 Interdependence of labor supply and demand via the income distributional effects of wage changes 7.1 The standard economic ‘circular flow’ diagram 7.2 The rate of profit equals the marginal product of capital 7.3 Supply and demand determine the rate of profit 7.4 The wage/profit frontier measured using the standard commodity 9.1 Standard neoclassical comparative statics 9.2 The time path of one variable in the Lorenz model 9.3 Structure behind the chaos 9.4 Sensitive dependence on initial conditions 9.5 Unstable equilibria 9.6 Cycles in employment and income shares 9.7 A closed loop in employment and wages share of output 9.8 Phillips’s functional flow block diagram model of the economy 9.9 The component of Phillips’s Figure 12 including the role of expectations in price setting 9.10 Phillips’s hand drawing of the output–price-change relationship 9.11 A modern flow-chart simulation program generating cycles, not equilibrium 9.12 Phillips’s empirically derived unemployment–money-wage-change relation 10.1 Hicks’s model of Keynes 10.2 Derivation of the downward-sloping IS curve 10.3 Derivation of the upward-sloping LM curve 10.4 ‘Reconciling’ Keynes with ‘the Classics’ 10.5 Unemployment–inflation data in the USA, 1960–70 10.6 Unemployment–inflation data in the USA, 1950–72 10.7 Unemployment–inflation data in the USA, 1960–80 10.8 The hog cycle 11.1 Supply and demand in the market for money 11.2 The capital market line 11.3 Investor preferences and the investment opportunity cloud 11.4 Multiple investors (with identical expectations) 11.5 Flattening the IOC 11.6 How the EMH imagines that investors behave 11.7 How speculators actually behave 12.1 Inflation and base money in the 1920s 12.2 Inflation and base money in the post-war period 12.3 Bernanke’s massive injection of base money in QE1 12.4 Change in M0 and unemployment, 1920–40 12.5 Change in M1 and unemployment, 1920–40 12.6 Change in M0 and M1, 1920–40 12.7 M0–M1 correlation during the Roaring Twenties 12.8 M0–M1 correlation during the Great Depression 12.9 Bernanke’s ‘quantitative easing’ in historical perspective 12.10 The volume of base money in Bernanke’s ‘quantitative easing’ in historical perspective 12.11 Change in M1 and inflation before and during the Great Recession 12.12 The money supply goes haywire 12.13 Lindsey, Orphanides, Rasche 2005, p. 213 12.14 The empirical ‘Money Multiplier’, 1920–40 12.15 The empirical ‘Money Multiplier’, 1960–2012 12.16 The disconnect between private and fiat money during the Great Recession 13.1 Goodwin’s growth cycle model 13.2 My 1995 Minsky model 13.3 The vortex of debt in my 1995 Minsky model 13.4 Cyclical stability with a counter-cyclical government sector 13.5 Australia’s private debt-to-GDP ratio, 1975–2005 13.6 US private debt to GDP, 1955–2005 13.7 Aggregate demand in the USA, 1965–2015 13.8 US private debt 13.9 The change in debt collapses as the Great Recession begins 13.10 The Dow Jones nosedives 13.11 The correlation of debt-financed demand and unemployment 13.12 The housing bubble bursts 13.13 The Credit Impulse and change in employment 13.14 Correlation of Credit Impulse and change in employment and GDP 13.15 Relatively constant growth in debt 13.16 The biggest collapse in the Credit Impulse ever recorded 13.17 Growing level of debt-financed demand as debt grew faster than GDP 13.18 The two great debt bubbles 13.19 Change in nominal GDP growth then and now 13.20 Real GDP growth then and now 13.21 Inflation then and now 13.22 Unemployment then and now 13.23 Nominal private debt then and now 13.24 Real debt then and now 13.25 Debt to GDP then and now 13.26 Real debt growth then and now 13.27 The collapse of debt-financed demand then and now 13.28 Debt by sector – business debt then, household debt now 13.29 The Credit Impulse then and now 13.30 Debt-financed demand and unemployment, 1920–40 13.31 Debt-financed demand and unemployment, 1990–2011 13.32 Credit Impulse and change in unemployment, 1920–40 13.33 Credit Impulse and change in unemployment, 1990–2010 13.34 The Credit Impulse leads change in unemployment 14.1 The neoclassical model of exchange as barter 14.2 The nature of exchange in the real world 14.3 A nineteenth-century private banknote 14.4 Bank accounts 14.5 A credit crunch causes a fall in deposits and a rise in reserves in the bank’s vault 14.6 A bank bailout’s impact on loans 14.7 A bank bailout’s impact on incomes 14.8 A bank bailout’s impact on bank income 14.9 Bank income grows if debt grows more rapidly 14.10 Unemployment is better with a debtor bailout 14.11 Loans grow more with a debtor bailout 14.12 Profits do better with a debtor bailout 14.13 Bank income does better with a bank bailout 14.14 Modeling the Great Moderation and the Great Recession – inflation, unemployment and debt 14.15 The Great Moderation and the Great Recession – actual inflation, unemployment and debt 14.16 Modeling the Great Moderation and the Great Recession – output 14.17 Income distribution – workers pay for the debt 14.18 Actual income distribution matches the model 14.19 Debt and GDP in the model 14.20 Debt and GDP during the Great Depression 15.1 Lemming population as a constant subject to exogenous shocks 15.2 Lemming population as a variable with unstable dynamics 17.1 A graphical representation of Marx’s dialectics Boxes 10.1 The Taylor Rule 13.1 Definitions of unemployment PREFACE TO THE SECOND EDITION Debunking Economics was far from the first book to argue that neoclassical economics was fundamentally unsound.

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Ben Bernanke, as Federal Reserve chairman, literally doubled the level of government-created money in the US economy in five months, when the previous doubling had taken thirteen years. A long decay in the ratio of government-created money to the level of economic activity, from 15 percent of GDP in 1945 to a low of 5 percent in 1980, and 6 percent when the crisis began, was eliminated in less than a year as Bernanke’s ‘Quantitative Easing 1’ saw the ratio rocket back to 15 percent by 2010. 2.2 Bernanke doubles base money in five months The tenor of these times is well captured in Hank Paulson’s On the Brink: ‘We need to buy hundreds of billions of assets,’ I said. I knew better than to utter the word trillion. That would have caused cardiac arrest.

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Bernanke began as chairman on 1 February 2006, and between October 2007 and July 2008, the change in M0 was an inflation-adjusted minus 3 percent – one percent lower than its steepest rate of decline in 1930–33. The rate of change of M0 had trended down in nominal terms ever since 2002, when the Greenspan Fed had embarked on some quantitative easing to stimulate the economy during the recession of 2001. Then, M0 growth had turned from minus 2 percent nominal (and minus 6 percent real) at the end of 2000 to plus 11 percent nominal (and 8 percent real) by July 2001. From there it fell steadily to 1 percent nominal – and minus 3 percent real – by the start of 2008. 12.3 Bernanke’s massive injection of base money in QE1 Whatever way you look at it, this makes a mockery of the conclusion to Bernanke’s fawning speech at Milton Friedman’s ninetieth birthday party in November 2002: ‘Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve.

Makers and Takers: The Rise of Finance and the Fall of American Business
by Rana Foroohar
Published 16 May 2016

Many experts have argued that an environment like what we’ve seen since 2008, in which borrowing costs are as low as they’ve ever been, is the perfect time to build bridges, fund new basic science research, or revamp public schools. Yet thanks to congressional gridlock, it didn’t happen. The Federal Reserve alone was able to act to support the economy, with lower rates and quantitative easing (which is essentially pumping money into the economy in the hopes of boosting asset prices and consumption). But one of the many fascinating and downright disturbing things about the current boom in shareholder activism is that it was actually enabled by monetary policies that were supposed to help the little guy.

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The money stays in the financial sector, in other words, instead of being invested in the real economy that we live in. The Fed had hoped that rising asset prices would lead to growing consumer confidence, which would spur business investment in the real economy, boost the demand for labor, and eventually get that virtuous cycle of job creation started. But it didn’t work that way. While quantitative easing has helped lift the job market somewhat at the lower end of the socioeconomic spectrum (one big reason that companies like Walmart have raised their wages by a dollar or two per hour), it has done almost nothing for the middle class. There are two reasons why. The first is that, as I’ve explained above, companies didn’t take advantage of low borrowing rates in order to invest in Main Street; they did it to buy back stock and enrich corporate leaders and investors.

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It was a shift that was due to several things: the creation of a commodity index fund by Goldman Sachs in 1991, which allowed raw materials to become securities that could be bought and sold by investors; the deregulation of commodities markets in 2000, which poured gasoline on that process; the financial crisis of 2008, which scared everyone out of stocks and drove investors into “safety” bets like raw materials; and the beginning of the Federal Reserve’s quantitative easing program the following year, a $4.5 trillion money dump that was meant to help Main Street but ended up giving Wall Street a lot of easy money to burn. Much of that money ended up in commodities markets, dramatically boosting the prices of those commodities—the raw materials that people depend on to heat their homes, fill up their gas tanks, and feed their families.

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
by Jeremy Siegel
Published 7 Jan 2014

In the Great Depression, the money supply, measured as the sum of demand and savings deposits (M2), fell by 29 percent between August 1929 and March 1933.6 In contrast, the money supply actually rose during the 2008 financial crisis as the Federal Reserve increased the total reserves by over $1 trillion. This action provided sufficient reserves so that banks were not forced to call in loans as they were forced to in the 1930s. Although one can certainly question whether the later injections of reserves (called quantitative easing) aided the economy, there was little doubt that the initial provisions of liquidity were critical to stabilizing the financial markets and preventing the downturn from becoming substantially worse. REACTION OF THE FINANCIAL MARKETS TO THE FINANCIAL CRISIS Stocks Despite the actions taken by the Federal Reserve to moderate the economic contraction, the credit disruption that followed the Lehman bankruptcy had a devastating impact on the equity markets, which suffered their worst decline in 75 years.

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But surprise intermeeting moves by the central bank are as powerful as ever. The unexpected ½-point cut in the funds rate from 6.5 to 6 percent that took place on January 3, 2001, sent the S&P 500 Index up 5 percent and the tech-heavy Nasdaq up an all-time record 14.2 percent. And when Fed Chairman Ben Bernanke announced that the Fed was planning to phase out its quantitative easing on June 19, 2013, the stock and bond markets suffered their largest loss in almost two years. The only case in which stocks will react poorly to central bank easing is if the monetary authority eases excessively, so that the market fears an increase in inflation. But if the central bank eases excessively, an investor would prefer to be in stocks than bonds, because fixed-income assets are hurt more than stocks by unexpected inflation.

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See Fund performance Becker Securities Corporation, 360 Behavioral finance avoiding behavioral traps in, 350 contrarian investing in, 352–354 Dow 10 strategy in, 354 enhancing portfolio returns in, 352–354 equity risk premiums in, 350–352 excessive trading in, 345–347 fads in, 343–344 holding on to losing trades in, 347–349 introduction to, 339–340, 342 investor sentiment in, 352–354 loss aversion in, 347–352 myopic loss aversion in, 350–352 out of favor stocks in, 354 overconfidence in, 345–347 portfolio monitoring in, 350–352 prospect theory in, 347–349 representative bias in, 345–347 rules vs., 376 social dynamics in, 343–344 stock bubbles in, 343–344 technology bubble, 1999–2001 in, 340–342 Benchmarks, 358–359 Berkshire Hathaway, 203–205, 362–363 Bernanke, Fed Chairman Ben on central banks, 33–35 on innovation, 71 on quantitative easing, 267 on TARP, 246 TARP and, 54–55 on unemployment rates, 262 on world markets, 21–22 Best Global Brands, 68 Beta, 175, 190–191 BHP Billiton, 205 Birrell, Lowell, 106 Birthrates, 58–59 Black, Fischer, 285 Black Monday. See also Stock market crash of 1987, 291–294 Black-Scholes formula, 285–286 Blackstone, 18–19 Blake, Christopher, 364 BLS (Bureau of Labor Statistics), 261–262, 266 Blue Chip Economic Indicators , 236–238 BNP Paribas, 18, 44, 46 Bogle, Jack, 365 Bogle, John, 367 Bond market 1802-present.

Nomad Century: How Climate Migration Will Reshape Our World
by Gaia Vince
Published 22 Aug 2022

Governments have thus far failed to approach the problem with the ambition and scale it requires – there has been nowhere near the level of commitment that is given to a war effort, for instance. One solution would be for banks to work together to create large amounts of money to fast-track the transition, in what’s been dubbed ‘carbon quantitative easing’. This, some suggest, could allow petrostates to be compensated for loss of fossil fuel earnings in a similar way that slave owners were compensated during the abolition of the slave trade, helping speed the end of the industry. BETTER GROWTH We’ve looked at some of the ways the world intends to meet growing demand for energy, but we can also reduce this growth in demand.

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In some cases, this can be by paying communities to protect forests and wildlife. Recent inhabitants could also be compensated for leaving important ecosystems, through schemes that provide livelihoods and homes elsewhere. Financial tools to encourage markets to invest in restoration (rather than destruction),3 will also help, perhaps including carbon quantitative easing. Extinction rates are at least 1,000 times higher than they would be without human activities, and in some cases local losses directly threaten us. Pollinators, for example, are essential for many of our foods, yet in the UK 97 per cent of meadowlands have been lost through intensive farming, causing a crash in insect and bird populations.

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Kung peoples; lack of water resources; low levels of migration to; migration from as relatively low; poor infrastructure and city planning; population rise in; rainfall due to Indian irrigation; remittances from urban migrants; and restoring of planet’s habitability; Transaqua Project of water diversion; transatlantic slave trade; transport infrastructure in; urbanization in African Union agoraphobia AI and drone technology aid, development/foreign air-conditioning/cooling airships or blimps Alaska algae Aliens Act (UK, 1905) Alps, European Amazon region Americas Anatolia Anchorage, Alaska Anderson, Benedict animals/wildlife; global dispersal of; impact of fires on; impact of ice loss on see also livestock farming Antarctica; ice sheet Anthropocene era; four horsemen of Aravena, Alejandro Archaeology architecture/buildings: Aravena’s ‘partial houses’; energy-efficiency retrofits; floating infrastructure; heat- and light-responsive materials; low-carbon concrete; prefabricated and modular housing; in successful migrant cities; wooden skyscrapers; zero-carbon new-builds Arctic region; first ice-free summer expected; opening up of due to climate change Argentina Arrhenius, Svante Asia: cities vulnerable to climate change; drought-hit areas; extreme La Niña events; extreme precipitation in monsoon regions; Ganges and Indus river basins; and heat ‘survivability threshold’; huge populations of South Asia; lack of water resources; rivers fed by glaciers; small hydropower installations; urbanization Aswan High Dam asylum-seekers: Australia’s dismal record on; Britain’s proud history on; dominant hostile narratives about; drownings in English Channel; limbo situation due to delayed claim-processing; misinformation about see also refugees Athens Australia: Black Summer (2019–20); energy-supply economy; impact of climate emergency; indigenous inhabitants; low population density in; migration to; and mineral extraction in Greenland; renewable power in; treatment of asylum-seekers; White Australia Policy aviation Aztecs Babylon bacteria, in food production bamboo Bangkok Bangladesh; ‘Bangla’ communities in London; Burmese Rohingya refugees; impact of climate emergency; migration across Indian border; population density in; relocation strategies; training for rural migrants Bantu people Barber, Benjamin Barcelona Beckett, Samuel Belarus Belgium Bergamo, Italy Bhutan Bijlmermeer (outside Amsterdam) biodiversity loss/ecosystem collapse; coral reefs as probably doomed; crash in insect and bird populations; depletion of fish stocks; due to agriculture; due to farming; four horsemen of the Anthropocene; and human behaviour; Key Biodiversity Areas; links with climate change; and marine heatwaves; and overuse of fertilizers; restoring of; species extinction; and urban adaptation strategies see also environmental sustainability bioenergy with carbon capture and storage (BECCS) biotech industry birds black soldier flies black-footed ferrets BoKlok (IKEA spinoff) Bolivia Borneo Bosch, Carl Boston, Massachusetts Boulder, Colorado Brazil Brexit Brin, Sergey British Columbia Brown, Pat bureaucracy Burke, Marshall Burma business/private sector Cairo California; forest fires in Cambodia Cameroon Canaan Canada; and charter cities model; Climate Migrants and Refugee Project; economic benefits from global heating; expansion of agriculture in; first carbon-neutral building in; forest fires in; indigenous populations; infrastructure built on permafrost; regional relocation schemes Capa, Robert, capitalism Caplan, Bryan Caprera (Italian warship) carbon capture/storage; BECCS; ‘biochar’ use in soil; carbon capture and storage (CCS); direct capture from the air; by forests; in grasslands; Key Biodiversity Areas; in oceans; by peatlands; by phytoplankton; vegetation as vital carbon pricing/taxing carbon/carbon dioxide: amount in atmosphere now; Arrhenius’ work on; and biomatter decay in soil, ‘carbon quantitative easing’; continued emitting of; decarbonizing measures; effect on crop growth; emissions cut by building from wood; emissions from farming; emissions from human energy systems; emissions from urban buildings; geoengineering to remove; during last ice age; Miocene Era levels; new materials made from; ocean release of; released by wildfires; tree-planting as offsetting method; in tropical rainforests Carcassonne, France Card, David Cardiff Castro, Fidel Çatalhöyük, ancient city of Central African Republic Central America Chad ‘char people’ charcoal (‘biochar’) Chicago children: childcare costs; deaths of while seeking safety; ‘invisible’/living on the margins; left behind by migrant parents; and move to cities; numbers at extreme risk; in refugee camps; and sense of ‘belonging’ Chile China: adaptation for heavy rainfall events; Belt and Road Initiative; cities vulnerable to climate change; demography; desertification of farmland in north; economic domination of far east; emigrants and knowledge-flow; emissions as still rising in; extreme La Niña events; ‘green wall’ tree-planting projects; and heat ‘survivability threshold’; Hong Kong–Shenzhen–Guangzhou mega-region; hukou system; integrated soil-system management; internal migration in; migrant workers in Russia’s east; and mineral extraction; net zero commitment; small hydropower installations; South-to-North Water Diversion Project; ‘special economic zones’; Uyghur Muslim communities in; and water scarcity; ‘zhuan‘ documents Chinatowns Churchill (town in Manitoba) Churchill, Winston cities: adapting to net-zero carbon economy; city state model; coastal cities; as concentrated nodes of connectivity; ‘consumption cities’ in Africa; control of migration by; deadly urban heat; demand for cooling; devolving power to communities; in eighteenth/nineteenth-century Europe; entrenched assets; and extreme flood risk; flood defences; as focal points for trade networks; food production in; genetic impacts of; in high altitude locations; large megacities; merging into mega-regions; as particularly vulnerable to climate change; phased abandonment of; population densities in; private gardens in; relocation of; relocation strategies within; sprawling shanty towns in; strategies against impact of heat; zero-carbon new-builds see also migrant cities; migration, urban citizenship; patriotism of welcomed migrants; ‘UN/international passport’ idea Clemens, Michael climate change, historic: Cretaceous–Palaeogene meteorite impact event; in late-bronze-age Near East; and migration; in Miocene Era; and transition to farming climate change/emergency; 3–5° C as most likely scenario; as affecting all of Earth; cities as particularly vulnerable to; destruction of dam infrastructure; enlisting of military/security institutions against; every tenth of a degree matters; extreme weather events; global climate niches moving north; global water cycle as speeding up; greenhouse gas emissions as still growing; impact of cities; impact on lives as usually gradual; inertia of the Earth’s climate system; lethality by 2100; links with biodiversity loss; near-universal acceptance of as human made; net zero pledges; Paris Agreement (2015); path to 3–4° C-hotter world; situation as not hopeless; slow global response to; as threat multiplier; warming as mostly absorbed by oceans see also biodiversity loss/ecosystem collapse; drought; fires; floods; heat climate models: future emissions scenarios; heating predictions; impact of 4° C-hotter world; IPCC ‘Representative Concentration Pathways’ (RCPs); optimum climate for human productivity; threshold for mass migrations coastal areas: coastal cities; migration from; retreating coastlines; seawater desalination plants cochineal scale insect Colombia colonialism, European Colorado Columbia Concretene construction industry copper coral reefs Cornwall Costa Rica cotton Covid-19 pandemic; cooperation during cross-laminated timber (CLT) Crusaders Cruz, Abel Cuba cultural institutions/practices: cultural losses over time; diversity as improving innovation; migration of; in well-planned migrant cities cyclones Cyprus Czech workers in Germany Dar es Salaam Death Valley Delhi Democratic Republic of Congo demographic changes/information: and decline of nationality viewed in racial terms; depopulation crisis; elderly populations in global north; GenZ; global climate niches moving north; global population patterns; global population rise; ‘household formation’; huge variation in global fertility rates; migrants as percentage of global population; population fall due to urban migration; population-peak projection; post-war baby boom; and transition to farming Denmark Denver, Colorado desert conditions Dhaka Dharavi (slum in Mumbai) diet and nutrition: edible seeds of sea grasses; genetically engineered microbes; global disparities in access to nutrition; and Haber–Bosch process; insects as source of protein and fats; loss of nutrition due to heat stress of crops; move to plant-based diet; vitamin D sources; zinc and protein deficiencies dinosaurs direct air capture (DAC) disease; waterborne Doha Domesday Book (1086) Driscolls (Californian berry grower) drone technology drought; as affecting the most people; in Amazon region; impact on farming; in late-bronze-age Near East; and rivers fed by glaciers; and sulphate cooling Dubai Duluth, Minnesota Dunbar, Robin economies; Chinese domination of far east; economic growth; forced move towards a circular economy; GDP per capita measure; Global Compact for Migration; global productivity losses due to heat; immigrant-founded companies; and influx of low-skilled migrant workers; migration as benefitting; mining opportunities exposed by ice retreat; and nation state model; need to open world’s borders; new mineral deposits in northern latitudes; northern nations benefitting from global heating; ‘special economic zone’ concept; taxing of robots see also employment/labour markets; green economy; political and socioeconomic systems; trade and commerce education: availability to migrants; as key to growth; and remittances from urban migrants; systems improved by migration Egypt; Ancient electricity: current clean generation as not sufficient; decarbonizing of production; electric vehicles; grid systems; hydroelectric plants; and net zero world; renewable production Elwartowski, Chad employment/labour markets: amnesties of ‘illegal’ migrants; and arguments against migration; and automation; controlled by city authorities; and global labour mobility; and the green economy; impact of heat on jobs; indentured positions; and influx of low-skilled migrant workers; jobs in growth industries; jobs restoring diversity; jobs that natives don’t want to do; mechanization/automation slowed down by migrant workers; migrants bring greater diversity to; need for Nansen-style scheme; occupational upgrading of locals due to immigration; refugees barred from working; role of business in migrant integration; rural workers moving to cities; skilled migrants; support/access for migrants; Trump’s work visa restrictions; ‘urban visas’ in USA; workforce shortages in global north energy systems: access to in global south; air-conditioning/cooling demand; and carbon capture; ‘closed-loop’ radiator construction; decarbonizing of; and economic growth; geothermal production; global energy use as increasing; new dam-construction boom in south; nuclear power; oceans as source; poor grid infrastructure in global south; power outages; power sharing as not equitable; reducing growth in demand; replacement of inefficient heating/cooling systems; transmission/transport see also electricity English Channel Environmental Protection Agency, US environmental sustainability: decarbonizing measures; decoupling of GDP from carbon emissions; and economic growth; heat- and light-responsive materials; low-energy plastic recycling methods; and migrant cities; need for open mind in planning for; phytoplankton as hugely important; replacement of inefficient heating/cooling systems; zero-carbon new-builds see also biodiversity loss/ecosystem collapse environmentalists; negative growth advocates; opponents of geoengineering equatorial belt Erdoğan, Recep Tayyip Eritrea Estonia Ethiopia Europe: 2003 heatwave; depopulation crisis; eighteenth/nineteenth-century shanty towns; impact of climate emergency; medieval barriers to movement; Mediterranean climate moving north; migrant indentured labour in; migration of women working in domestic service; small hydropower installations; three mass migrations in Stone and Bronze Ages European Union: free movement within; fund for aid to Africa; Green New Deal; no ‘asylum crisis’ within; nuclear power in; open-border policy for refugees from Ukraine; as popular migrant destination; seeks quota system for refugees; as successful example of regional union; war against migrants Fairbourne (Welsh village) farming: in abandoned areas in south; in Africa; ancient transition to; bad harvests as more frequent; barns/storehouses; benefits of warming in Nordic nations; biodiversity loss due to; cereal crops; closing the yield gap; early nineteenth century expansion of; ever-decreasing, sub-divided plots of land; expanded growing seasons; fertile land exposed by ice retreat; genetic research to produce new crops; genetically modified crop varieties; global disparities in food production; Green Revolution; greenhouse gas emissions from; in Greenland; Haber–Bosch process; heat-tolerant and drought-resistant crops; high-yielding wheat and rice variants; impact of climate emergency; indoor industrial systems; modern improvement in yields; nutrient and drip-irrigation systems; pre-twentieth-century methods; relying on new forms of; Russian dominance; salt-tolerant rice; smallholder; and solar geoengineering; solar-powered closed-cycle; urban vertical farms; use of silicates; and water scarcity; wildflower strips in fields see also livestock farming Fiji Fires fish populations: artisanal fishers; boost of in Arctic region; and decommissioned offshore oilrigs; fish farming; future pricing of fish products; as under huge pressure; insects as farmed-fish feed; land-based fish-farming Five Points slum, New York floods; flash floods; low-lying islands and atolls; sea walls/coastal defences; three main causes; in urban areas; water-management infrastructure Florida food: algal mats; carbon-pricing of meat; impact of soaring global prices; insect farming; kelp forest plantations; lab-grown meats; meat substitutes; for migrant city dwellers; move to plant-based diet; need for bigger sources of in global north; need to cut waste; photosynthesizing marine plants and algae; plant-based dairy products; reduced supplies due to temperature rises; refrigerated storage; replication of Maillard chemical reaction; sourced from the oceans see also diet and nutrition; farming; livestock farming food security Ford, Henry forests: advance north of in Nordic nations; deforestation; impact of climate emergency; ‘negative emissions activity’; replanting of; Siberian taiga forest fossil fuels; carbon capture and storage (CCS); as embedded in human systems France Fraser, Sean freedom of movement French Polynesia Friedman, Patri Gargano, Gabriele gas industry Gates, Bill gender: heat related inequalities; physical/sexual danger for female migrants; women in domestic service in Europe; women rejoining workforce genetic modification genetics, population Genghis Khan geoengineering; artificial sill proposals; cloud-brightening idea; as controversial/taboo; and ideal temperature question; possible unwanted effects; proposals for dealing with ice melt; to reduce atmospheric carbon dioxide; solar radiation reduction tools; sulphate cooling concept; thin-film technology; tools to reflect the sun’s heat away from Earth geology GERD dam, Ethiopia Germany; Syrian refugee resettlement in Ghana Glasgow climate meeting (2021) Global Parliament of Mayors global south; benefit of solar cooling idea; capital costs of deploying new renewables; cutting of food waste in; future repopulation of abandoned regions; global income gap as rising; little suitable landmass for climate-driven migration; migration to higher elevations with water; need for improved infrastructure; need for sustainable economic growth; new dam-construction boom in; new domestic sources of energy; population rise in; remittances from urban migrants; resource extraction by rich countries; and vested interests in the rich world see also Africa; Asia; Latin America and entries for individual nations golf courses Gore, Al, An Inconvenient Truth (2006) Gothenburg Grand Inga hydroelectric dam project (Congo River) Granville, Earl grasslands Great Barrier Reef Great Lakes region, North America Greece; Ancient green economy; and building of fair societies; Green New Deals; migration as vital to; multiple benefits of see also environmental sustainability; renewable power production; restoring our planet’s habitability greenhouse gas emissions; charging land owners for; in cities; emitters trying to avoid/delay decarbonization; from farming; national emissions-reductions pledges; underreporting of; unfair global impact of see also carbon/carbon dioxide Greenland; ice sheet; potato farming in Gulf states Haber, Fritz Hangzhou Hawaii health: climate change as threat multiplier; dementia care; diseases of poor sanitation; healthcare in successful migrant cities; heat related inequalities; lethality of extreme heat; and life in cities; mental illness and migration; migration as benefitting social care systems; pathogens in frozen tundras; rural living as single largest killer today; and smoke pollution heat: 35°C wet bulb threshold crossed; climate model predictions; cloud and water vapour feedbacks; combined with humidity; and demand for cooling; extreme hotspots; global productivity/work hour losses; impact of 4° C-hotter world; impact on farming/food supplies; infrastructure problems due to; lethality by 2100; lethality of extreme temperatures; Paris pledge of below 2°C; solar radiation reduction tools; subtropical climate spreading into higher latitudes; temperatures above 50°C; threshold for mass migrations; ‘threshold of survivability’; urban adaptation strategies; urban heat island effect; ‘wet bulb’ temperature calculations Held, David Hernando, Antonia HIV Höfn, southeastern Iceland Holocene epoch Honduras Hong Kong horses, domestication of housing: Aravena’s ‘partial houses’; controlled by city authorities; equitable access to; floating infrastructure; in flood-affected areas; and heat related inequalities; and migrants; planning and zoning laws; policies to prevent segregation; prefabricated and modular; twentieth-century social programmes see also slum dwellers Hudson Bay Huguenot immigrants human rights, universal Hungary hunter-gatherers hurricanes hydrogen ice age, last ice loss; as accelerating at record rate; in Antarctica; in Arctic region; artificial reflective snow idea; artificial sill proposals; and flash floods; loss of glaciers; permafrost thaw; reflective fleece blankets idea; retreat of ice sheets; rising of land due to glaciers melting; tipping points for ice-free world Iceland ICON, construction company identity: accentuation of small differences; and ancient transition to farming; borders as ‘othering’ structures; language as tool of self-construction; mistrust of outsiders; pan-species; sense of ‘belonging’; social norms of ‘tribe’; social psychology; stories crafting group identity see also national identity immigration policies: bilateral or regional arrangements; deliberately prejudicial policy; development of since later nineteenth-century; and harnessing migrant potential; immigrant inclusion programmes; immigration lottery schemes; move needed from control to managing,; points-based entrance systems; poorly designed; quota systems; responses to terrorist incidents; restrictions as for people not stuff; restrictive border legislation; Spain’s successful policy Impossible Foods India; crop irrigation in; emigrants and knowledge-flow; emissions as still rising in; falling fertility rate in; Ganges Valley; and heat ‘survivability threshold’; impact of climate emergency; internal migration in; lime-washing of roofs in; Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA); National River Linking Project; population density in; young population in indigenous communities Indo-European language Indonesia industrial revolution inequality and poverty: and access to reliable energy; benefit of solar cooling to south; climate change as threat multiplier; climate migration and social justice; and demand for cooling; despair and anger of ‘left behind’ natives; and environmental destruction; and European colonialism; as failure of social/economic policy; and geoengineered cooling; global disparities in access to nutrition; and global food prices; global income gap as rising; heat related; and impact of flooding; increased by ancient transition to farming; as matter of geographical chance; migration as best route out of; and modern farming; and national pride; need for redistributive policies; the poor trapped in vulnerable cities; and post-war institutions; rural living as single largest killer today; slow global response to crisis of; superrich and private jets; tribalism as not inevitable; and vested interests in the rich world insects; collapsing populations; farming of; as human food source insulation insurance, availability of Intergovernmental Panel on Climate Change (IPCC) International Energy Agency (IEA) International Fund for Agricultural Development (IFAD) International Labour Organization Iquique (Chile) Ireland iron, powdered Islam islands, small/low-lying Israel Italy Ithaca, city of (New York) Jakarta Japan Jobs, Steve Johnson, Boris Jordan kelp Kenya Khan, Sadiq Khoisan Bushmen Kimmel, Mara King, Sir David Kiribati knowledge and skills: better environment for in rich countries; ‘brain drain’ issue; channelled through migrant networks; diversity as improving innovation; global knowledge transfer; Global Skill Partnerships model; impact of European colonialism; migrants returning to origin countries; and Nansen-style schemes; need for rapid transference of; and points-based entrance systems Kodiak Island, Alaska krill Kuba Kingdom, West Africa !

Termites of the State: Why Complexity Leads to Inequality
by Vito Tanzi
Published 28 Dec 2017

The governments were thus able to still significantly influence the lives of citizens and the operations of the market, through manipulation of the level and the composition of public spending, as well as the level and the structure of taxes; through regulations and authorizations; and through monetary policies that in time (with Quantitative Easing policies of later years) would come to resemble and even to some extent replace fiscal policies. The return of faith in the free operations of the market economy contributed to creating, in conservative circles and among an increasing number of economists, an almost ethical or religious belief that the market could not be wrong, that its results were always legitimate, and that it did not need to be (much) regulated, because it was able to regulate itself.

…

The new paradigm had already been a major factor in the financial crises that had hit several Southeast Asian countries in 1997–1998 (see Tanzi, 2008a, pp. 85–92 and 139–141). It surely was a factor in the crisis that hit the United States in 2007 and led to the Great Recession there and in several European countries. The major unanswered question at the time this book was written (2016) is what impact policies of Quantitative Easing promoted by central banks, which have been feeding exceptionally cheap credit to a financial market that has continued to have the characteristics described earlier, will have over the longer run. Only time will tell. One thing is sure – that the total debt of many countries (public plus private debt) has reached and has remained at exceptionally high levels (see Tanzi, 2016b).

…

However, the important point is that failures are government failures and are shared by society, while the gains eventually become private gains, first for a few lucky individuals who become very rich, and later more broadly for society. Sixth, there is also the impact of monetary policy, especially the one pursued by the central banks’ increasingly unorthodox policies, such as Quantitative Easing, which, in some cases, has resembled fiscal policy by a different name. That policy has helped some private enterprises and some individuals to access large financial resources at very low cost and to use those resources to earn large incomes. For example, some private enterprises have used the cheap loans obtained from the central banks to buy shares in their own enterprises, rather than to make real investments.

Superforecasting: The Art and Science of Prediction
by Philip Tetlock and Dan Gardner
Published 14 Sep 2015

Signed by a long list of economists and commentators, including the Harvard economic historian Niall Ferguson and Amity Shlaes of the Council on Foreign Relations, the letter calls on the Federal Reserve to stop its policy of large-scale asset purchases known as “quantitative easing” because it “risk[s] currency debasement and inflation.” The advice was ignored and quantitative easing continued. But in the years that followed, the US dollar wasn’t debased and inflation didn’t rise. The investor and commentator Barry Ritholtz wrote in 2013 that the signatories had been proved “terribly wrong.”5 Many others agreed. But there was an obvious response: “Wait.

…

But there was an obvious response: “Wait. It hasn’t happened yet. But it will.” Ritholtz and the critics might argue that in the context of the 2010 debate, the letter writers expected currency debasement and inflation in the next two or three years if quantitative easing went ahead. Perhaps—but that is not what they wrote. The letter says nothing about the time frame. It wouldn’t matter if Ritholtz waited until 2014 or 2015 or 2016. No matter how much time passed, someone could always say, “Just wait. It’s coming.”6 It also isn’t clear how much the dollar would have to fall, and inflation rise, to count as “currency debasement and inflation.”

Why It's Still Kicking Off Everywhere: The New Global Revolutions
by Paul Mason
Published 30 Sep 2013

When the global recovery got under way in 2010, the poor were hit by price rises, occurring in the first place because, since 2000, all global recoveries have sparked commodity price inflation; and secondly, because the USA had decided to unleash inflation onto the developing world. As the effects of Obama’s stimulus faded, in November 2010 Ben Bernanke began a second round of money printing—$600 billions’ worth—known as ‘Quantitative Easing II’. QEII, it was recognized even at the design stage, would not increase demand directly in America. By reducing the value of the dollar, and the attractiveness of dollar investments, it would create an international ‘wall of money’ flowing out of the USA towards its emerging rivals: Russia, Brazil, India and other dynamos of the global south.

…

I. 46 Len-len 193–96, 209 Liberal Democrats 43–44, 46 liberalizers 31 Libya 25, 31, 119; National Transitional Council 178 Life and Fate (Grossman) 129 Lilico, Andrew 121 link-shorteners 75 Linux 139–40 @littlemisswilde 41–42, 44, 45, 135–36, 138 living conditions, urban slums 196–99 London: anti-capitalist demonstrations 33; arrests 61–62; Day X, 24 November 2010 41–42, 46–48; the Dubstep Rebellion 48–52; Fortnum & Mason 60–61; HM Revenue and Customs building 51; Hyde Park 60; Millbank riot 42–44; Millbank Tower 43; Museum Tavern 1; National Gallery teach-in 53, 53–54; Oxford Circus 60; Palladium Theatre 51; Parliament Square 49, 51, 52–53; Piccadilly Circus 58; police–student confrontation 50–51; Regent Street 58; Ritz Hotel 60; Tate Modern 53; trade-union demonstration, March 2011 57–61; Trafalgar Square 47; Victoria Street 50; Victorinox 59 London School of Oriental and African Studies, occupation of 44–46 López, Fernando 166–67, 170 Lopez, Gina 200–2 Lopez Inc. 200–2 Loubere, Leo 174 Loukanikos (riot dog) 94, 96 L’Ouverture, Toussaint 149 LulzSec 151 McIntyre, Jody 51 McPherson, James 182 Madison, Wisconsin revolt 184–87 Madrid 33 Mahalla uprising, 2008 10, 71 Maher, Ahmed 83 Mahfouz, Asmaa, @AsmaaMahfouz 11, 177 Mahmoud (Zamalek Sporting Club ultra) 16–17 Makati, Manila 204–6 malnutrition 9 Mandelson, Peter 17, 26, 114 Manila 33; Estero de Paco 200–2; Estero de San Miguel 196–99; Makati 204–6; waterways 200–2 manipulated consciousness 29–30 Manufacturing Consent (Chomsky and Herman) 28–29 Mao Tse Tung 46 Marxism 141–45 Marx, Karl 46, 141–45, 174, 187, 188–89, 190, 192 Masai with a mobile, the 133–34 Masoud, Tarek 27 Masry Shebin El-Kom textile factory 22–23 mass culture 29–30 Matrix, The (film) 29 Meadows, Alfie 51 media, the 28–29 @mehri912 34 Meltdown (Mason) 31–32 memes 75, 150–52, 152 Merkel, Angela 96, 98, 99, 112 Michas, Takis 103 Middle East: balance of power 178; Facebook usage 135; failure of specialist to understand 25–27 Milburn, Alan 114 Miliband, Ed 58, 60, 188 Millbank riot 42–44 Millennium Challenge 2002 82–83 Miller, Henry 128 misery 209 mobile telephony 75–76, 133–34 modernism 28 mortgage-backed securities 106–8 Moses, Jonathan 48 Mousavi, Mir-Hossein 33–34 movement without a name 66 Mubarak, Alaa 17–18 Mubarak, Gamal 8, 10, 17–18, 26 Mubarak, Hosni 9, 10, 14, 15, 18–19, 19–20, 26, 31 Murdoch, Rupert 31, 106, 148–49 Muslim Brotherhood 21, 177 NAFTA 166–67 Napoleon III 172, 191 Nasser, Gamal Abdel 19 National Gallery teach-in 53, 53–54 nationalism 124 Native Americans 162, 163 Negri, Toni 42 Netanyahu, Binyamin 180 network animals 147 networked individualism 130, 130–33, 141 networked protests 81–82, 85 networked revolution, the 79–85; erosion of power relations 80–81; informal hierarchies 83; networked protests 81–82; network relationships 81; swarm tactics 82–83 network effect, the 2, 74–75, 77; erosion of power relations 80–81; strength 83; usefulness 84 network relationships 81 Nevins, Allan 182 New Journalism 3 News Corporation 148—49 News of the World 49; phone hacking scandal 61, 148–49 New Unrest, social roots of 65–66, 85; demographics of revolt 66–73; information tools 75–76; the networked revolution 79–85; organizational format 77–78; technology and 74–79; the urban poor 70–72 New York Times 170 1984 (Orwell) 30, 129 Nomadic Hive Manifesto, The 53–54 @norashalaby 13 North Africa: demographics of revolt 66; students and the urban poor 71 Obama, Barack 72, 116–18, 120, 122, 162, 167, 170, 180, 183, 187 OccupiedLondon blog 88–89 Occupy Wall Street movement, the 139, 144, 187, 210 Office for National Statistics 115 Ogden-Nussbaum, Anna, @eponymousthing 184 Oklahoma 153, 153–56 Oldouz84 36, 37 Olives, Monchet 202–4 online popularity 75 On the Jewish Question (Marx) 143 Open Source software 139–40 Operation Cast Lead 33 organizational format, changing forms of 77–78 Organisation of Labour, The (Blanc) 187 organized labour 71–72, 143 Ortiz, Roseangel 161 Orwell, George 30, 129, 208, 210 Owen, Robert 142 Palafox, Felino 204–5 Palamiotou, Anna 97 Palestine 25, 121, 179, 180 Palin, Sarah 181, 182 PAME (Greek trade union) 90 Papaconstantinou, George 91, 97 Papandreou, George 88, 96 Papayiannidis, Antonis 103 Paris 39; 1968 riots 46; revolution of 1848 171, 172 Paris Commune, the 1, 72–73, 84, 132 PASOK 89, 91, 98, 99 Paulson, Hank 110 Petrache, Ruben 203–4 Philippines: Calauan, Laguna Province 202–4; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City 193–96; Makati, Manila 204–6; New People’s Army 203 Philippines Housing Development Corporation 198 philosophy 29 phone hacking scandal 61, 148–49 Picasso, Pablo 127, 128, 132 Pimco 170 Poland 172 police car protester (USA) 4 Policy Exchange think tank 55 political mainstream, youth disengagement from 89–90 popular culture 65, 176 Porter, Brett 154, 155, 156 Port Huron Statement, the 129–30, 145 Portugal 92, 112, 188 postmodernism 28 poverty 121–22, 210, 211 Powell, Walter 77 power, refusal to engage with 3 power relations, erosion of 80–81 Procter & Gamble 23 propaganda of the deed 62 property 48 property bubble collapse 106–8 protectionism 124 protest, changing forms of 54–57 pro-Western dictators, support for 31 Prussia 191 Puente 165 Putnam, Robert 134 Quantitative Easing II 120–23 radicalization 33, 37, 47–48 radical journalists 149 Ramírez, Leticia 165 Real Estate Tax Authority Workers (Egypt) 19 Really Free School, the 1–2 @rebeldog_ath 96 reciprocity 77 Reed Elsevier 146 Reider, Dimi 179 Research and Destroy group 38–39 revolt, demographics of 66, 66–73 revolutionary wave 65 revolution, definition 79–80 revolutions: 1848 171–73, 173–75, 191, 192; 1917 173; 1968 173; 1989 173 Reynalds, Jeremy 159–60, 162–63 rice crops 195 Riches, Jessica, @littlemisswilde 41–42, 44, 45, 135–36, 138 Rimbaud, Arthur 132 River Warriors 201 Roads to Freedom (Sartre) 129 Road to Wigan Pier, The (Orwell) 208 Romer, Christina 117 Roosevelt, Franklin D. 169–70 Rove, Karl 30–31, 32 Rowan, Rory 54 Said, Edward 26–27 Said, Khaled 11, 148 @Sandmonkey 13 Sandra (Joy Junction resident) 160 Santa Cruz, University of California 37–39 Sarkozy, Nicolas 91–92, 98 @sarrahsworld 11–12, 14, 135 Sartre, Jean-Paul 129 Saudi Arabia 121 savings, and investment 107 Savio, Mario 4 SB1070 (USA) 164, 165–66, 166–67 self-esteem, and consumption 80–81 self-interest 111 self-reliance 68 self, the, social networks impact on 136–38 Sennett, Richard 68, 80–81, 131 Sentimental Education (Flaubert) 171 el-Shaar, Mahmoud 22 Shafiq, Mohammed 20–22 Shalit, Gilad 179 shared community 84 Sharp, Gene 83 Sharpton, Al 184 Shirky, Clay 138, 139, 140, 146 Sinclair, Cameron 199, 208 Sioras, Dr Ilias 90–91 Situationist movement 46–47 Situationist Taliban 1 slum-dwellers 68; numbers 198 social capital 134 social democracy 145 social housing 199 Socialist International 19–20 social justice 177, 191, 192, 209, 210 social media 7, 74–75, 77; collective mental arena 137; lack of control 37; power of 34–35; role of 56; and the spread of ideas 151 social micro-history 173 social networks 77, 82; impact of 147; impact on activism 138–41; and the self 136–38 social-republicanism 187 solidaristic slum, the 207 Solidarity 42 ‘Solidarity Forever’ (song) 42 Soviet Union 28 Spain 66, 104, 105, 188 Spanish Civil War 209–10 species-being 143 @spitzenprodukte (art activist) 1 spontaneous horizontalists 44–46 spontaneous replication 55 Starbucks Kids 79 Steinbeck, John 153, 155, 159, 163, 164, 169 Stephenson, Paul 52 Stiglitz, Joseph 118 Strategy Guide (Sharp) 83 Strauss-Kahn, Dominique 188 strongman threat, the 177–78 student occupations 37–39, 44–46, 53, 53–54 students: economic attack on 38; expectations 67–68; population 70 Sudan 25 Suez Canal Port Authority 19 Supreme Council of the Armed Forces (SCAF) (Egypt) 18, 20 surveillance 148 swarm tactics 82–83 swine flu epidemic 9 Switzerland 123 syndicalism 175–76 synthesis, lack of 57 Syria 25 tactics 54–57 Tahrir Square, Cairo 6, 69, 89, 139; chants 191, 211; Day of Rage, 28 May 15–17; demonstration, 25 January 10–14; numbers 13; Twitter feeds 13; volunteer medics 20–22 Taine, Hippolyte 73 Tantawi, General 19 Tarnac Nine, the 189 Tea Party, the 117–18, 124–25, 180–81 tear gas 93–94, 100–1 technology 65, 66, 74–79, 85, 133–36, 138–39; and the 1848 revolutions 173–74 Tehran, Twitter Revolution 34–37 teleology 131, 152 Tent City jail, Arizona 164–67 Territorial Support Group 50 Thatcher, Margaret 106 @3arabawy 10, 22, 71 Third Way, the 31 Time magazine 36 Tim (human rights activist) 1–2 Tim (Joy Junction resident) 160 Tocqueville, Alexis de 192 totalitarianism 147–48 toxic debt 110–11 trade wars 122, 124–25 transnational culture 69 Transparency International 119 Trichet, Jean-Claude 112 Truman Show, The (film) 29 trust 57 Tunisia: Army 178; economic growth 119; inflation 121; organized workforce 72; revolution 10, 11, 25–26; unemployment 119 Turkle, Sherry 136 Twitpic 75 Twitter and tweets 3, 74, 137–38; #wiunion 184, 185; @Ghonim 13; @mehri912 34; @norashalaby 13; @rebeldog_ath 96; @Sandmonkey 13; Egyptian revolution 13, 14; importance of 135–36; Iranian revolution and 33–37; Madison, Wisconsin revolt 184; news dissemination 75; real-time organization 75; reciprocity 77; user numbers 135; virtual meetings 45 Twitter Revolution, Iran 33–37, 78, 178 Ukraine 177–78 UK Uncut 54–57, 58, 61 ultra-social relations 138 unemployment: America 159–63; Egypt 119; Spain 105; Tunisia 119; youth 66, 105, 119–20 UN-Habitat 199 Unison 57 United Nations, The Challenge of Slums 198–99 United States of America: agriculture 154–56; Albuquerque 159, 159–63; Arizona 164–67, 183; armed struggle 181–83; Bakersfield, California 168–70; budget cuts 156, 161, 167, 170; California 168–70; campus revolts, 1964 4; Canadian River 159; cattle prices 156; collapse of bipartisan politics 116–19; culture wars 179, 180–84; current-account deficit 107; debt 118; deportations 166; devaluation 123; Dodd–Frank Act 167; the Dust Bowl 154–55; economic decline 183–84; economic growth 170; Federal budget 156, 161; fiscal management 183; fiscal stimulus 117–18; fruit pickers 169; hamburger trade 156; healthcare bill 180, 183; homeless children 160; homelessness 159–63; Indiana 116–17, 125; Interstate 40 157, 170; job market 161; Joy Junction, Albuquerque 159–63; Madison, Wisconsin revolt 184–87; minimum wage workers 158; the Mogollon Rim 163; motels 157–58, 162–63; the New Deal 169–70; Oklahoma 153, 153–56; Phoenix, Arizona 164–67; police car protester 4; political breakdown, 1850s 182–83; property bubble 106–8; Quantitative Easing II 120–23; radical blogosphere 184; the religious right 118; repossessions 168; Route 66 157–59; San Joaquin valley 169; SB1070 164, 165–66, 166–67; State Department 178; states’ rights 183; student occupation movement 37–39; the Tea Party 117–18, 124–25, 180–81, 186; Tent City jail, Arizona 164–67; Tucson, Arizona 182; undocumented migrants 164–67; unemployment 159–63; wages 108; war spending 162; welfare benefits 162, 170 Unite Union 55 university fees 44, 47, 50, 54 urban poor 70–72 urban slums 191; Calauan, Laguna Province 202–4; clearance policies 198–99; education levels 207; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City, Philippines 193–96; improvement policies 199, 205–6; internet access 207; labour force 208; living conditions 196–99; Moqattam, Cairo 6–10; population numbers 198 Vail, Theodore 74 Vanderboegh, Mike 181 Van Riper, Lieutenant General Paul 82 Venizelos, Evangelos 97–98 Vietnam War 129 virtual meetings 45 virtual societies 134 Vodafone 54–55 Vradis, Antonis 87–89 wages 108, 112 Walker, Scott 184 Walorski, Jackie 116–17 Walt, Stephen M. 26 war, threat of 178 Warwick University, Economics Conference 67–68 Washington Times 35 Wasim (Masry Shebin El-Kom delegate) 23 water supplies 194 wave creation 78 wealth, monopolization of 108 We Are Social 148 Weeks, Lin, @weeks89 184 Wellman, Barry 130 Wertheim, Margaret 136 White House, the 92 ‘Why the Tunisian revolution won’t spread’ (Walt) 26 WikiLeaks 140 Wikipedia 46, 140 wikis 140–41 #wiunion 184, 185 Wobblies 176 Women’s liberation 132 Woods, Alan 33 Woollard, Edward 43 working class 68, 71–72, 79–80, 145; culture 72; revolutions, 1848 172–73 World of Yesterday, The (Zweig) 128 World Trade Organization 122 Yemen 25, 119, 121 youth 68; alienation 62; British 41–42, 44, 53–54; culture 70; disconnected 190; disengagement from political mainstream 89–90; radicalization 33, 37, 47–48; unemployment 66, 119–20 YouTube 75; Egyptian revolution on 11, 14, 15; Iranian revolution on 34, 35 Zamalek Sporting Club, ultras 16–17 Zapatistas 1 Zekry, Musa 5–6, 7, 23–24 Zola, Emil 191 Zweig, Stefan 128, 132–33, 152, 176 Copyright This revised and updated second edition first published by Verso 2013 First published by Verso 2012 © Paul Mason 2012, 2013 All rights reserved The moral rights of the author have been asserted Verso UK: 6 Meard Street, London W1F 0EG US: 20 Jay Street, Suite 1010, Brooklyn, NY 11201 www.versobooks.com Verso is the imprint of New Left Books ISBN: 978-1-781-68245-6 (e-book) British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book is available from the Library of Congress Typeset in Fournier by MJ Gavan, Truro, Cornwall Printed by ScandBook AB, Sweden

…

I. 46 Len-len 193–96, 209 Liberal Democrats 43–44, 46 liberalizers 31 Libya 25, 31, 119; National Transitional Council 178 Life and Fate (Grossman) 129 Lilico, Andrew 121 link-shorteners 75 Linux 139–40 @littlemisswilde 41–42, 44, 45, 135–36, 138 living conditions, urban slums 196–99 London: anti-capitalist demonstrations 33; arrests 61–62; Day X, 24 November 2010 41–42, 46–48; the Dubstep Rebellion 48–52; Fortnum & Mason 60–61; HM Revenue and Customs building 51; Hyde Park 60; Millbank riot 42–44; Millbank Tower 43; Museum Tavern 1; National Gallery teach-in 53, 53–54; Oxford Circus 60; Palladium Theatre 51; Parliament Square 49, 51, 52–53; Piccadilly Circus 58; police–student confrontation 50–51; Regent Street 58; Ritz Hotel 60; Tate Modern 53; trade-union demonstration, March 2011 57–61; Trafalgar Square 47; Victoria Street 50; Victorinox 59 London School of Oriental and African Studies, occupation of 44–46 López, Fernando 166–67, 170 Lopez, Gina 200–2 Lopez Inc. 200–2 Loubere, Leo 174 Loukanikos (riot dog) 94, 96 L’Ouverture, Toussaint 149 LulzSec 151 McIntyre, Jody 51 McPherson, James 182 Madison, Wisconsin revolt 184–87 Madrid 33 Mahalla uprising, 2008 10, 71 Maher, Ahmed 83 Mahfouz, Asmaa, @AsmaaMahfouz 11, 177 Mahmoud (Zamalek Sporting Club ultra) 16–17 Makati, Manila 204–6 malnutrition 9 Mandelson, Peter 17, 26, 114 Manila 33; Estero de Paco 200–2; Estero de San Miguel 196–99; Makati 204–6; waterways 200–2 manipulated consciousness 29–30 Manufacturing Consent (Chomsky and Herman) 28–29 Mao Tse Tung 46 Marxism 141–45 Marx, Karl 46, 141–45, 174, 187, 188–89, 190, 192 Masai with a mobile, the 133–34 Masoud, Tarek 27 Masry Shebin El-Kom textile factory 22–23 mass culture 29–30 Matrix, The (film) 29 Meadows, Alfie 51 media, the 28–29 @mehri912 34 Meltdown (Mason) 31–32 memes 75, 150–52, 152 Merkel, Angela 96, 98, 99, 112 Michas, Takis 103 Middle East: balance of power 178; Facebook usage 135; failure of specialist to understand 25–27 Milburn, Alan 114 Miliband, Ed 58, 60, 188 Millbank riot 42–44 Millennium Challenge 2002 82–83 Miller, Henry 128 misery 209 mobile telephony 75–76, 133–34 modernism 28 mortgage-backed securities 106–8 Moses, Jonathan 48 Mousavi, Mir-Hossein 33–34 movement without a name 66 Mubarak, Alaa 17–18 Mubarak, Gamal 8, 10, 17–18, 26 Mubarak, Hosni 9, 10, 14, 15, 18–19, 19–20, 26, 31 Murdoch, Rupert 31, 106, 148–49 Muslim Brotherhood 21, 177 NAFTA 166–67 Napoleon III 172, 191 Nasser, Gamal Abdel 19 National Gallery teach-in 53, 53–54 nationalism 124 Native Americans 162, 163 Negri, Toni 42 Netanyahu, Binyamin 180 network animals 147 networked individualism 130, 130–33, 141 networked protests 81–82, 85 networked revolution, the 79–85; erosion of power relations 80–81; informal hierarchies 83; networked protests 81–82; network relationships 81; swarm tactics 82–83 network effect, the 2, 74–75, 77; erosion of power relations 80–81; strength 83; usefulness 84 network relationships 81 Nevins, Allan 182 New Journalism 3 News Corporation 148—49 News of the World 49; phone hacking scandal 61, 148–49 New Unrest, social roots of 65–66, 85; demographics of revolt 66–73; information tools 75–76; the networked revolution 79–85; organizational format 77–78; technology and 74–79; the urban poor 70–72 New York Times 170 1984 (Orwell) 30, 129 Nomadic Hive Manifesto, The 53–54 @norashalaby 13 North Africa: demographics of revolt 66; students and the urban poor 71 Obama, Barack 72, 116–18, 120, 122, 162, 167, 170, 180, 183, 187 OccupiedLondon blog 88–89 Occupy Wall Street movement, the 139, 144, 187, 210 Office for National Statistics 115 Ogden-Nussbaum, Anna, @eponymousthing 184 Oklahoma 153, 153–56 Oldouz84 36, 37 Olives, Monchet 202–4 online popularity 75 On the Jewish Question (Marx) 143 Open Source software 139–40 Operation Cast Lead 33 organizational format, changing forms of 77–78 Organisation of Labour, The (Blanc) 187 organized labour 71–72, 143 Ortiz, Roseangel 161 Orwell, George 30, 129, 208, 210 Owen, Robert 142 Palafox, Felino 204–5 Palamiotou, Anna 97 Palestine 25, 121, 179, 180 Palin, Sarah 181, 182 PAME (Greek trade union) 90 Papaconstantinou, George 91, 97 Papandreou, George 88, 96 Papayiannidis, Antonis 103 Paris 39; 1968 riots 46; revolution of 1848 171, 172 Paris Commune, the 1, 72–73, 84, 132 PASOK 89, 91, 98, 99 Paulson, Hank 110 Petrache, Ruben 203–4 Philippines: Calauan, Laguna Province 202–4; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City 193–96; Makati, Manila 204–6; New People’s Army 203 Philippines Housing Development Corporation 198 philosophy 29 phone hacking scandal 61, 148–49 Picasso, Pablo 127, 128, 132 Pimco 170 Poland 172 police car protester (USA) 4 Policy Exchange think tank 55 political mainstream, youth disengagement from 89–90 popular culture 65, 176 Porter, Brett 154, 155, 156 Port Huron Statement, the 129–30, 145 Portugal 92, 112, 188 postmodernism 28 poverty 121–22, 210, 211 Powell, Walter 77 power, refusal to engage with 3 power relations, erosion of 80–81 Procter & Gamble 23 propaganda of the deed 62 property 48 property bubble collapse 106–8 protectionism 124 protest, changing forms of 54–57 pro-Western dictators, support for 31 Prussia 191 Puente 165 Putnam, Robert 134 Quantitative Easing II 120–23 radicalization 33, 37, 47–48 radical journalists 149 Ramírez, Leticia 165 Real Estate Tax Authority Workers (Egypt) 19 Really Free School, the 1–2 @rebeldog_ath 96 reciprocity 77 Reed Elsevier 146 Reider, Dimi 179 Research and Destroy group 38–39 revolt, demographics of 66, 66–73 revolutionary wave 65 revolution, definition 79–80 revolutions: 1848 171–73, 173–75, 191, 192; 1917 173; 1968 173; 1989 173 Reynalds, Jeremy 159–60, 162–63 rice crops 195 Riches, Jessica, @littlemisswilde 41–42, 44, 45, 135–36, 138 Rimbaud, Arthur 132 River Warriors 201 Roads to Freedom (Sartre) 129 Road to Wigan Pier, The (Orwell) 208 Romer, Christina 117 Roosevelt, Franklin D. 169–70 Rove, Karl 30–31, 32 Rowan, Rory 54 Said, Edward 26–27 Said, Khaled 11, 148 @Sandmonkey 13 Sandra (Joy Junction resident) 160 Santa Cruz, University of California 37–39 Sarkozy, Nicolas 91–92, 98 @sarrahsworld 11–12, 14, 135 Sartre, Jean-Paul 129 Saudi Arabia 121 savings, and investment 107 Savio, Mario 4 SB1070 (USA) 164, 165–66, 166–67 self-esteem, and consumption 80–81 self-interest 111 self-reliance 68 self, the, social networks impact on 136–38 Sennett, Richard 68, 80–81, 131 Sentimental Education (Flaubert) 171 el-Shaar, Mahmoud 22 Shafiq, Mohammed 20–22 Shalit, Gilad 179 shared community 84 Sharp, Gene 83 Sharpton, Al 184 Shirky, Clay 138, 139, 140, 146 Sinclair, Cameron 199, 208 Sioras, Dr Ilias 90–91 Situationist movement 46–47 Situationist Taliban 1 slum-dwellers 68; numbers 198 social capital 134 social democracy 145 social housing 199 Socialist International 19–20 social justice 177, 191, 192, 209, 210 social media 7, 74–75, 77; collective mental arena 137; lack of control 37; power of 34–35; role of 56; and the spread of ideas 151 social micro-history 173 social networks 77, 82; impact of 147; impact on activism 138–41; and the self 136–38 social-republicanism 187 solidaristic slum, the 207 Solidarity 42 ‘Solidarity Forever’ (song) 42 Soviet Union 28 Spain 66, 104, 105, 188 Spanish Civil War 209–10 species-being 143 @spitzenprodukte (art activist) 1 spontaneous horizontalists 44–46 spontaneous replication 55 Starbucks Kids 79 Steinbeck, John 153, 155, 159, 163, 164, 169 Stephenson, Paul 52 Stiglitz, Joseph 118 Strategy Guide (Sharp) 83 Strauss-Kahn, Dominique 188 strongman threat, the 177–78 student occupations 37–39, 44–46, 53, 53–54 students: economic attack on 38; expectations 67–68; population 70 Sudan 25 Suez Canal Port Authority 19 Supreme Council of the Armed Forces (SCAF) (Egypt) 18, 20 surveillance 148 swarm tactics 82–83 swine flu epidemic 9 Switzerland 123 syndicalism 175–76 synthesis, lack of 57 Syria 25 tactics 54–57 Tahrir Square, Cairo 6, 69, 89, 139; chants 191, 211; Day of Rage, 28 May 15–17; demonstration, 25 January 10–14; numbers 13; Twitter feeds 13; volunteer medics 20–22 Taine, Hippolyte 73 Tantawi, General 19 Tarnac Nine, the 189 Tea Party, the 117–18, 124–25, 180–81 tear gas 93–94, 100–1 technology 65, 66, 74–79, 85, 133–36, 138–39; and the 1848 revolutions 173–74 Tehran, Twitter Revolution 34–37 teleology 131, 152 Tent City jail, Arizona 164–67 Territorial Support Group 50 Thatcher, Margaret 106 @3arabawy 10, 22, 71 Third Way, the 31 Time magazine 36 Tim (human rights activist) 1–2 Tim (Joy Junction resident) 160 Tocqueville, Alexis de 192 totalitarianism 147–48 toxic debt 110–11 trade wars 122, 124–25 transnational culture 69 Transparency International 119 Trichet, Jean-Claude 112 Truman Show, The (film) 29 trust 57 Tunisia: Army 178; economic growth 119; inflation 121; organized workforce 72; revolution 10, 11, 25–26; unemployment 119 Turkle, Sherry 136 Twitpic 75 Twitter and tweets 3, 74, 137–38; #wiunion 184, 185; @Ghonim 13; @mehri912 34; @norashalaby 13; @rebeldog_ath 96; @Sandmonkey 13; Egyptian revolution 13, 14; importance of 135–36; Iranian revolution and 33–37; Madison, Wisconsin revolt 184; news dissemination 75; real-time organization 75; reciprocity 77; user numbers 135; virtual meetings 45 Twitter Revolution, Iran 33–37, 78, 178 Ukraine 177–78 UK Uncut 54–57, 58, 61 ultra-social relations 138 unemployment: America 159–63; Egypt 119; Spain 105; Tunisia 119; youth 66, 105, 119–20 UN-Habitat 199 Unison 57 United Nations, The Challenge of Slums 198–99 United States of America: agriculture 154–56; Albuquerque 159, 159–63; Arizona 164–67, 183; armed struggle 181–83; Bakersfield, California 168–70; budget cuts 156, 161, 167, 170; California 168–70; campus revolts, 1964 4; Canadian River 159; cattle prices 156; collapse of bipartisan politics 116–19; culture wars 179, 180–84; current-account deficit 107; debt 118; deportations 166; devaluation 123; Dodd–Frank Act 167; the Dust Bowl 154–55; economic decline 183–84; economic growth 170; Federal budget 156, 161; fiscal management 183; fiscal stimulus 117–18; fruit pickers 169; hamburger trade 156; healthcare bill 180, 183; homeless children 160; homelessness 159–63; Indiana 116–17, 125; Interstate 40 157, 170; job market 161; Joy Junction, Albuquerque 159–63; Madison, Wisconsin revolt 184–87; minimum wage workers 158; the Mogollon Rim 163; motels 157–58, 162–63; the New Deal 169–70; Oklahoma 153, 153–56; Phoenix, Arizona 164–67; police car protester 4; political breakdown, 1850s 182–83; property bubble 106–8; Quantitative Easing II 120–23; radical blogosphere 184; the religious right 118; repossessions 168; Route 66 157–59; San Joaquin valley 169; SB1070 164, 165–66, 166–67; State Department 178; states’ rights 183; student occupation movement 37–39; the Tea Party 117–18, 124–25, 180–81, 186; Tent City jail, Arizona 164–67; Tucson, Arizona 182; undocumented migrants 164–67; unemployment 159–63; wages 108; war spending 162; welfare benefits 162, 170 Unite Union 55 university fees 44, 47, 50, 54 urban poor 70–72 urban slums 191; Calauan, Laguna Province 202–4; clearance policies 198–99; education levels 207; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City, Philippines 193–96; improvement policies 199, 205–6; internet access 207; labour force 208; living conditions 196–99; Moqattam, Cairo 6–10; population numbers 198 Vail, Theodore 74 Vanderboegh, Mike 181 Van Riper, Lieutenant General Paul 82 Venizelos, Evangelos 97–98 Vietnam War 129 virtual meetings 45 virtual societies 134 Vodafone 54–55 Vradis, Antonis 87–89 wages 108, 112 Walker, Scott 184 Walorski, Jackie 116–17 Walt, Stephen M. 26 war, threat of 178 Warwick University, Economics Conference 67–68 Washington Times 35 Wasim (Masry Shebin El-Kom delegate) 23 water supplies 194 wave creation 78 wealth, monopolization of 108 We Are Social 148 Weeks, Lin, @weeks89 184 Wellman, Barry 130 Wertheim, Margaret 136 White House, the 92 ‘Why the Tunisian revolution won’t spread’ (Walt) 26 WikiLeaks 140 Wikipedia 46, 140 wikis 140–41 #wiunion 184, 185 Wobblies 176 Women’s liberation 132 Woods, Alan 33 Woollard, Edward 43 working class 68, 71–72, 79–80, 145; culture 72; revolutions, 1848 172–73 World of Yesterday, The (Zweig) 128 World Trade Organization 122 Yemen 25, 119, 121 youth 68; alienation 62; British 41–42, 44, 53–54; culture 70; disconnected 190; disengagement from political mainstream 89–90; radicalization 33, 37, 47–48; unemployment 66, 119–20 YouTube 75; Egyptian revolution on 11, 14, 15; Iranian revolution on 34, 35 Zamalek Sporting Club, ultras 16–17 Zapatistas 1 Zekry, Musa 5–6, 7, 23–24 Zola, Emil 191 Zweig, Stefan 128, 132–33, 152, 176 Copyright This revised and updated second edition first published by Verso 2013 First published by Verso 2012 © Paul Mason 2012, 2013 All rights reserved The moral rights of the author have been asserted Verso UK: 6 Meard Street, London W1F 0EG US: 20 Jay Street, Suite 1010, Brooklyn, NY 11201 www.versobooks.com Verso is the imprint of New Left Books ISBN: 978-1-781-68245-6 (e-book) British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book is available from the Library of Congress Typeset in Fournier by MJ Gavan, Truro, Cornwall Printed by ScandBook AB, Sweden

The Seventh Sense: Power, Fortune, and Survival in the Age of Networks
by Joshua Cooper Ramo
Published 16 May 2016

Bernanke’s reaction to the 2008 financial crisis—and the path of most of his fellow central bankers around the world—was what you would have expected, then: to avoid that fatal financial distress by flooding the system with money. “I was not going to be the Federal Reserve chairman who presided over the second Great Depression,” he reflected in 2009. The U.S. monetary base grew fivefold, from $800 billion to $4 trillion, as a program known as “quantitative easing” pressed money into circulation. But something unusual and unnerving became apparent after a few years. Despite massively increasing money supply, prices remained largely the same. Consumption remained stagnant. Usually the injection of tremendous amounts of money into the system creates demand, it builds pressure for inflation: Suddenly everyone has money and wants to spend it.

…

The rich were getting richer; the poor in other countries (or the machines) were taking the jobs. Though financial and monetary stimulus were pouring into the system, there was no trickle down. “The extent and continuing increase in income inequality in the United States greatly concern me,” Bernanke’s successor Janet Yellen remarked in 2015, after seven years of quantitative easing policy. “The past several decades have seen the most sustained rise in income inequality since the nineteenth century.” Even with more money floating around, there was, paradoxically (at least using traditional thinking), less demand. But that wasn’t the whole story. Networks were also working insidiously on the supply side of the equation.

…

Networks were also working insidiously on the supply side of the equation. Remember that markets always set prices by balancing supply and demand. On a hot day when more people want lemonade, the kids on the beach selling it can charge more than on a rainy day. In the years after 2008, much of the cheap credit of “quantitative easing” was used to fund projects that massively increased supply. More oil rigs were built. A whole fracking industry was financed on cheap credit. More ship keels were laid down. Mines were excavated in Australia and Brazil. Factories were built in China and Vietnam and Malaysia. This created a historic excess of supply of everything from jet planes to iron ore to shoes.

Big Capital: Who Is London For?
by Anna Minton
Published 31 May 2017

Academics call these super-rich groups ‘transnational elites’, whose wealth is invested internationally, who travel intensively and who have globally based social networks. Today they are clustered in the super prime parts of London, the world capital of billionaires, with seventy-seven, sixteen more than its nearest rival, New York.14 These groups have seen their wealth increase significantly since the financial crisis, boosted by the policy of Quantitative Easing, introduced by the Bank of England in the UK, the Federal Reserve in the US and the European Central Bank, which pushed up asset prices, including stocks and shares, gilts and property prices. The Bank of England itself recognized that in the UK this policy increased the financial wealth held outside pension funds of the top 5 per cent of households, who now hold 40 per cent of assets.15 This influx of capital has fuelled the property market since 2008.

…

So from Kensington to Acton, from Acton to Forest Gate and from Forest Gate to the South Coast, individuals, couples and families – both the middle classes and the so-called ‘claimant cultures’ and working poor – are pushed out of London altogether. This is the ‘super prime crisis’, and it affects everyone. Very large injections of global capital into London’s safe haven, including corrupt money, have combined with quantitative easing, limited regulation, flexible employment and some of the lowest corporate tax rates in the world, to transform London in under a decade. INSIDE AND OUTSIDE THE TENT The properties in the alpha parts of the city are in old and established areas of London, but the tens of thousands of luxury apartments in newly created districts are an equally important component of the housing crisis.

The End of Indexing: Six Structural Mega-Trends That Threaten Passive Investing
by Niels Jensen
Published 25 Mar 2018

Slowing economic growth is not at all the post-crisis phenomenon it is often portrayed as. GDP growth has slowed every decade since the 1970s, and that is the topic of chapter 1. In chapter 2 I look at the big conundrum. Why on earth have equities done so well in recent years despite everything trending down? QE (quantitative easing) is often credited as the main reason why investors have had such an appetite for equities in recent years but, as you will see in chapter 2, other dynamics have driven equity prices higher as well. Chapter 3 goes into more detail on the first of the six structural mega-trends I will review in this book – the end of the debt super-cycle.

…

As a country’s average age increases beyond a certain point, equity valuations drop, and there are indeed significant demographic headwinds in the US until the mid-2020s (and much longer elsewhere) – but more about that in chapter 4. One final point on the link between demographics and equity valuations. As you will see in chapter 4, equity valuations should (theoretically) be under much more pressure now than they are; the reason they are not is probably QE (quantitative easing). QE has distorted normal market mechanisms and has kept risk assets at valuation levels that can’t be justified from a fundamental point of view, but more about that in chapter 2. * * * 4 By “everything” I am referring to a wide range of economic indicators. At the same time, I note that it is not only in the world of economics things are slowing down.

Investment: A History
by Norton Reamer and Jesse Downing
Published 19 Feb 2016

Previously a Princeton economics professor and expert on the Great Depression, Bernanke had not only studied but also written extensively on policy issues related to the Great Depression and certain subsequent significant economic cycle disturbances such as the Japanese real estate collapse in the early 1990s that resulted in the so-called lost decade that followed in the Japanese economy.39 Bernanke, like Benjamin Strong, also turned out to be a willing and even courageous innovator in methods to advance monetary liquidity even after interest rates had been pushed to their “zerobound.” His approach of flooding the financial system with liquidity by undertaking several rounds of quantitative easing and by deciding to include mortgage-backed securities instead of just US Treasuries in open market operations received no shortage of bad press from a variety of politicians and commentators. And yet, slowly but surely, the credit markets were set back in motion, consumers experienced wealth effects from reflating asset prices, and firms that had access found themselves with inexpensive capital for investment projects and eventually had the confidence to use it when the smoke began to clear. 218 Investment: A History the fiscal response In terms of fiscal policy, the financial crisis triggered several important and substantial steps by way of fiscal stimulus from the Treasury.

…

Morgan (largest US savings and loan) September 29, 2008: Congress rejects bailout October 3, 2008: Wachovia Bank sold to Wells Fargo Congress passes TARP (451 pages) November 4, 2008: Obama elected US president November 23, 2008: The Fed, Treasury, and FDIC bail out Citigroup December 11, 2008: Bernie Madoff arrested December 19, 2008: TARP loans to GM and Chrysler January 2009: The Fed, Treasury, and FDIC bail out Bank of America February 17, 2009: $787 billion Economic Stimulus Act signed March 2009: QE1 (first Fed quantitative easing) April 30, 2009: Chrysler files for bankruptcy June 2009: Great Recession ends July 21, 2010: Dodd-Frank Reform Act signed November 2010: QE2 November 18, 2010: GM emerges from bankruptcy with IPO September 2012: QE3 c h a p t er se v en The Emergence of Investment Theory IT IS STAMPED ACROSS THE NEWSPAPER.

…

Economic Rationalism and Rural Society in ThirdCentury A.D. Egypt: The Heroninos Archive and the Appianus Estate. Cambridge: Cambridge University Press, 1991. Reinhart, Carmen M., and Kenneth S. Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2011. Ricketts, Lowell R. “Quantitative Easing Explained.” Liber8 Economic Information Newsletter (Federal Reserve Bank of St. Louis), April 2011. http://research.stlouisfed.org/pageone-economics/uploads/newsletter /2011/201104_ClassroomEdition.pdf. Rinehart, Jim. “U.S. Timberland Post-Recession: Is It the Same Asset?” R&A Investment Forestry.

Money: 5,000 Years of Debt and Power
by Michel Aglietta
Published 23 Oct 2018

It was possible to reduce excessive indebtedness by restructuring payment deadlines, thereby diminishing the amounts outstanding or the interest paid; to organise the sale, under public control, of parts of the debtors’ assets; and to direct public funds into donations or zero- or low-interest loans in order to inject liquidity into the economy.21 These mechanisms did not, therefore, imply monetary reforms, but nor did they rule out this possibility (indeed, such reforms took place in 91 and 81 BC). In most crises, the public authorities chose to put more money into circulation. In doing so, they implemented a policy of what is called ‘expanding the balance sheet’ (quantitative easing, or QE). In light of this, the cries of bloody murder coming from the neutrality-of-money purists in our own time, in opposition to the sheer ‘nerve’ of the central banks, appears rather comical. Indeed, the worst crisis was that of the ‘Catilinarian conspiracy’, between 64 and 62 BC, in which Cicero refused to take any measures to manage over-indebtedness.

…

Moreover, the capital inflows that the central bank had to absorb were amplified by the rapid decline in the rate of Fed funds, which fell from 5.25 percent in August 2007 to 2 percent in mid-2008, and around 0 percent from September of that same year. In the United States itself, the Federal Reserve threw itself into a quantitative easing policy, flooding the planet with dollar liquidity. China’s accumulation of reserves thus continued at an annual average rhythm of 40 percent, up until the recovery induced by the stimulus plan after May 2009. The pace of reserve accumulation significantly slowed and never recovered its previous rhythm, because the current account surplus had been considerably reduced.

…

See also market efficiency efficient international monetary system (IMS), 291–6 Eichengreen, Barry, 253, 343, 358n8 Einzig, Paul, 196 electronic money, 152, 155–9, 171 electronic transfers, 152, 156, 157, 158 EMS exchange crisis (1992–3), 237, 238 endogenous money, 261–5, 393 energy transition, 177–83 EPU (European Payments Union), 319 equilibrium in balance of payments, 316, 350, 351 as coordinating principle, 21 general equilibrium theory, 42n24 intertemporal equilibrium, 22, 24 prices as always in, 27 equilibrium configurations, 21 equilibrium model of pure economics, 82 equilibrium prices, theory of, 25 equivalence logic of, 61, 68, 71, 72 principle of, 35, 38, 83 Erhard, Ludwig, 120–31 Essai sur le don (Mauss), 66 ETFs (Exchange Traded Funds), 242, 273 ethical confidence, 58, 59, 61, 66, 69–70, 72–3, 75, 78b, 93, 113, 144–5, 151, 161, 185, 187, 188t, 190 euro, 150, 339, 348, 361–71 Eurobonds, 370 Eurogroup, 364 European Central Bank (ECB), 348, 362, 363, 365, 367 European Commission, 364 European Council, 367 European Parliament, 364 European Payments Union (EPU), 319 European Recovery Program, 318 European Union (EU), 368, 369 eurozone, 10, 95, 102, 144, 239, 282, 337, 338, 362, 363, 364, 365, 367, 368, 370, 390, 396 exchange markets, 107, 227, 291, 313, 317, 327, 338, 350, 351, 392 exchange processes, 13 exchange rates Chinese exchange policy, 372–4, 378 fixed exchange rates, 351, 352, 353 flexible exchange rates, 383, 387 floating exchange rates, 327, 339, 342, 390 functions of, 95, 242 indeterminacy of, 292–293b, 349–51, 370 overhaul of, 326 real effective exchange rate, 336, 337f, 373, 374 regulation of/control over, 105, 158, 234 scriptural exchange rate, 197, 198 setting of, 94 stabilisation of, 310 exchange reserves, 307, 320, 323, 324, 336, 338, 339, 340t, 351, 377f. See also foreign exchange reserves Exchange Stabilisation Fund, 315, 316 exchange system(s) development of, 87–8 fixed-exchange system, 317 gold exchange system, 307 regulation of, 296 Exchange Traded Funds (ETFs), 242, 273 expanding the balance sheet (a.k.a. quantitative easing, or QE), 101, 378 external money (currency) principle, 256 F falsifiability by experience, principle of, 15 Fama, Eugene, 25, 26 FCP (Fonds communs de placement), 273 FDI (foreign direct investment), 371 Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), 240, 241 Federal Reserve, 54, 220, 265–8, 266f, 305, 345, 378 Federal Reserve Act of 1913, 220, 305 federal sovereignty, 132–4, 364 fetishism, 68, 145 Fichte, Johann Gottlieb, 56, 129, 130 fiduciary money, 55, 88, 89, 93, 115, 147–8, 151, 152, 157, 253–6, 392, 398 fief model, 105 finality of payments, 34, 44–9, 53, 175, 350, 398 finance deregulation of, 239 essential question for understanding of, 22 globalisation of, 10, 144, 237, 268, 286, 296, 298, 329, 334, 345, 349, 351, 354, 370, 384, 386 as intrinsically linked to money, 21 object of, 21 as operating on basis of future, 13 self-transcendence of, 23 financial crises.

Why America Must Not Follow Europe
by Daniel Hannan
Published 1 Mar 2011

At the same time, Europe has become accustomed to a high level of structural unemployment. Indeed, if we exclude the United Kingdom, the EU failed to produce a single net private-sector job between 1980 and 1992. Only now, as the U.S. applies a European-style economic strategy based on fiscal stimulus, nationalization, bailouts, quantitative easing, and the regulation of private-sector remuneration, has the rate of unemployment in the U.S. leaped to European levels. For the past 40 years, Europeans have fallen further and further behind Americans in their standard of living. Some EU leaders privately recognize that the U.S. economy is more dynamic than their own, and they occasionally issue staccato statements to the effect that they really ought to do something about it.

Economics Rules: The Rights and Wrongs of the Dismal Science
by Dani Rodrik
Published 12 Oct 2015

When the Fed’s Ben Bernanke, an expert on the Depression, injected hundreds of billions of dollars of liquidity into the economy in 2008–9, Lucas applauded the action.9 President Obama’s initial fiscal stimulus package of 2009 also received widespread support (including from Lucas), even if viewed as a desperate, last-resort measure.‡ Beyond these measures, and once the financial panic subsided, the new classical models suggested restraint and caution and not much else. The Fed’s policies of quantitative easing—its monetary expansion—had to be withdrawn quickly; otherwise, it soon would lead to inflation. Economists trained on these models kept warning about the dangers of inflation and urged the Fed to tighten its policy, even though unemployment remained high, the economy performed below par, and—notably—inflation refused to appear.

…

Hirschman” (Lepenies), 211n Post-Crash Economics Society (PCES), 197 precommitment strategies, 63 Prescott, Edward C., 101n pressure groups, 187 price ceilings, 28 price controls, 28–29, 94–97, 150, 185 price elasticities, 14, 180–81 price fixing, 179 prices: in bubbles, 152–58 business cycles and, 125–26, 129, 132 consumers and, 119, 129 in efficient-markets hypothesis, 157 minimum wages relative to, 143 Princeton University, Woodrow Wilson School at, 30 principal-agent models, 155 Principle of Comparative Advantage, 52–55, 59–60, 139, 170 prison cell upgrades, 192, 194 prisoners’ dilemma, 14–15, 20, 21, 61–62, 187, 200 privatization, 98, 161, 162 production functions, 119, 122 productivity, 120–21, 122–25, 141 Progresa, 4, 105–6 property rights, 87, 88, 98, 205 Prospera, 4, 105 “Protection and Real Wages” (Stolper and Samuelson), 58n, 140n public spending: business cycles and, 128–29, 131–32 economic growth and, 76–78, 114 quantitative easing, 135 Rajan, Raghu, 154 randomized controlled trials (RCTs), 202–4, 205 randomized field experiments, 105–7, 173, 202–5 rational bubbles, 154 rational choice, 33n rational expectations, 132 rationality postulate, 202–3 rationing, 64–65, 69, 95 Reagan, Ronald W., 49 real business cycle (RBC) models, 101n reasoning, rule-based vs. case-based forms of, 72 Recession, Great, 115, 134–35, 152–59, 184 recessions: fiscal stimulus and, 74–75, 128, 130, 131–37, 149, 150, 171 inflation and (stagflation), 130–31 reform fatigue, 88 regulation, 143, 155, 158–59, 160–61, 165–66, 208–9 Reinhart, Carmen, 76–78 relativity, general, 113 rents, 119, 120, 149, 150 revenue sharing, 124 reverse causal inference, 115 Ricard, Samuel, 196 Ricardo, David, 52–53, 139, 196 risk, 110, 141, 165 Great Recession and, 153–54, 155, 158, 159 Robinson, James, 206 Rodrik, Dani, 35n Rogoff, Kenneth, 76–78 Rubinstein, Ariel, 20 rule of law, 205 Russia, 166 Rustichini, Aldo, 71n Ryan, Stephen, 107 sales tax, 180–81 Samuelson, Paul, 31, 51–52, 53, 58n, 125, 140n Sandel, Michael, 189, 191–92, 194 Sargent, Tom, 131–32, 134 UC graduation speech and, 147–48 savings: globalization and, 165, 166 in Great Recession, 153 investment and, 129–30, 165–67 scale economies, 108, 122 Schelling, Thomas, 33, 42, 62 Schultz, Theodore W., 75n Schumacher, E.

In FED We Trust: Ben Bernanke's War on the Great Panic
by David Wessel
Published 3 Aug 2009

“Credit spreads” — the difference between yields on safe government debt and riskier corporate debt — “are much wider and credit markets more dysfunctional in the United States than they were during the Japanese experiment with quantitative easing,” Bernanke said. Bernanke wanted to continue to bypass the banking system and lend directly in markets — mortgages, commercial paper, student loans — where usually high interest rates indicated the supply of credit was inadequate to meet the demand. To distinguish the Fed’s approach from the Bank of Japan’s, he wanted to call it something other than “quantitative easing.” He and the other Musketeers bandied about alternatives. Warsh offered “qualitative easing,” but that didn’t fly.

…

Treasury bonds to put reserves into the system and let the money flow to where it was needed. It was an approach similar to one developed during the previous decade in Japan. To resuscitate the economy and fight deflation, the Bank of Japan had first dropped interest rates to zero and then, with mixed results, increased the supply of reserves. This policy, called “quantitative easing” — because it emphasized the quantity rather than the price (interest rates) of money — suited the ideology of several Fed presidents. The Fed would control how much money was in the financial system but wouldn’t influence where it went and for what it was used — that would be up to the markets.

Austerity: The History of a Dangerous Idea
by Mark Blyth
Published 24 Apr 2013

Once these bonds lost value, European banks increasingly found themselves shut out of US wholesale funding markets at the same time that US money markets began dumping their short-term debt. What happened in the United States in 2008, a general “liquidity crunch,” gathered pace in Europe in 2010 and 2011. It was only averted by the LTROs of the ECB in late 2011 and early 2012. This unorthodox policy of quasi-quantitative easing offered only temporary respite. Paul De Grauwe called it “giving cheap money to trembling banks with all the problems this entails.”68 The results were that within two months of the first LTRO by the ECB, sovereign bond yields were rising again, and the banks those sovereigns were responsible for now had even more sovereign debt on their balance sheets—a fact not lost on investors now worrying about Spain and Italy.

…

For debt being politically easier than taxes, look no further than Northern European criticisms of the budget policies of Greece and Italy.20 For government debt crowding out other investments, see the plethora of criticisms of the Obama stimulus.21 For debt driving up prices and compromising the ability of the state to cushion further shocks, see the voluminous criticisms of quantitative easing and fears that a spike in US interest rates will cause exactly that.22 For the fear of foreigners owning the United States, simply google “China owns USA.” The search returns 25 million hits even though the statement is simply not true—foreigners hold less than one-third of outstanding US debt.23 Despite this broadside of familiar critiques, we must remember that Hume predicted the end of Great Britain due to excessive debt issuance just at the moment that Great Britain was about to dominate the world for a century.

…

The smart cash that was being made in those equity markets looked around for a hedge and found real estate, which began its own global bubble phase in 1997 and ran until the crisis hit in 2006. The final bubble occurred in commodities, which rose sharply in 2005 and 2006, long before anyone had heard the words “quantitative easing,” and which burst quickly since these were comparatively tiny markets, too small to sustain such volumes of liquidity all hunting either safety or yield. The popping of these interlinked bubbles combined with losses in the subprime sector of the mortgage derivatives market to trigger the current crisis.

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

Central banks around the globe continued to use extraordinary measures to address the global financial crisis for the following decade and more. Interest rates were held at close to zero for the next 10 years, 191 BOOM AND BUST historically without precedent. In addition, central banks engaged in what was euphemistically called quantitative easing, whereby they created money to buy government bonds and other securities. The combination of quantitative easing and low interest rates distorted financial markets and may have resulted in overvalued equity and housing markets as investors reached for yield. The most significant effects of the housing bubble and subsequent financial crisis, however, may yet result from the political fallout.

…

See speculation mortgage-backed securities (MBS) in relation to the Subprime Bubble, 176, 177–9, 185–6 in relation to the US housing boom of the 1920s, 117–18 Mosaic internet browser, 153 NASDAQ index, 156–7, 159–60 National Asset Management Agency, 180 National City Bank, 120, 126, 127 National Land Agency (Japan), 145 Netherlands in relation to the bubbles of 1720, 29–31, 36 Netscape, 153–5, 163, 164 new era narratives, 8, 218 in relation to the 1920s stock market bubble, 129–30 in relation to the Dot-Com Bubble, 163–4 New York Daily News, 123, 125 New York Investment News, 124 New York Times, The in relation to the 1920s stock market bubble, 122, 124–6, 129, in relation to the Chinese bubbles, 198 in relation to the Dot-Com Bubble, 154, 164 news media after the first emerging market bubble, 57 after the South Sea Bubble, 35–6 in relation to the 1920s stock market bubble, 122–3, 125–6 in relation to the Australian Land Boom, 81, 87–8 in relation to the British Bicycle Mania, 100–1, 103–5, 109 in relation to the Chinese bubbles, 198, 200, 203 in relation to the first emerging market bubble, 49–50 in relation to the Great Railway Mania, 63–5 in relation to the Mississippi Bubble, 20 in relation to the South Sea Bubble, 26–7 in relation to the Subprime Bubble, 185 role in past and future bubbles, 218–20 Northern Ireland housing bubble of the 2000s, 2, 175, 177, 182 Northern Rock, 178 Noyes, Alexander Dana, 122 Panic of 1907, the, 124 Peel, Robert, 65 penny-farthing, 99 People’s Daily, 200, 203 Plaza Accord, the, 136–7, 141 Ponzi, Charles, 119 Poyais. See Macgregor, Gregor promotion boom in Australian Land Boom companies, 82–3 in relation to the 1720 bubbles, 28–30 in relation to the first emerging market bubble, 41–5 in relation to the Great Railway Mania, 63 of 1807–8, 40 of railways in 1836–7, 59 286 INDEX quantitative easing, 192 Railway Act 1844, 59–61, 71–2 railway authorisation process in relation to the Great Railway Mania, 62–3 Railway Board, 62–3, 71–2 railway booms in the United States, 72–3 Railway Dissolution Act 1846, 67 Railway Times, 63, 64, 65, 68, 72 Raleigh Company, The, 106 reaching for yield definition of, 6 during the Great Railway Mania, 68 in relation to the Subprime Bubble, 162 recession after the 1920s stock market bubble.

The Bond King: How One Man Made a Market, Built an Empire, and Lost It All
by Mary Childs
Published 15 Mar 2022

Another would buy up to $100 billion in Fannie and Freddie debt, and up to $500 billion in securities that Fannie and Freddie backed. The plan, inspired by the Japanese central bank’s innovation in 2001 of buying government debt to give the system a cash infusion and to loosen lending relationships, became known as “quantitative easing.” (Actually, QE1, because there would be more; it would take years to soothe the system.) The $500 billion in Fannie- and Freddie-backed debt that the Fed intended to buy—it had never made such purchases on that scale. To do so, it could build its own team of traders, or outsource the job; it chose the latter.

…

Maybe because many of these ordinary “savers” got burned in the recession by all those guys who had said they knew what they were doing with their money. Fed policy was rewarding risk takers, people who bought junk bonds and speculative real estate—people like Pimco and Gross, or worse. So, when the “quantitative easing” government-buying-bonds program ended, who would step up to buy 70 percent of Treasuries? Gross suspected the Fed would leave a Fed-shaped void. Those artificially suppressed yields would jump back up—which would mean losses for bond investors. At the same time, the thinking went, the government’s spending had ballooned from financing bailouts and the stimulus act and everything after.

…

This brought rushing back all the memories of panicked weekends, emergency meetings, cardboard boxes carried out into Times Square, the freefall, Dick Fuld punched on a treadmill. Europe still felt like it was on the brink, even now. The only message traders heard was that the good times were over; the Fed might “taper” its support, slowly reduce and eventually end its quantitative easing programs, and maybe, one day—God forbid—raise rates. They panicked. The violent bond market sell-off that followed immediately became known as the “Taper Tantrum.” The yield on the ten-year Treasury jumped from 1.61 percent on May 1 to 2.75 percent on July 8. An unbelievable surge. That was it, then: rates were headed up.

Seventeen Contradictions and the End of Capitalism
by David Harvey
Published 3 Apr 2014

Whereas gold and silver are relatively scarce and of constant supply, the representation of money as numbers allows the quantity of money available to expand without any technical limit. We thus see the Federal Reserve in our time adding trillions of dollars to the economy at the drop of a hat through tactics like quantitative easing. There seems no limit to such possibilities except that imposed by state policies and regulation. When the metallic basis of global moneys was totally abandoned in the 1970s, we indeed found ourselves in a potentially limitless world of money creation and accumulation. Furthermore, the rise of moneys of account and even more importantly of credit moneys (beginning with the simple use of IOUs) places a great deal of money creation in the hands of individuals and the banks rather than in the hands of state institutions.

…

State-issued fiat moneys can be created without limit. The expansion of the contemporary money supply is now accomplished by some mix of private activity and state action (via the state–finance nexus as constituted by treasury departments and central banks). When the US Federal Reserve engages in quantitative easing it simply creates as much liquidity and money as it wants at the drop of a hat. Adding a few zeros to the quantity of money in circulation is no problem. The danger, of course, is that the result will be a crisis of inflation. This is not occurring because the Federal Reserve is largely refilling a hole left in the banking system when trust between the private banks broke down and interbank lending, which was leveraged into massive money creation within the banking system, broke down in 2008.

…

283 Maddison, Angus 227 Maghreb 174 Malcolm X 291 Maldives 260 Malthus, Thomas 229–30, 232–3, 244, 246, 251 Manchester 149, 159 Manhattan Institute 143 Mansion House, London 201 manufacturing 104, 239 Mao Zedong 291 maquilas 129, 174 Marcuse, Herbert 204, 289 market cornering 53 market economy 198, 205, 276 marketisation 243 Marshall Plan 153 Martin, Randy 194 Marx, Karl 106, 118, 122, 142, 207, 211 and alienation 125, 126, 213 in the British Museum library 4 on capital 220 conception of wealth 214 on the credit system 239 and deskilling 119 on equal rights 64 and falling profits 107 and fetishism 4 on freedom 207, 208, 213 and greed 33 ‘industrial reserve army’ 79–80 and isolation of workers 125 labour theory of value 109 and monetary system reforms 36 monopoly power and competition 135 reality and appearance 4, 5 as a revolutionary humanist 221 and social reproduction 182 and socialist utopian literature 184 and technological innovation 103 and theorists of the political left 54 and the ‘totally developed individual’ 126–7 and world crises xiii; Capital 57, 79–80, 81, 82, 119, 129, 132, 269, 286, 291–2 The Economic and Philosophic Manuscripts of 1844 269, 286 Grundrisse 97, 212–13 Theories of Surplus Value 1 Marxism contradiction between productive forces and social relations 269 ‘death of Marxism’ xii; ecologically sensitive 263 and humanism 284, 286, 287 ‘profit squeeze’ theory of crisis formation 65 traditional Marxist conception of socialism/ communism 91 Marxists 65, 109 MasterCard Priceless 275 Mau Mau movement 291 Melbourne 141 merchants 67 and industrial capital 179 price-gouging customers 54 and producers 74–5 Mercosur 159 Mexican migrants 115, 175, 195–6 Mexico 123, 129, 174 Mexico City riots (1968) x microcredit 194, 198 microfinance 186, 194, 198, 211 Microsoft 131 Middle East 124, 230 Milanovic, Branko 170 military, the capacities and powers 4 dominance 110 and technology 93, 95 ‘military-industrial complex’ 157 mind-brain duality 70 mining 94, 113, 123, 148, 239, 257 MIT (Massachusetts Institute of Technology) 292 Mitchell, David: Cloud Atlas 264 Mitchell, Timothy 122 Modern Times (film) 103 Mondragon 180 monetarism xi monetary wealth and incomes, inequalities in (1920s) x 1071 monetisation 44, 55, 60, 61, 62, 115, 192–3, 198, 235, 243, 250, 253, 261, 262 money abandonment of metallic basis of global moneys 30, 37, 109 circulation of 15, 25, 30–31, 35 coinage 15, 27, 29, 30 commodification of 57 commodity moneys 27–31 creation of 30, 51, 173, 233, 238–9, 240 credit moneys 28, 30, 31, 152 cyber moneys 36, 109–10 electronic moneys 27, 29, 35, 36, 100 and exchange value 28, 35, 38 fiat 8, 27, 30, 40, 109, 233 gap between money and the value it represents 27 global monetary system 46–7 love of money as a possession 34 measures value 25, 28 a moneyless economy 36 oxidisation of 35 paper 15, 27, 29, 30, 31, 37, 40, 45 power of 25, 36, 59, 60, 62, 65–66, 131–6, 245, 266 quasi-money 35 relation between money and value 27, 35 represented as numbers 29–30 and social labour 25, 27, 31, 42, 55, 88, 243 and the state 45–6, 51, 173 storage of value 25, 26, 35 the US dollar 46–7 use value 28 money capital 28, 32, 59, 74, 142, 147, 158, 177, 178 money laundering 54, 109 ‘money of account’ 27–8, 30 monopolisation 53, 145 monopoly, monopolies 77 and competition 131–45, 218, 295 corporate 123 monetary system 45, 46, 48, 51 monopoly power 45, 46, 51, 93, 117, 120, 132, 133–4, 136, 137, 139, 141, 142–3 monopoly pricing 72, 132 natural 118, 132 of state over legitimate use of force and violence 42, 44, 45, 51, 88, 155, 173 see also prices, monopoly monopsony 131 Monsanto 123 Montreal Protocol 254, 259 ‘moral restraints’ 229, 233 mortgages 19, 21, 28, 32, 54, 67, 82, 239 multiculturalism 166 Mumbai 155, 159 Murdoch, Rupert xi Myrdal, Gunnar 150 N NAFTA 159 name branding 31, 139 nano-trading 243 Nation of Islam 291 national debt 45, 226, 227 National Health Service 115 National Labor Relations Board 120 National Security Administration 136 nationalisation 50 nationalism 7, 8, 44, 289 natural resources 58, 59, 123, 240, 241, 244, 246, 251 nature 56 alienation from 263 capital’s conception of 252 capital’s relation to 246–63 commodification of 59 domination of 247, 272 Heidegger on 59, 250 Polanyi on 58 power over 198 process-thing duality 73 and technology 92, 97, 99, 102 Nazis 151 neoclassical economists 109 neocolonialism 143, 201 neoliberal era 128 neoliberal ethic 277 neoliberalisation x, 48 neoliberalism xiii, 68, 72, 128, 134, 136, 176, 191, 234, 281 capitalism 266 consensus 23 counter-revolution 82, 129, 159, 165 political programme 199 politics 57 privatisation 235 remedies xi Nevada, housing in 77 ‘new economy’ (1990s) 144 New York City 141, 150 creativity 245 domestic labour in 196 income inequality 164 rental markets 22 social reproduction 195 Newton, Isaac 70 NGOs (non-governmental organisations) 189, 210, 284, 286, 287 Nike 31 Nkrumah, Kwame 291 ‘non-coincidence of interests’ 25 Nordic countries 165 North America deindustrialisation in 234 food grain exports 148 indigenous population and property rights 39 women in labour force 230 ‘not in my back yard’ politics 20 nuclear weapons 101 Nyere, Julius 291 O Obama, Barack 167 occupational safety and health 72 Occupy movement 280, 292 Ohlin Foundation 143 oil cartel 252 companies 77, 131 ‘Seven Sisters’ 131 embargo (1973) 124 ‘peak oil’ 251–2, 260 resources 123, 240, 257 oligarchy, oligarchs 34, 143, 165, 221, 223, 242, 245, 264, 286, 292 oligopoly 131, 136, 138 Olympic Games 237–8 oppositional movements 14, 162, 266–7 oppression 193, 266, 288, 297 Orwell, George 213 Nineteen Eighty-Four 202 overaccumulation 154 overheating 228 Owen, Robert 18, 184 Oxfam xi, 169–70 P Paine, Tom: Rights of Man 285 Paris 160 riots (1968) x patents 139, 245, 251 paternalism 165, 209 patriarchy 7 Paulson, Hank 47 pauperisation 104 Peabody, George 18 peasantry ix, 7, 107, 117, 174, 190, 193 revolts 202 pensions 134, 165, 230 rights 58, 67–8, 84, 134 people of colour: disposable populations 111 Pereire, Emile 239 pesticides 255, 258 pharmaceuticals 95, 121, 123, 136, 139 Philanthropic Colonialism 211 philanthropy 18, 128, 189, 190, 210–11, 245, 285 Philippines 115, 196 Picasso, Pablo 140–41, 187, 240 Pinochet, Augusto x Pittsburgh 150, 159, 258 planned obsolescence 74 plutocracy xi, xii, 91, 170, 173, 177, 180 Poland 152 Polanyi, Karl 56, 58, 60, 205–7, 210, 261 The Great Transformation 56–7 police 134 brutality 266 capacities and powers 43 powers xiii, 43, 52 repression 264, 280 surveillance and violence 264 violence 266, 280 police-state 203, 220 political economy xiv, 54, 58, 89, 97, 179–80, 182, 201, 206–9 liberal 204, 206, 209 political parties, incapable of mounting opposition to the power of capital xii political representation 183 pollutants 8, 246, 255 pollution 43, 57, 59, 60, 150, 250, 254, 255, 258 Pontecorvo, Gillo 288 Ponzi schemes 21, 53, 54, 243 population ageing 223, 230 disposable 108, 111, 231, 264 growth 107–8, 229, 230–31, 242, 246 Malthus’s principle 229–30 Portugal 161 post-structuralism xiii potlatch system 33 pounds sterling 46 poverty 229 anti-poverty organisations 286–7 and bourgeois reformism 167 and capital 176 chronic 286 eradication of 211 escape from 170 feminisation of 114 grants 107 and industrialisation 123 and population expansion 229 and unemployment 170, 176 US political movement denies assistance to the poor 292–3 and wealth 146, 168, 177, 218, 219, 243 world xi, 170 power accumulation of 33, 35 of capital xii, 36 class 55, 61, 88, 89, 97, 99, 110, 134, 135, 221, 279 computer 105 and currencies 46 economic 142, 143, 144 global 34, 170 the house as a sign of 15–16 of labour see under labour; of merchants 75 military 143 and money 25, 33, 36, 49, 59, 60, 62, 63, 65–6, 245, 266 monopoly see monopoly power; oligarchic 292 political 62, 143, 144, 162, 171, 219, 292 purchasing 105, 107 social 33, 35, 55, 62, 64, 294 state 42–5, 47–52, 72, 142, 155–9, 164, 209, 295 predation, predators 53, 54, 61, 67, 77, 84, 101, 109, 111, 133, 162, 198, 212, 254–5 price fixing 53, 118, 132 price gouging 132 Price, Richard 226, 227, 229 prices discount 133 equilibrium in 118 extortionate 84 food 244, 251 housing 21, 32, 77 land 77, 78, 150 low 132 market 31, 32 and marketplace anarchy 118 monopoly 31, 72, 139, 141 oil 251, 252 property 77, 78, 141, 150 supermarket 6 and value 31, 55–6 private equity firms 101, 162 private equity funds 22, 162 private property and the commons 41, 50, 57 and eradication of usufructuary rights 41 and individual appropriation 38 and monopoly power 134–5, 137 social bond between human rights and private property 39–40 and the state 47, 50, 58, 59, 146, 210 private property rights 38–42, 44, 58, 204, 252 and collective management 50 conferring the right to trade away that which is owned 39 decentralised 44 exclusionary permanent ownership rights 39 and externality effects 44 held in perpetuity 40 intellectual property rights 41 microenterprises endowed with 211 modification or abolition of the regime 14 and nature 250 over commodities and money 38 and state power 40–41, 42–3 underpinning home ownership 49 usufructuary rights 39 privatisation 23, 24, 48, 59, 60, 61, 84, 185, 235, 250, 253, 261, 262, 266 product lines 92, 107, 219, 236 production bourgeois 1 falling value of 107 immaterial 242 increase in volume and variety of 121 organised 2 and realisation 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 regional crises 151 workers’ dispossession of own means of 172 productivity 71, 91, 92, 93, 117, 118, 121, 125, 126, 132, 172, 173, 184, 185, 188, 220, 239 products, compared with commodities 25–6 profitability 92, 94, 98, 102, 103, 104, 106, 112, 116, 118, 125, 147, 184, 191–2, 240, 252, 253, 256, 257 profit(s) banking 54 as capital’s aim 92, 96, 232 and capital’s struggle against labour 64, 65 and competition 93 entrepreneurs 24, 104 falling 81, 107, 244 from commodity sales 71 and money capital 28 monopoly 93 rate of 79, 92 reinvestment in expansion 72 root of 63 spending of 15 and wage rates 172 proletarianisation 191 partial 175, 190, 191 ‘property bubble’ 21 property market boom (1920s) 239 growth of 50 property market crashes 1928 x, 21 1973 21 2008 21–2, 54, 241 property rights 39, 41, 93, 135 see also intellectual property rights; private property property values 78, 85, 234 ‘prosumers’ 237 Proudhon, Pierre-Joseph 183 Prozac 248 public goods 38 public utilities 23, 60, 118, 132 Q quantitative easing 30, 233 R R&D ix race 68, 116, 165, 166, 291 racial minorities 168 racialisation 7, 8, 62, 68 racism 8 Rand, Ayn 200 raw materials 16, 17, 148, 149, 154 Reagan, Ronald x, 72 Speech at Westminster 201 Reagan revolution 165–166 realisation, and production 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 reality contradiction between reality and appearance 4–6 social 27 Reclus, Elisée 140 regional development 151 regional volatility 154 Reich, Robert 123, 188 religion 7 religious affiliation 68 religious hatreds and discriminations 8 religious minorities 168 remittances 175 rent seeking 132–3, 142 rentiers 76, 77, 78, 89, 150, 179, 180, 241, 244, 251, 260, 261, 276 rents xii, 16–19, 22, 32, 54, 67, 77, 78, 84, 123, 179, 241 monopoly 93, 135, 141, 187, 251 repression 271, 280 autocratic 130 militarised 264 police-state 203 violent 269, 280, 297 wage 158, 274 Republican Party (US) 145, 280 Republicans (US) 167, 206 res nullius doctrine 40 research and development 94, 96, 187 ‘resource curse’ 123 resource scarcity 77 revolution, Fanon’s view of 288 revolutionary movements 202, 276 Ricardo, David 122, 244, 251 right, the ideological and political assault on the left xii; response to universal alienation 281 ‘rights of man’ 40, 59, 213 Rio de Janeiro 84 risk 17, 141, 162, 219, 240 robbery 53, 57, 60, 63, 72 robotisation 103, 119, 188, 295 Rodney, Walter 291 romantic movement 261 Roosevelt, Theodore 131, 135 Four Freedoms 201 Rousseau, Jean-Jacques 213, 214 Ruhr, Germany 150 rural landscapes 160–61 Russia 154 a BRIC country 170, 228 collapse of (1989) 165 financial crisis (1998) 154, 232 indebtedness 152 local famine 124 oligarchs take natural resource wealth 165 S ‘S’ curve 225, 230–31 Saint-Simon, Claude de Rouvroy, comte de 183 sales 28, 31, 187, 236 San Francisco 150 Santiago, Chile: street battles (2006–) 185 Sao Paulo, Brazil 129, 195 savings the house as a form of saving 19, 22, 58 loss of 20, 58 private 36 protecting the value of 20 Savings and Loan Crisis (USA from 1986) 18 savings accounts 5, 6 Scandinavia 18, 85, 165 scarcity 37, 77, 200, 208, 240, 246, 260, 273 Schumpeter, Joseph 98, 276 science, and technology 95 Seattle 196 Second Empire Paris 197 Second World War x, 161, 234 Securities and Exchange Commission 120, 195 security xiii, 16, 121, 122, 165, 205, 206 economic 36, 153 food 253, 294, 296 job 273 national 157 Sen, Amartya 208–11, 281 Development as Freedom 208–9 senior citizens 168 Seoul 84 serfdom 62, 209 sexual hatreds and discriminations 8 Shanghai 153, 160 share-cropping 62 Sheffield 148, 149, 159, 258 Shenzhen, China 77 Silicon Valley 16, 143, 144, 150 silver 27–31, 33, 37, 57, 233, 238 Simon, Julian 246 Singapore 48, 123, 150, 184, 187, 203 slavery 62, 202, 206, 209, 213, 268 slums ix, 16, 175 Smith, Adam 98, 125–6, 157, 185, 201, 204 ‘invisible hand’ 141–2 The Wealth of Nations 118, 132 Smith, Neil 248 social distinction 68, 166 social inequality 34, 110, 111, 130, 171, 177, 180, 220, 223, 266 social justice 200, 266, 268, 276 social labour 53, 73, 295 alienated 64, 66, 88 and common wealth 53 creation of use values through 36 expansion of total output 232 household and communal work 296 immateriality of 37, 233 and money 25, 27, 31, 42, 55, 88, 243 productivity 239 and profit 104 and value 26, 27, 29, 104, 106, 107, 109 weakening regulatory role of 109, 110 social media 99, 136, 236–7, 278–9 social movements 162–3 social reproduction 80, 127, 182–98, 218, 219, 220, 276 social security 36, 165 social services 68 social struggles 156, 159, 165, 168 social value 26, 27, 32, 33, 55, 172, 179, 241, 244, 268, 270 socialism 215 democratic xii; ‘gas and water’ 183 socialism/communism 91, 269 socialist revolution 67 socialist totalitarianism 205 society capitalist 15, 34, 81, 243, 259 civil 92, 122, 156, 185, 189, 252 civilised 161, 167 complex 26 demolition of 56 and freedom 205–6, 210, 212 hope for a better society 218 industrial 205 information 238 market 204 post-colonial 203 pre-capitalist 55 primitive 57 radical transformation of 290 status position in 186 theocratic 62 women in 113 work-based 273 world 204 soil erosion 257 South Africa 84–5, 152, 169 apartheid 169, 202, 203 South Asia labour 108 population growth 230 software programmers and developers 115, 116 South Korea 123, 148, 150, 153 South-East Asia 107–8 crisis (1997–8) 154, 232, 241 sovereign debt crises 37 Soviet Bloc, ex-, labour in 107 Soviet Union 196, 202 see also Russia Spain xi, 51, 161 housing market crash (2007–9) 82–3 spatio-temporal fixes 151–2, 153, 154, 162 spectacle 237–8, 242, 278 speculative bubbles and busts 178 stagnation xii, 136, 161–2, 169 Stalin, Joseph 70 standard of life 23, 175 starvation 56, 124, 246, 249, 260, 265 state, the aim of 156–7 brutality 266, 280 and capital accumulation 48 and civil society 156 curbing the powers of capital as private property 47 evolution of the capitalist state 42 and externality effects 44 guardian of private property and of individual rights 42 and home ownership 49–50 interstate system 156, 157 interventionism 193, 205 legitimate use of violence 42, 44, 45, 51, 88, 155, 173 loss of state sovereignty xii; and money 1, 45–6, 51, 173 ‘nightwatchman’ role 42, 50 powers of 42–5, 47–52, 57–8, 65, 72, 142, 155–9, 209, 295 and private property 47, 50, 58, 59, 146, 210 provision of collective and public goods 42–3 a security and surveillance state xiii; social democratic states 85 war aims 44 state benefits 165 state regulatory agencies 101 state-finance nexus 44–5, 46–7, 142–3, 156, 233 state-private property nexus 88–9 steam engine, invention of the 3 steel industry 120, 121, 148, 188 steel production 73–4 Stiglitz, Joseph 132–4 stock market crash (1929) x Stockholm, protests in (2013) 171, 243 strikes 65, 103, 124 sub-prime mortgage crisis 50 suburbanisation 253 supply and demand 31, 33, 56, 106 supply chain 124 supply-side remedies xi supply-side theories 82, 176 surplus value 28, 40, 63, 73, 79–83, 172, 239 surveillance xiii, 94, 121, 122, 201, 220, 264, 280, 292 Sweden 166, 167 protests in (2013) 129, 293 Sweezy, Paul 136 swindlers, swindling 45, 53, 57, 239 ‘symbolic analysts’ 188 Syntagma Square, Athens 266, 280 T Tahrir Square, Cairo 266 Taipei, Taiwan 153 Taiwan 123, 150, 153 Taksim Square, Istanbul 266, 280 Tanzania 291 tariffs 137 taxation 40, 43, 47, 67, 84, 93–4, 106, 133, 150, 155, 157, 167, 168, 172, 190 Taylor, Frederick 119, 126 Taylorism 103 Tea Party faction 205, 280, 281, 292 technological evolution 95–6, 97, 101–2, 109 technological imperatives 98–101 technological innovation 94–5 technology changes involving different branches of state apparatus 93–4 communicative technologies 278–9 and competition 92–3 constraints inhibiting deployment 101 culture of 227, 271 definition 92, 248 and devaluation of commodities 234 environmental 248 generic technologies 94 hardware 92, 101 humanising 271 information 100, 147, 158, 177 military 93, 95 monetary 109 and nature 92, 97, 99, 102 organisational forms 92, 99, 101 and productivity 71 relation to nature 92 research and development 94 and science 95 software 92, 99, 101 a specialist field of business 94 and unemployment 80, 103 work and labour control 102–11 telephone companies 54, 67, 84, 278 Tennessee 148 Teresa, Mother 284 Thatcher, Margaret (later Baroness) x, 72, 214, 259 Thatcherism 165 theft 53, 60, 61, 63 Thelluson, Peter 226, 227 think tanks 143 ‘Third Italy’ 143 Third World debt crisis 240 Toffler, Alvin 237 tolls 137 Tönnies, Ferdinand 122, 125 tourism ix, 16, 140, 141, 187, 236 medical 139 toxic waste disposal 249–50, 257 trade networks 24 trade unions xii, 116, 148, 168, 176, 184, 274, 280 trade wars 154 transportation 23, 99, 132, 147–8, 150, 296 Treasury Departments 46, 156 TRIPS agreement 242 tropical rainforest 253 ‘trust-busting’ 131 trusts 135 Turin, Italy 150 Turkey 107, 123, 174, 232, 280, 293 Tuscany, Italy 150 Tutu, Archbishop Desmond 284 Twitter 236 U unemployment 37, 104, 258, 273 benefits 176 deliberately created 65, 174 high xii, 10, 176 insurance 175 and labour reserves 175, 231 and labour-saving technologies 173 long-term 108, 129 permanent 111 echnologically induced 80, 103, 173, 274 uneven geographical developments 178, 296 advanced and underserved regional economies 149–50 and anti-capitalist movements 162 asset bubbles 243 and capital’s reinvention of itself 147, 161 macroeconomic processes of 159 masking the true nature of capital 159–60 and technological forms 219 volatility in 244 United Fruit 136 United Kingdom income inequality in 169; see also Britain United Nations (UN) 285 United States aim of Tea Party faction 280 banking 158 Bill of Rights 284 Britain lends to (nineteenth century) 153 capital in (1990s) 154 Constitution 284 consumption level 194 global reserve currency 45–6 growth 232 hostility towards state interventions 167 House of Representatives 206 human rights abuses 202 imperial power 46 indebtedness of students in 194 Indian reservations 249 interstate highway system 239 jobless recoveries after recession 172–3 liberty and freedom rhetoric 200–201, 202 Midwest ‘rust belt’ 151 military expenditures 46 property market crashes x, 21–2, 50, 54, 58, 82–3 racial issues 166 Savings and Loan Crisis (from 1986) 18 social mobility 196 social reproduction 196–7 solidly capitalist 166 steel industry 120 ‘symbolic analysts’ 188 ‘trust-busting’ 131 unemployment 108 wealth distribution 167 welfare system 176 universal suffrage 183 urbanisation 151, 189, 228, 232, 239, 247, 254, 255, 261 Ure, Andrew 119 US Congress 47 US dollar 15, 30, 45–6 US Executive Branch 47 US Federal Reserve xi, 6, 30, 37, 46, 47, 49, 132, 143, 233 monetary policy 170–71 US Housing Act (1949) 18 US Treasury 47, 142, 240 use values collectively managed pool of 36 commodification of 243 commodities 15, 26, 35 common wealth 53 creation through social labour 36 and entrepreneurs 23–4 and exchange values 15, 35, 42, 44, 50, 60, 65, 88 and housing 14–19, 21–2, 23, 67 and human labour 26 infinitely varied 15 of infrastructural provision 78 loss of 58 marketisation of 243 monetisation of 243 of money 28 privatised and commodified 23 provision of 111 and revolt of the mass of the people 60 social demand for 81 usufructuary rights 39, 41, 59 usury 49, 53, 186, 194 utopianism 18, 35, 42, 51, 66, 119, 132, 183, 184, 204, 206–10, 269, 281, 282 V value(s) commodity 24, 25 failure to produce 40 housing 19, 20, 22 net 19 production and realisation of 82 production of 239 property 21 relation between money and value 27, 35 savings 20 storing 25, 26, 35 see also asset values; exchange values; social value; use values value added 79, 83 Veblen, Thorstein: Theory of the Leisure Class 274 Venezuela 123, 201 Vietnam, labour in 108 Vietnam War 290 violence 53, 57, 72, 204–5, 286 against children 193 against social movements 266 against women 193 colonial 289–90, 291 and contemporary capitalism 8 culture of 271 of dispossession 58, 59 in a dystopian world 264 and humanism 286, 289, 291 of the liberation struggle 290 militarised 292 as the only option 290–91 political 280 in pursuit of liberty and freedom 201 racialised 291 state’s legitimate use of 42, 44, 45, 51, 88, 155, 173 of technology 271 and wage labour 207 virtual ecological transfer 256 Volcker, Paul 37 W wages 103 basic social wage 103 falling 80, 82 for housework 115, 192–3 low xii, 114, 116, 186, 188 lower bound to wage levels 175 non-payment of 72 and profits 172 reduction in 81, 103, 104, 135, 168, 172, 176, 178 rising 178 and unskilled labour 114 wage demands 150, 274 wage levels pushed up by labour 65 wage rates 103, 116, 172, 173 wage repression 158–9 weekly 71 see also income Wall Street criticised by a congressional committee 239–40 illegalities practised by 72, 77 and Lebed 195 new information-processing technologies 100 Wall Street Crash (1929) x, 47 Wall-E (film) 271 Walmart xii, 75, 84, 103, 131 war on terror 280 wars 8, 60, 229 currency 154 defined 44 monetisation of state war-making activities 44–5 privatisation of war making 235 resource 154, 260 and state aims 44 state financing of 32, 44, 48 and technology 93 trade 154 world 154 water privatisation 235 wave theory 70 wave-particle duality 70 wealth accumulation of 33, 34, 35, 157, 205 creation of 132–3, 142, 214 disparities of 164–81 distribution of 34, 167 extraction from non-productive activities 32 global 34 the house as a sign of 15–16 levelling up of per capita wealth 171 and poverty 146, 168, 177, 218, 219, 243 redistribution of 9, 234, 235 social 35, 53, 66, 157, 164, 210, 251, 265, 266, 268 taking it from others 132–3 see also common wealth weather futures 60 Weber, Max 122, 125 Weimar Republic 30 welfare state 165, 190, 191, 208 Wells Fargo 61 West Germany 153, 154, 161 Whitehead, Alfred North 97 Wilson, Woodrow 201 Wolf, Martin 304n2 Wollstonecraft, Mary: A Vindication of the Rights of Woman 285 women career versus family obligations 1–2 disposable populations 111 exploitation of 193 housework versus wage labour 114–15 oppression against 193 social struggle 168 trading of 62 violence against 193 in the workforce 108, 114, 115, 127, 174, 230 women’s rights 202, 218 workers’ rights 202 working classes and capital 80 consumer power 81 crushing organisation 81 education 183, 184 gentrified working-class neighbourhoods ix; housing 160 living conditions 292 wage repression and consumption 158–9 working hours 72, 104–5, 182, 272–5, 279 World Bank 16, 24, 100, 186, 245 World Trade Organization 138, 242 WPA programmes (1930s) 151 Wright, Frank Lloyd: Falling Water 16 Wriston, Walter 240 Y YouTube 236 Yugoslavia, former 174 Z Zola, Émile 7

Black Box Thinking: Why Most People Never Learn From Their Mistakes--But Some Do
by Matthew Syed
Published 3 Nov 2015

It would be too devastating, even for him.” III In November 2010, a group of renowned economists, high-profile intellectuals, and business leaders wrote an open letter to Ben Bernanke, then chairman of the Federal Reserve.7 The bank had just announced its second tranche of so-called quantitative easing. They proposed to purchase bonds with newly printed money, introducing, over time, an additional $600 billion into the U.S. economy. The signatories were worried about this policy. In fact, they thought it might prove disastrous. In the letter, which was published in the Wall Street Journal, they argued that the plan was not “necessary or advisable under current circumstances” and that it would not “achieve the Fed’s objective of promoting employment.”

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Boskin, the former chairman of the president’s Council of Economic Advisers; Seth Klarman, the billionaire founder of the Baupost Group, an investment company; John Taylor, professor of economics at Stanford University; Paul Singer, the billionaire founder of Elliott Management Corporation; and Niall Ferguson, the renowned professor of history at Harvard University. Perhaps their greatest concern was over inflation, the fear that printing money would lead to runaway price increases. This is a worry often associated with economists within the “monetarist” school of policymaking. The signatories warned that quantitative easing would risk “currency debasement and inflation” and “distort financial markets.” The letter, which was also published as a full-page ad in the New York Times, made headlines around the world. The fears were well expressed, well argued, and the prediction of trouble ahead for the U.S. economy caused a minor tremor in financial markets.

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(Probe, Alert, Challenge, Emergency), 30 Page, Larry, 199 parole, 118–19 Patient Safety Alerts, 49, 50, 51 Pavlov, Ivan, 109 perception, 6, 24–25, 28–29, 30 perfectionism, 16–17, 140–41 perseverance, 262–65 Phillips, Charles, 278 pilot schemes, 290–91 Pixar, 207–10 Plato, 278 Poincaré, Henri, 201, 202 politics/politicians, 141, 283, 284 blame and, 234 Iraq War and, 73–74, 90–94 Popper, Karl, 41, 43–44, 103, 235, 267, 277, 280, 288 Portal, Nicholas, 171 practical knowledge, 212 practice environments, 32–33, 45–46 pre-closed loop behavior, 140 pre-mortems, 291 problem phase of innovation, 195–96, 195–200 professionalism, 12 progress, 7–8 Pronovost, Peter J., 10, 52–53, 103–5, 106–7 prospective hindsight, 291–92 Pruchnicki, Shawn, 26, 31 pseudoscience, 42–44 psychotherapy, 43–44, 46–47, 288–89 Putnam, Hilary, 282 Pythagoras, 278 quantitative easing, 94–96 radio, wind-up, 195 radiologists, 47–48 radiology, 65–66 random allocation, 156n randomized control trials (RCTs), 154–59, 285, 291 African aid efficacy and, 175–78 Capital One and, 185–86 criminal justice system programs, lack of RCTs for, 158 employment policy and, 187 Google and, 184–85 marginal gains theory and, 175, 176–77 medicine and, 157–58 morality of, 177 of Scared Straight Program efficacy, 160, 162–64 real-time data, 26 Reason, James, 17, 58–59 “Reasonable Choice of Disaster, The” (Lanir), 221 religion, 111–12, 281–82 Renquist, William, 84 resources, 11, 31–32 Ries, Eric, 142–43, 189 Rivera, Juan, 64–65, 70–71, 82–83, 116, 120 Robinson, Alan, 179 Roosevelt, Eleanor, 25 Rosberg, Nico, 183, 184 Royal Aeronautical Society, 26 Royal Navy, 56 Rush, Dr.

Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity
by Charles L. Marohn, Jr.
Published 24 Sep 2019

We’ve been through a savings and loan crisis and bailout, hedge fund failures that threatened the entire market, the runup in Internet stocks with the subsequent crash, and a housing bubble followed by a crisis in subprime lending followed by a re-inflating of the housing bubble. The economic tremors of overreach seem to be increasing in intensity. Through all of this, the Federal Reserve lowered interest rates all the way to zero and kept them there for nearly a decade, while printing trillions of dollars in digital money in an unprecedented experiment known as Quantitative Easing. This occurred while the federal government ran deficits at levels rivaling those of the world wars. We have brought forward more than a generation of consumption capacity and, in a classic sense, should anticipate a generation of corrective sacrifice. Right on cue, a new experiment is starting to gain popularity, one that promises to rid us of the few remaining financial constraints.

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Index A Accounting, for infrastructure, 70–71 Acre, value per, 135, 138–142 Alexander, Christopher, 8 Altruism, in community living, 6–7, 26 American Society of Civil Engineers (ASCE), 65–67 Amish society, 217 Anderson, Monte, 160–161 Antifragile (Taleb), 193 Anti-fragile systems, 4, 6 Appreciation, for maintenance staff, 180–183 Arnade, Chris, 214–215 ASCE (American Society of Civil Engineers), 65–67 Assessment process, 77 Automobile reliance: development based on, 27–30 and modern city development, 111–112 productivity and, 140 B Barbell investment approach, 148–150, 150f Better Block Foundation, 159 Bezos, Jeff, 102 Bias, confirmation, 69, 74, 183–186 Bicycles, 112 Big box stores: alternative uses of sites of, 169 productivity for, 136–137 Big project mentality, 184–186 The Big Sort (Bishop), 207–208 “Bipartisan Placemaking: Reaching Conservatives” panel, 210 Bishop, Bill, 207–208 The Black Swan (Taleb), 59, 120 Blighted areas, productivity of, 131–134, 140 Boise State University, 126 Boys & Girls Club of Santa Ana, x Brainerd, Minnesota, 16f, 18f development of infrastructure in, 30–31 experimental development pattern in, 125–126 founding and development of, 16–17 productivity at downtown vs. edge of town, 134–138 traditional vs. modern development in, 131–134 Bretton Woods agreement, 90 Brooklyn, New York, 213–214 Brown, Aaron, 211 Brown, Michael, 114 Budgeting, by cities, 50–57 Building code deficiencies, addressing, 194 Buildings, complex vs. complicated, 20–23 Bureaucracy, 172 Burnham, Daniel, 122 Bush, George W., 209 C California, government decision making in, 197–198 Capital investments, return on, 171–172 Carbon-reduction benefits, 74 Carlson, Curtis, 121 “Carlson's Law,” 121 Cash flow: and debt, 98, 187–192, 188f–190f over life cycle of development project, 52–57, 55f, 56f CBO (Congressional Budget Office), 78–80 Centralization, 198 Chaos, order vs., 121–122 Chicken problem, 195 Cities, 37–62 abandonment of, 109–110 accounting for infrastructure by, 70–71 budgeting and growth in, 50–57 contracting of, 154 Detroit, Michigan, 60–62 development of Pompeii, Italy, 5–10 economic stability of modern, 104–106 engineer's view of, 11 experimental development pattern in, 126–127 filling gaps in, 160–163 and illusion of wealth, 57–60 incremental growth in founding of, 15–20 as infinite game, 38–41 and infrastructure, 44–50 maintenance required for infrastructure in, 115 modern development of, 12 revenues and expenses, 41–44 traditional vs. modern development of, 1–3 Cities and the Wealth of a Nation (Jacobs), 101–102 City Council of Santa Ana, ix, x City engineer, 177t City halls, 43–44 City planner, 177t Class: and neighborhoods, 21–22 and re-urbanization, 116 Clinton, Bill, 209 Clinton, Hillary, 63 Cognitive Architecture (Sussman and Hollander), 8 Cognitive discounting, 65 Collaboration, between government officials and citizens, 195–197 Commers, Jon, 45 Common infrastructure, 130 Community living, 199–218 differing opinions in, 206–212 and extended family, 200–201 as infinite game, 39–40 meaning in, 212–218 in neighborhoods, 202–203 in Pompeii, Italy, 6–7 walking in, 203–206 Complex, adaptive systems: human habitats as, 3–4 and incremental growth, 168 incremental growth of, 15–16, 18–19 rational decision making with, 120–123 Complex buildings, 20–23 Complicated buildings, 20–23 Complicated systems, 11–14 Confirmation bias, 69, 74, 183–186 Conflicts, dealing with, 206–212 Congress for the New Urbanism, 210 Congressional Budget Office (CBO), 78–80 Constraints: and economic stability, 93–96 and gold standard, 90 growth as, 100 prudent, for investments, 164–168 removal of, in modern world, 59–60, 96 Construction costs, 136–137 Consumption, 215–216 Costa Rica, 126–127 The Crash Course (Martenson), 108 Critical systems, 182–183 Cross-generational civic collaboration, 187 D Dallas, Texas, 159 Darwin, Charles, 8 The Death and Life of Great American Cities (Jacobs), 8 Debt: and cash flow, 98 for federal government, 186 for government, 96–100 for local government, 113–114 for place-oriented government, 186–192 for projects with quality-of-life benefits, 187 for state government, 113–114 Debt to income ratio, 97 Decision making: rational, see Rational decision making subsidiarity in, 195–198 Default, on municipal debt, 191 Deneen, Patrick, 211 Density, as urban planning metric, 128–129 Depression economics, 86–89 Detroit, Michigan, 60–62 land values in, 24 renewal of urban, 117–119 Development projects: cash flow over life cycle of, 52–57, 53f, 55f, 56f decisions about failing, 115–120 Diamond, Jared, 58, 59, 84 Dig Deep, 211 Donjek, 45 Downtown, productivity of, 134–140, 139t, 143–144 Duany, Andres, 195 Duggan, Mike, 119 Duncanville, Texas, 160 E Economic development department, 178t Economics: and benefits of infrastructure spending, 72–73 in depressions, 86–89 Economic stability, 83–106 and auto-oriented development, 29–30 and constraints, 93–96 creating, 85–86 and depression economics, 86–89 and focus on growth, 100–102 following World War II, 89–91 and government debt, 96–100 growth vs. wealth, 102–104 of modern cities, 104–106 and post-war boom, 91–93 risk management strategies for, 83–85 Edges, 7–8 Edges of city: center vs., 28 city infrastructure necessary for, 115 productivity of, 134–138, 143–144 Efficiency, designing for, 174–176 Ehrenhalt, Alan, 116 Empire State Building (New York, New York), 129 Employment, in productive places, 133 England, 83 Expenses, and revenues, 41–44 Extended family, 200–201 F Failure, slow, 110–115 Failure to Act (ASCE report), 65–67 Family, extended, 200–201 Fannie Mae, 92 Farmers, risk management strategies of, 83–84 Federal Funds Rate, 97 Federal government: debt for, 186 impact of infrastructure on, 79 Federal Housing Administration (FHA), 89, 92 Federal Reserve, 99 Feedback, in local governments, 173–174 Ferguson, Missouri, 93, 114 FHA (Federal Housing Administration), 89 Financial status, local government's understanding of, 190–191 Finished states, neighborhoods built to, 21–23 “First ring” suburbs, 94 Form-based codes, 193–194 Fragile systems, 4 Franchises, productivity of, 133–134 Freddie Mac, 92 Future, predicting needs for, 19–20, 120–121 G Gaps, in cities, 160–163 Garcia, Anthony, 158 Gas tax, 75 Gawron, Stephen, 161 Gehl, Jan, 8 “General Theory of Walkability,” 206 Gentrification, of urban neighborhoods, 117 Goals, of individuals vs. communities, 40–41 Goland, Carol, 84 Gold reserves, 94 Gold standard, as basis for trade, 90 Government debt, 96–100 Government policies, prioritizing traffic, 29 Great Depression, 87–89, 191 The Great Inversion and the Future of the American City (Ehrenhalt), 116 Great Society, 93 Growth: economic stability and focus on, 100–102 in municipalities, 50–57 as objective of local governments, 176 wealth vs., 102–104 H Haidt, Jonathan, 208, 209, 215 Hardship, response to, 172–174 Hasidic Judaism, 213–214, 217 Hemingway, Ernest, 4 Henwood, Doug, 79 Hierarchies, in local government, 174–176 Highland neighborhood (Shreveport, Louisiana), 220 Highland Park (Shreveport, Louisiana), 220 High land values, 27–30 High Point, North Carolina, 161 Highway bypass corridor, 134–138 Hollander, Justin B., 8, 9 Homeless shelters, xi Homes, changing, 20 Hoover, Herbert, 87 Horizontal expansion, in California, 197 Housing: in California, 197–198 post-war changes in, 92 preference for single-family, 144–145 Housing authority, 178t How to Live in a World We Don't Understand (Taleb), 59 Human habitats, 1–14 as complex, adaptive systems, 3–4 in North America, 1–3 spooky wisdom in, 5–10 as systems that are complicated, 11–14 Hunter-gatherer existence, 58 Hurricane Katrina, 102–103 Hurricane Rita, 102–103 I Illusion of Wealth: and constant maintenance, 152 human response to, 57–60 Illusion of Wealth phase of development, 143 Improvement to Land (I/L) Ratio, 25, 25f, 117 Improvement value, 23–25, 25f Incentives, to fix problems, 113 Income taxes, 72 Incremental changes, implementing, 122–123, 156–157 Incremental growth, 15–35 and complex, adaptive systems, 168 complex vs. complicated buildings in, 20–23 constraints on, 164 and founding of cities, 15–20 good and bad development in, 34–35 and high land values, 27–30 and neighborhood renewal, 23–27 private and public investment in, 30–34 in traditional habitat development, 2 Infill projects, 160 Infrastructure, 63–81 accounting for, 70–71 and American Society of Civil Engineers, 65–67 calculating returns on investment for, 67–69 Congressional Budget Office on, 78–80 development of, 30–34 as investment, 41–42 in modern development, 32 and municipalities, 44–50 perception of need for more, 63–65 ratio of private to public investment in, 129–130 real return on investment, 74–78 secondary effects of, 72–74 Infrastructure Cult: development of, 65–67 paper returns calculated by, 69 Insolvency, 187–192 Interstate highway system, 92 Investment(s), 147–170 barbell investment approach, 148–150 capital, 171–172 conventional vs. strong towns thinking about, 185–186, 186t in filling gaps in cities, 160–163 impact of regulations on, 194 infrastructure as, 41–42 little bets, 150–160 low-risk investments with steady returns, 150–155 prudent constraints for, 164–168 public and private, 30–34, 31f, 32f returns on, see Return on investment in Suburban Retrofit, 168–169 Italy, walking in, 203–204 J Jacobs, Jane, 8, 101–102 Japan, 76 Jimmy's Pizza, 161–162 Job creation, 49, 72–73 Johnson, Neil, 12, 13 Junger, Sebastian, 216–217 K Keynes, John Maynard, 88 Keynesian economic policies, 88 Krugman, Paul, 63, 78 Kunstler, James, 110–111 L Lafayette, Louisiana, 101, 141–144, 151 Landau, Moshe, 213–214, 217 Land value: in declining suburbs, 113 and interstate highway project, 92 and neighborhood renewal, 23–25, 25f in neighborhoods with different types of properties, 165–167, 165f, 166f and suburban development, 27–30 Learning, from previous local investments, 187 Legacy programs, 173 Lifestyle choices, 202, 205–206 “Lifestyle enclaves,” 208 Little bets, 16–18, 150–160 Local economy: as basis for national economy, 101–102 national vs., 103 Local government: changes in, to maintain economic stability, 105–106 debt taken on by, 113–114 funded by state government, 95 impact of infrastructure on, 79–80 profit run by, 37–38, 147 relationship of state and, 198 Long declines, 110–115 “Long emergency,” 110–111 Long Recession of the 1870s, 77 Los Angeles, California, xi Lovable places, 10 Low-risk investments, with steady returns, 150–155 Lydon, Mike, 158 M Maintenance: ability to keep up with, 109 cash-flow debt to cover, 188–192, 188f–190f of development projects, 52–57 of infrastructure, 46–49 need for constant, 151–154 in place-oriented government, 180–183 required for single-family homes, 112 Maintenance department, 179t Manhattan, New York, 24 Martenson, Chris, 108 Meaning, life of, 212–218 Middle class, 92, 93, 144–145 Milan, Italy, 164 Mills Fleet Farm, 134–137 Minicozzi, Joseph, 138–140, 161 “Minnesota Miracle,” 95 Mixed-use neighborhoods, 163, 169 Modern city development: as high-risk investments, 149 as lead by pubic investment, 34–35 productive places in, 131–134 Modern Monetary Theory, 99 Mortgages, during Great Depression, 88–89 Mouzon, Steve, 10, 113 Muskegon, Michigan, 161 N National Association of Home Builders, 136 National economy, local vs., 103 Natural disasters, 102–103 Neighborhoods: abandonment of, 109–110 built to finished states, 21–23 changing in post-war era, 92–93 community living in, 202–203 decline of, 113 gentrification of urban, 117 mixed-use, 163, 169 renewal of, and incremental growth, 23–27 responses to improvements in, 158 structured around religions, 214 in transition sections of Detroit, 118 Neighbors, being involved with, 202–203 New Deal economics, 87–88 New Orleans, Louisiana, 102, 182 Nixon, Richard, 94 Noncritical systems, 182 O Oak Cliff neighborhood (Dallas, Texas), 159 Obama, Barack, 63 Obesity, among Pacific Islanders, 58–59 Options Real Estate, 160 Orange County, California, xi–xii Order, chaos vs., 121–122 The Original Green (Mouzon), 10, 113 Oroville dam (California), 182 Oswego, New York, 152 Oswego Renaissance Association, 152 P Pacific Islanders, 58–59, 183–185 Paper returns on investment, 67–69 Paradox of Avarice, 104 Paradox of Thrift, 88, 104 Pareidolia, 8–9, 9f Parks department, 178t Party analogy, 34–35 A Pattern Language (Alexander), 8 Pension funds, 56–57, 70, 98 Pequot Lakes, Minnesota, 44–46 Perception, of need for more infrastructure, 63–65 Personal preferences, 144–145 Peru, 84 Place-oriented government, 171–198 and confirmation bias, 183–186 designed for efficiency, 174–176 focus on broad wealth creation by, 176–180 maintenance as priority for, 180–183 and regulations, 192–194 response to hardship by, 172–174 subsidiarity in, 195–198 understanding of debt by, 186–192 Political differences, 207 Pompeii, Italy, 5–10 Post-war boom: and economic stability, 91–93 modern city development established in, 12 Power, subsidiarity principle and, 196–198 Prayer of Saint Francis, 218 Prioritization, of maintenance, 180–183 Private development, 40 Private investment: private to public investment ratio, 129–130 public and, 30–34, 31f, 32f Private sector (businesses): response to economic hardship in, 172–173 small, see Small businesses Problem solving, 13–14 Productive places, 125–146 downtown vs. edge of town, 134–138 in past, 125–127 and personal preferences, 144–145 productivity calculations for, 128–130 return on investment, 141–144 traditional vs. modern development in, 131–134 value per acre, 138–141 Productivity, calculations of, 128–130 Project teams, 179–180 Property taxes, 49 Property value, 23–25, 25f Public health, and walking neighborhoods, 205 Public investment: private and, 30–34, 31f, 32f private to public investment ratio, 129–130 returns required for, 147 Public safety department, 179t Q Quality-of-life benefits, 187 Quantitative Easing, 99 R Railroad companies, 77 Rational decision making, 107–123 about failing development systems, 115–120 about long declines, 110–115 within complex, adaptive system, 120–123 and lack of single solution, 107–110 Real return on investment, 74–78 Redevelopment, financial productivity after, 131–134, 139–140, 139t Redundant systems, 182 ReForm Shreveport, 219, 220 Regulations: from place-oriented government, 192–194 and subsidiarity principle, 195–198 Repealing regulations, 192–193 Republican Party, 209 Request for proposal (RFP), 50 Residents, learning concerns of, 156–157 Resources: assumption of abundance of, 12–14 wasted, in modern development, 19 Retreats, strategic, 108–109 Return on investment, 141–144 calculating, for infrastructure, 67–69 for capital projects, 171–172 in cities, 44 and debt taken on by local governments, 187 low-risk investments with steady, 150–155 paper, 67–69 real, 74–78 social, 78–79 Revenues, and expenses, 41–44 RFP (request for proposal), 50 The Righteous Mind (Haidt), 208 Risk management strategies, 83–85 Roaring Twenties, 87 Roberts, Jason, 159 Roosevelt, Franklin, 87, 88 Rotary International, 203 S St.

The Powerful and the Damned: Private Diaries in Turbulent Times
by Lionel Barber
Published 5 Nov 2020

Managing public deficits and pushing necessary structural reforms to boost growth, he says, must be part of the remedy, alongside monetary policy. It’s the unspoken (and unfulfilled) bargain in the eurozone. I ask Draghi whether he would be prepared to go further, in effect putting the ECB’s entire credibility behind intervention such as US-style quantitative easing or something else? ‘People have to accept that we have to and always will act in accordance with our mandate and within our legal foundations,’ he replies. Mario has left the door open to dramatic intervention, Fed-style. But he’s used such careful wording that the FT cannot – and will not – hype the story.

…

The message is unequivocal: Chinese growth will come in on target at 7 per cent in 2013. There will not be any room for slackening off in China, whatever the uncertainties in the world economy. Just a fortnight ago, US financial markets had a nervous fit after the Fed signalled it would start to ‘taper’ its special government bond and asset purchase programme known as quantitative easing (QE). Towards the end of the conversation, the official asks me for my own views on the ‘taper tantrum’ and what it might mean for the US and Europe. I’m cautiously optimistic, contrasting it with the 1998 Asian crisis when overextended sovereign borrowers got into trouble because of their dollar-denominated debt.

…

Lee) 182, 182n Lehman Brothers x, xiv, xv, 5n, 37, 46, 81, 85, 86, 87, 101–2, 104, 105, 107, 121, 160, 199, 432 Le Pen, Marine 349, 353, 380 Leveson Inquiry xv, 177–8, 191–2, 194–5, 197, 200–202, 220, 221, 222–3, 227, 236, 237, 239, 257n Leveson, Lord Justice 177, 194, 195, 201–2 Lewis, Leo 181 Lewis, Simon 143 Lewis, Will 135, 135n Liberal Democrats xv, 135, 135n, 151, 158, 158n, 159, 195–6, 274, 275, 275n, 284, 288, 290, 354 Libor rate 168, 212 Libya 142, 177, 180, 259, 330, 355, 387 Li, Frank 207–8 liquidity, financial 69, 70, 86, 94, 103, 117, 323 Lisbon treaty, EU 64, 64n, 67, 381 Liu Xiaoming x, 206–7, 374–5 Llewellyn, Ed 308–9 Lloyds Bank 19 Long-Term Capital Management (LTCM) 86, 86n Luce, Ed 130, 190 Maastricht treaty (1992) 64n, 342, 389, 426, 433 Mackay, Angela 284 Mack, John 85, 86 MacLeod, Lisa 147, 203 Macron, Emmanuel 353, 412–13 MacShane, Denis 41 Mail on Sunday 58, 197, 220–21, 227, 265 MailOnline 357 Ma, Jack 233 Major, John 139, 157, 217n, 290, 320, 342n, 414 Major, Tony 240–41, 254–5, 272 Ma Kai 271 Makinson, John 189, 282 Malema, Julius 260–61 Mallet, Victor 245, 392–3 Malmström, Cecilia 328 Mandela, Nelson 51, 52, 53 Mandelson, Peter 65, 190, 244 Manningham-Buller, Eliza 20–22 Marchionne, Sergio 375–6 Markle, Meghan 422 Marks and Spencer 235–6, 244 Marriage, Madison 368–9, 370, 371, 372, 373–4, 382, 384 Massoudi, Arash 295, 296 Mayer, Marissa 73–4 May, Theresa ix, xvi, 274, 310, 323, 324, 326, 327, 328, 333–4, 339, 342–3, 345–6, 349–50, 353–4, 358, 359–60, 365, 373, 375, 381, 388, 399–400, 402, 406, 410, 411, 413, 414, 420, 425 Mbeki, Thabo 51–3 McCain, John 96, 99 McChrystal, Stan 148–9, 148n, 150 McClean, Paul 356–7, 395 McCoy, Danny 188 McCrum, Dan 404, 405, 407, 421 McDonnell, Finola 406–7 McGregor, Heather 14 McKinsey 122, 197, 243, 245, 306 McLaren, Malcolm 155–6 McMaster, Lieutenant General H.R. 366, 366n McNulty, Sheila 35 Media Standards Trust 220–21 Medvedev, Dmitry xiv, 89, 90–91, 329, 417 Melbourne Mining Conference 386–7 Meng Wanzhou 399 Merkel, Angela ix, xiv, xvi, 95–7, 153, 199, 211, 253, 274, 309, 323, 326, 358–9, 367, 368, 420, 426, 433–5, 437 Merrill Lynch 16, 86, 102 #MeToo 357, 369, 370 Metropolitan Police 165 Meyer, Christopher 139 Micklethwait, John 238, 258 Middleweek, James 20 MI5 20–22 Miliband, David 162, 163–4, 193 Miliband, Ed 162, 164, 193, 273, 286, 290 Miller, Maria 220, 223 Mill, John Stuart 423, 423n Mirror Group 197, 227 MI6 21, 180 Misra, Rajeev 383 Mitchell, Tom 390 Modi, Narendra ix, 244–6, 309, 348, 407–9 Molotov, Vyacheslav 90, 90n Monti, Mario 196, 203–4, 367–8 Moreno, Glen 114–15, 294 Morgan Stanley 85, 86, 102, 113 Morgan, John Pierpont 93 Morgan, Piers: The Insider 11 mortgage-backed securities 62, 84, 85, 114 Mosbacher, Georgette 242, 333, 358, 366 MPs expenses scandal 135–6 Mubarak, Hosni 54 Mudie, George 127 Mueller investigation, US 374, 374n Mugabe, Robert 52, 53, 261 Mulcaire, Glenn 190 Mulvaney, Mick 366, 366n Münchau, Wolfgang 172, 180 Murdoch, James 63 Murdoch, Rupert xv, 5, 5n, 28, 59–61, 65, 67, 161–2, 177, 191, 222, 267–8, 282, 289, 291, 317, 318 Murphy, Paul 27, 291, 368, 369, 382, 384, 405, 421 Murray, John 386 Musk, Elon 221–2 Myanmar 229–31, 233 Narayanan, M.K. 169 National Security Agency (NSA) 236–7 National Union of Journalists (NUJ) xiv, 202, 203, 240, 311 NatWest Bank 22, 22n Navalny, Alexei 328–9, 329n Nayef, Mohammed bin 308 Nazarbayev, Nursultan 142, 176, 176n Netanyahu, Benjamin ix, xiv, 102, 108, 109, 109n Netflix 398–9, 439 Neville-Rolfe, Lucy 23 Newman, Cathy 15, 15n News Corporation 5n, 268 News International 161–2, 165, 191 News of the World xv, 11, 139, 165, 177, 190, 191, 223, 223n, 237, 324n Newton, Gordon 9, 391 New Yorker 381 New York Post 119 New York Stock Exchange 86, 234 New York Times 35, 59, 61, 161, 165, 189, 216n, 224, 225, 258, 298, 332 NHS (National Health Service) 180, 180n, 232, 289, 313, 422 Nikkei xv, xvi, 281, 283, 284–5, 295–300, 295n, 301–3, 304, 305–6, 310–11, 312, 321, 339, 371, 373, 374, 390, 391, 394, 403, 407, 428, 431 Nikkei Asian Review 403 9/11 terrorist attacks (2001) 76, 236 Nixon, Richard 10, 45, 241, 267 non-doms 82–3, 83n, 319 Noonan, Peggy 317 North Korea 54, 182, 253–4, 348, 349, 366, 374, 376, 397 Northern Rock 45, 70, 77, 88, 127 Oakeshott, Isabel 316 Obama, Barack xii, 55, 68, 82, 96, 96n, 97, 98, 99, 113–14, 117, 130–31, 132, 148n, 162, 163, 187, 188, 189, 204, 219, 222, 233, 236, 307, 320, 331, 333, 342, 348, 378, 396, 413, 435 Obamacare 342, 348 Obama, Michelle 204 Office of Budget Responsibility (OBR) 106 Okada, Naotoshi 284, 298, 299, 404 Oliver, Craig 180 Olympics: (2008) 98–9; (2012) 98–9, 243 Olympus Corporation 298 1MDB (Malaysian state investment fund) 167 O’Neal, Stan 16, 148 Osborne, George xv, 81, 82, 97, 106, 156–7, 159, 174, 193, 209, 255, 259, 273–4, 289, 308, 318–19, 324, 345, 377, 378, 413 Owen, Geoffrey 252, 411 Owen, Jane 174–5, 264, 270 Oxford Union 41, 41n, 340 Page, Bruce 62 Page, Larry 326 Pakistan 41n, 132, 161, 168, 169, 170, 171–2, 203, 309, 363 Palestinians xv, 54–5, 107, 108, 109, 208, 378 Palin, Sarah 99 Pandit, Vikram 85, 113 Parker, Alan 153, 153n Parker, George 152, 153, 157, 320, 322–3, 359 Parker, Lieutenant General Nick 150 Patten, Chris 217, 217n Paulson, Hank 31, 31n, 55–6, 57, 87, 104 Payne, Sebastian 313, 410 Pearson x, 3, 3n, 5, 8, 15, 18, 19, 29, 43, 66, 73, 114, 115, 128, 189, 213, 218, 251, 253, 257, 282, 288–9, 292, 293, 294–7, 302–3, 311 Pence, Mike 333 Penguin Books 189, 282 Perkins, Zelda 357 Peston, Robert 70, 127 Pfizer 263 phone-hacking xv, 41, 76, 139, 162, 165, 166, 177, 190–91, 195, 223, 223n, 236, 268, 291 PIGS (acronym for southern European nations) 100–101 Pilling, David 165, 355, 356 Piris, Jean-Claude 341, 426 Polman, Paul 352, 353 Portugal 99–100, 148, 212, 238 Powell, Colin 54, 330 Powell, Jonathan 68, 68n Prabodhan 244–5 Presidents Club 368–9, 370–72, 373 Press Complaints Commission (PCC) 139, 165–6, 165n, 178, 192, 197, 201, 202, 221 Press Standards Board of Finance (Pressbof) 197 Prince, Chuck 69 private equity xiv, 46, 68, 69, 113, 114, 233, 243, 352 Purdy, Matt 332 Putin, Vladimir ix, xii, xvi, 89, 89n, 91, 120–21, 137, 205, 237–9, 238n, 256, 275, 277, 307, 328, 329, 330, 335, 348, 380, 401, 405, 406, 416–20, 432, 434 Qatar 74, 122, 212, 377 quantitative easing (QE) 199, 241 quants 187 Quinn, Sally 276 Raab, Dominic 410, 410n Rachman, Gideon 26, 26n, 43, 359 Rafsanjani, Akbar Hashemi 249–50, 249n Rajan, Raghuram 246–7, 246n Rajoy, Mariano 155, 219, 225–6 Rake, Michael 122, 212 Ramaphosa, Cyril 51, 262 Rathbone, John Paul 100, 140, 141, 428 Read, Ian 263 Reagan, Ronald 117, 129, 186, 188, 232, 249, 315, 317, 366, 397 Rees-Mogg, Jacob 327, 340, 341, 373, 388, 424 Rees-Mogg, William 340 Reliance Communications 247 Reliance Group 40 Remnick, David 381 Ren Zhengfei 183–4, 399 Renzi, Matteo 239–40 Republican Party, US 96, 130, 187–8, 242, 314, 315, 316, 331, 333, 363, 366n, 374 Reuters 147n, 258, 295–6, 298, 403, 417 Rice, Condoleezza 53–5, 108, 330 Richard III (Shakespeare) 192–3 Ridding, John 29, 135, 147–8, 215, 234, 257, 258n, 282, 288, 292, 293, 295, 296, 297, 299, 301, 312, 406–7, 430 Rio Tinto 286, 386 Robbins, Ollie 414–15 Robinson, Gwen 185, 230–31 Robinson, Nick 318 Rogers, Ivan 326 rogue traders 193 Rollins, Ed 366–7 Romney, Mitt 219 Roosevelt, Teddy 130, 140, 348 Rothermere, Jonathan 377 Rothschild 296, 353 Rothschild, Lynn Forester de 265, 265n Rouhani, Hassan ix, 249, 250–51, 267 Rousseff, Dilma 140, 142 Royal Bank of Scotland (RBS) xiv, 22–3, 22n, 75, 122 RPC (law firm) 421 Rubin, Robert 84, 172, 228 Rudd, Kevin 144, 144n Rudd, Roland 322 Rumsfeld, Donald 54, 330 Rupert, Johann 428, 428n Rusbridger, Alan x, 76, 139, 191–2, 197, 290–91, 395 Russell, Alec 51, 53, 189, 302, 321–2, 381, 429, 430 Russia ix, 56, 70, 81, 88–91, 91n, 120–21, 138–9, 161, 163, 228, 229, 237–9, 237n, 238n, 239, 256–7, 259, 275, 276–7, 307, 328–31, 335, 348, 349n, 374n, 376–7, 376n, 377n, 391, 405, 408, 416–20, 434 Rwanda ix, 142, 340, 354–6 Saatchi, Charles 243, 243n Salman, Mohammed bin x, xii, xvi, 306–8, 326, 361, 362, 376–9, 383, 392 Salmond, Alex 272, 273, 361–2 Salvini, Matteo 380 Samsung 182, 182n Sandberg, Sheryl 394 Sandbu, Martin 172 Sands, Peter 244–5, 245n Santander UK 210, 210n Santos, Juan Manuel 141 Sarkozy, Nicolas 62, 91–2, 185, 259, 412, 413, 435 Saudi Arabia xii, xvi, 107, 306–8, 360–61, 362, 376–9, 383, 392 Saudi Aramco 307, 308 Scardino, Marjorie x, 5–6, 8, 9, 14, 18, 26, 29, 32, 43, 66, 73, 83, 85, 93, 115, 147, 213, 218, 251, 282, 294, 411 Scavino, Dan 347 Schama, Simon 266–7 Schmidt, Eric 74, 160–61 Schroders 235, 235n Schwab, Klaus 120 Schwarzman, Christine 104 Schwarzman Scholars programme, Tsinghua university, Beijing 120 Schwarzman, Steve x, xiv, 46–7, 103–4, 118–20, 333, 377 Scotland 22, 22n, 250, 290, 344, 350, 361–2, 438; independence/independence referendums 253, 258–9, 266–7, 269, 271, 272, 273, 319, 320, 413, 438 Scotsman 13, 22, 361 Scott, C.P. 440 Scottish National Party (SNP) 272, 273, 290, 350, 361 Scowcroft, Brent 55 Second World War (1939–45) 128–9, 400 Seibert, Steffen 433 Sein, Thein 230 self-driving cars 215 Selmayr, Martin 406 Sevastopulo, Demetri 181, 346, 396 7/7 suicide bombings, London 21, 21n S4Capital 386 ‘shadow banking system’ 134 Shakespeare, William 192–3, 270, 323 shale gas 238 Shariatmadari, Hossein 249 short selling 103, 405, 407, 421 Shrimsley, Robert 13, 28, 102, 107, 117–18, 333, 371, 372, 430, 431 Shwe, General Than 230 Silicon Valley xv, 73, 74, 183, 184, 200, 213, 214–16, 236, 291, 348, 358, 394 Silva, Lula da 140, 142–3 Silverman, Gary 102 Simpson, Wallis 201 Singhal, Amit 214–15 Singh, Manmohan 38–9 Skapinker, Mike 298 Skripal, Sergei 376–7, 417, 419 Sky Television 41, 63, 127, 267–8, 316–17 Smith, Adam 124, 266, 297 Smith, Terry 14–15, 17–18, 19–20, 20n, 32, 139, 201–2, 218, 243, 372 Smollett, Tobias 297, 297n Snowden, Edward xv, 202, 236–7, 270–71, 291, 395 Snowdon, Lord 75, 76 SoftBank 325, 325n; Vision Fund 308, 326, 378, 383 Solana, Javier 219 Son, Masayoshi 325–6, 325n Soros, George 190, 231 Sorrell, Martin 32–3, 46, 60–61, 191, 293, 370, 371, 374, 381–2, 383–6, 385n South Africa 51–3, 109, 147, 229–30, 260, 402, 424, 428, 428n, 429 South Korea 23, 181, 182, 182n, 242, 342, 366, 366–7n, 435, 438 Spacey, Kevin 192–3 Spain 84, 100–101, 148, 153–5, 212, 219, 225–6, 238, 363, 388 Spiegel, Peter 15, 200, 211, 302, 357, 389 Squire, Sarah 264 Sri Lanka 169, 356 Stalin, Joseph 48, 50, 64, 95, 207, 331 Standard Chartered Bank 244–5, 245n Stephens, Mark 174–5 Stephens, Philip 190, 209–10, 228, 354 Stevenson, Dennis 19, 128 Stoppard, Tom 300–301 Stott, Michael 403 Stringer, Sir Howard 17, 17n, 298, 299, 301 Studzinski, John 317 Sturgeon, Nicola 272 ‘sub-prime’ mortgages 62n, 69, 114 Sullivan, Martin 36, 37, 37n Sulzberger, Arthur 225 Summers, Larry 189–90 Sun 41, 100, 162, 165n, 223 Sunday Mirror 75–6 Sunday Times 7, 62, 68, 135n, 192, 317 Susman, Louis B. x, 68, 204, 222 Svanberg, Carl-Henric 409–10 Svenska Dagbladet 240–41 Swannell, Robert 235–6 Swift, Jonathan 297, 297n Syria xiv, 55, 102, 110–11, 177, 259, 355 Taliban 133, 149, 150, 170 Taseer, Salman 169–70 Tate Modern 319 taxation 83n, 106, 125, 131, 143, 143n, 160, 187, 189, 193, 263, 287, 318, 333, 342, 343, 363n, 368, 410, 439 Taylor, Ian 287, 387–8 Team Sky 216, 219 Tencent xii, 440 Tendulkar, Sachin 247 Tesco 23–4 Tesla 221–2, 221n Tett, Gillian xiv, 44–5, 74–5, 102, 147, 190, 346, 347, 389 Thain, John 86–7 Thatcher, Margaret 117, 128, 129, 186, 217n, 229, 231–3, 244, 316, 317, 320, 426, 429, 438 Thompson, Mark 162, 216–17, 216n, 332 Thomson, Robert 5, 5n, 60 Thornhill, John 302 3G 352, 353 Times, The 5, 5n, 28, 35, 60, 151, 165, 165n, 192, 255, 264, 340 Timmins, Nick 47–8 Timothy, Nick 342, 349, 350 Today programme 318 Tortoise 28, 389 Toynbee, Polly 82–3 Trans-Pacific Partnership (TPP) 391, 392 Trichet, Jean-Claude 61–2, 188, 416 Trump, Donald ix, xii, xv, xvi, 58, 97, 131, 133, 184, 211, 251, 312, 314, 315, 316, 317, 331, 332–3, 334–5, 339, 340, 341–2, 345, 346–9, 350, 353, 359, 364, 366–7, 366n, 367n, 374, 376, 378, 380, 381, 390, 391, 394n, 396, 397–8, 399, 406, 409, 412, 419, 420, 432, 434, 435, 437 Turnbull, Andrew 47–51 Tutwiler, Margaret 86 Twitter 210–11, 224, 225, 320, 326–7, 347 Uber 357–8 UBS 179n, 193 UKFast 401 UKIP 253, 259, 262, 274, 284, 412 Ukraine 12n, 27n, 91, 253, 256–7, 259, 275, 330; Orange Revolution 253, 256 Unilever 263, 352, 353 United Arab Emirates xiv, 102 United States: FT move into 3–4; Presidential Election (2008) 68, 82, 96–7, 96n, 98, 99, 113–14, 220; Presidential Election (2012) 220; Presidential Election (2016) 312, 314, 330, 331, 332, 346, 374n; trade war with China xvi, 390, 397 see also individual president name Uribe, lvaro 140, 141–2, 380 Vadera, Shriti 244, 301 Vanity Fair 7, 75, 206 Venezuela 141, 261, 418–19 Verizon 236 Vickers, Paul 197, 227 Vietnam War 132–3, 233, 284 Viner, Kath 291 Virgin Islands 178 Vitol 286, 287, 387 Volkswagen 292 Wall Street Journal 5n, 35, 59–61, 65, 66, 92–3, 135n, 258, 282, 289, 298, 305, 381, 382 Wang Jianlin 213, 233 Wang Qishan 390 Warner, Mark 187 Washington Post 10, 15, 35–6, 51, 57, 59, 60n, 258, 276, 282, 332, 392 Watergate scandal 10, 222n Waters, Richard 215, 270–71 Weber, Axel 178–9, 179n Weibo 234 Weidmann, Jens 368, 415 Weinstein, Harvey 204, 357, 358, 370 Wen Jiabao xiv, 117, 123–6 West Bank 108 Weston, Galen 198, 198n WhatsApp 210, 395 Wheatley, Jonathan 143 White House correspondents’ dinner (2007) 55 WikiLeaks xv, 161, 174–5, 291 Wilkes, John 194, 194n, 195 Williams, Jon 149 Williams, Archbishop of Canterbury, Rowan 168, 169 Williams, Ted 402–3, 404, 432 Williamson, Hugh 96 Wilson, Harold 227, 388 Wilson, Kevin 255, 272, 321 Wimbledon Championships 33–4, 118, 211–12, 242n Wirecard xiii, 401, 404–5, 407, 421 Wolf, Martin x, 38–9, 43, 66, 102, 109, 129–30, 136, 172, 190, 209–10, 232, 256, 271, 436 Wolfowitz, Paul 55–6, 56n, 57, 63 Wong, Joshua 351 Woodford, Michael 298–9, 300–301 Woodford, Stephen 34 Woodward, Bob 276, 342 World Bank x, 56, 56n, 57, 63, 118 World Economic Forum, Davos 46–7, 85–6, 118–23, 225, 360–61, 371, 380, 385, 398 WPP 33, 370, 381, 382, 384–6 Wright, Peter 197, 220, 227 Xi Jinping 99, 241, 242, 303, 304, 305, 335, 347–8, 374–5, 390, 397, 409, 439 Yakovenko, Alexander 237–8, 376–7, 405 Yakunin, Vladimir 276–7 Yale University, Poynter fellowship lecture 134–5 Yanukovich, Viktor 27n, 256, 330 Yemen 307, 377 Zapatero, José Luis Rodríguez 153–5, 225 Zardari, Asif Ali 170, 171–2 Zimbabwe 52, 53, 261 Zoellick, Bob x, 63, 417, 437, 437n Zuckerburg, Mark 394 Zuma, Jacob 52, 53, 261–2 THIS IS JUST THE BEGINNING Find us online and join the conversation Follow us on Twitter twitter.com/penguinukbooks Like us on Facebook facebook.com/penguinbooks Share the love on Instagram instagram.com/penguinukbooks Watch our authors on YouTube youtube.com/penguinbooks Pin Penguin books to your Pinterest pinterest.com/penguinukbooks Listen to audiobook clips at soundcloud.com/penguin-books Find out more about the author and discover your next read at penguin.co.uk EBURY UK | USA | Canada | Ireland | Australia New Zealand | India | South Africa Ebury is part of the Penguin Random House group of companies whose addresses can be found at global.penguinrandomhouse.com.

Hedge Fund Market Wizards
by Jack D. Schwager
Published 24 Apr 2012

Debtor countries that can print money will behave differently from those that can’t. Countries that can’t print money will experience classic deflationary depressions. Those that can print money, such as the United States, can alleviate the deflation and depression pressures by printing money. However, the effectiveness of quantitative easing will be limited because the owners of the bonds that are purchased by the Fed will use the money to buy something similar; they are not going to use it to buy a house or a car. In addition, fiscal stimulus will be very limited because of the reality of the political situation. So it is unlikely that we will have effective monetary policy or effective fiscal policy.

…

The episode Ramsey is referring to represents the longest string of consecutive limit down days that has ever occurred in any futures market. 4John Murphy, Technical Analysis of the Futures Markets (New York: New York Institute of Finance, 1986). 5Strong economic conditions are bearish for bonds because they lead to higher interest rates. 6QE2 was the Fed’s second round of quantitative easing (buying longer-duration treasuries and other securities to lower longer-term rates) that began in November 2010 and ended in June 2011. 7In a Turkish lira/dollar chart, a new low in the lira would show up as a new high—that is, it would take more lira to buy each dollar. 8Ramsey is referring to the chart.

…

If I am concerned enough, I may even move to almost all cash. This attention to economic indicators helped me in 2002 and in 2008. Although in 2010, the same cautionary approach cut my profits. I sold a number of stocks on the notion that the economy was in trouble, and then the Fed initiated QE2 [that is, a second phase of quantitative easing], and stocks took off. I was up 13.3 percent net in 2010, but I would have been up a lot more if I hadn’t liquidated in response to my concerns about the economy. I have no regrets, though, because I’d rather miss an opportunity than lose money. During the long bear market in 2000 to 2002, did you have low exposure the whole time?

Stress Test: Reflections on Financial Crises
by Timothy F. Geithner
Published 11 May 2014

As I prepared to leave the New York Fed, it was hard to fathom how much we had done since the crisis began, and how much the financial world had changed. The Fed had overseen an aggressive easing of monetary policy, reducing our target interest rate from 5.25 percent in September 2007 to as close as it can go to zero in December 2008. Ben had also launched a “quantitative easing” program, buying bonds to provide further monetary stimulus for the economy. We had expanded the Fed’s balance sheet from $870 billion to $2.2 trillion with our new credit and liquidity programs, extending our lending far beyond the U.S. commercial banking system, financing a broad range of collateral for a broad array of nonbanks.

…

In an epic financial crisis that followed a major credit boom, easy money had much less power. Interest rates were already effectively zero; most banks had little ability and even less desire to lend; businesses had little desire to borrow; and consumers already had too much debt. As central bankers say, it felt like the Fed was pushing on a string. It had begun the first round of quantitative easing, or QE1, buying GSE mortgage bonds to help reduce the cost and increase the availability of mortgages. This was an innovative way to do monetary stimulus at a time when short-term rates were as low as they could go; the Fed would later expand the program to Treasuries to try to drive down long-term rates more generally.

…

You want to be as expansive as possible, providing substantial stimulus for the economy for as long as necessary. After a major shock that depresses demand and creates a risk of deflation, central bankers should ease monetary policy, aggressively lowering interest rates. Once the overnight rate approaches zero, they should find new ways to stay on the accelerator, as Ben did through quantitative easing. They need to signal that they’ll eventually hit the brakes, and that they’ll remain vigilant about inflation going forward, but the threat of future inflation is much less worrisome than the threat of imminent deflation and depression. Loose monetary policy can have limited power in a crisis, because low interest rates don’t help that much when borrowers don’t want to borrow and lenders don’t want to lend, but as the central bankers of the 1930s demonstrated, tight monetary policy can be disastrous.

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse
by Mohamed A. El-Erian
Published 26 Jan 2016

In January 2015, the central bank went even further, committing to large-scale purchases of market securities that would expand its balance sheet by 1 trillion euros. In what The Wall Street Journal loudly proclaimed on its January 23 front page was a “new era” (Figure 4), the ECB had embarked on a large and relatively open-ended quantitative easing (QE). It reaffirmed the use of the asset channel as a means of countering deflationary expectations and low growth. And to stress its seriousness, President Draghi indicated in the ECB press conference that the central bank stood ready to buy bonds at negative yields (yes, negative), and it did.

…

As such, the political statement would end up being disappointing, expensive, and short-lived, in addition to potentially harming more promising initiatives in the future. On the other hand, should these conditions be met, the BRICS could end up providing a catalyst for revamping multilateralism in a manner that promotes global economic cooperation and prosperity. CHAPTER 15 THE MIGRATION AND MORPHING OF FINANCIAL RISKS “Quantitative easing has been a bold and innovative experiment. Its outcomes were always uncertain, and some may have been unfortunate. But central banks have been right to do what they did.” —FINANCIAL TIMES Issue 7: With systemic risks migrating from banks to nonbanks, and morphing in the process, regulators are again challenged to get ahead of future problems.

Broken Markets: A User's Guide to the Post-Finance Economy
by Kevin Mellyn
Published 18 Jun 2012

Meanwhile, regulatory capital rules—as well as risk aversion to the real economy and lack of loan demand by shell-shocked enterprises and households—have stuffed bank balance sheets with sovereign bonds. Central bank balance sheets are whole multiples of pre-crisis levels due to bad asset purchases and “quantitative easing”—central banks creating money to buy debt securities. Scene Ten The finance crisis seems contained, and states and banks hope for a return to something resembling pre-crisis conditions or recovery while they continue to patch over difficulties ad hoc (e.g., Greece, Ireland, US house prices).

…

w 163 I Index A C Anglo-Saxon capitalism, 84 Card Act, 68, 70 Anglo-Saxon-type banking systems, 156 CHIPS.See Clearing House Interbank Payment System Asset securitization, 66 Association of Community Organizers for Reform Now (ACORN), 65 Austerity definition, 98 Euro, real unification, 99 Germany, 99–101 B BankAmericard, 29 Bankcard association/card scheme, 29 Bank-centric system, 110 Bank for International Settlements (BIS), 108 Basel III process, 50–51 Basel process, 27–28 Basel standards, 61 Bipartisan government policy, 72 Boom optimistic entrepreneurs, 77 Bretton Woods system, 26, 111 Bureaucracies, 21 Civilization, 64 Clearing House Interbank Payment System (CHIPS), 106, 107 Committee of Payment and Settlement Systems (CPSS), 108 Community Reinvestment Act (CRA), 65–66 Consumer banking BankAmericard, 29 bankcard association/card scheme, 29 branch-based customer relationship, 29 credit card industry, 30 Depression-era Glass-Steagall Act, 33 “diseconomies of scale”, 35 FDIC, 34 four-party model, 29 institutional investors, 34 “market-centric” financial system, 33 merchant/customer relationship, 29 Pac-Man banking, 34 risky business, 31–33 RTC, 31 SEC, 33 S&L industry, 28, 30 1 166 Index Consumer banking (continued) statistical analysis, 30 US “flow-of-funds” data, 28 usury laws, 30 Consumer Finance Protection Bureau (CFPB), 68 Continuous Linked Settlement (CLS), 108 Creative destruction, 85 Credit-driven economy, 76–77 Crony capitalism, 85 Cross-Pacific economy, 97 D Debtor Nation, 64 Dirigisme, 83 Dollar-centric financial system, 112 Durbin Amendment, 70 E ECB.See European Central Bank Economic consequences, financial regulation, 55 bank P & Ls and balance sheets bureaucratic regulation, 59 capital allocation, 57 capitalism, 57 clearinghouse/transaction switch, 58 contradictory rules, 59 creative destruction, 63 free-market capitalism, 57 full-blown panic leading, 57 lender-of-last-resort function, 58 payments system, 58–59 private-sector banks, 58 consumer protection vs. access, 67–68 financial access restriction brick-and-mortar branches, 66 civilization, 64 clearinghouse, 63 CRA, 65–66 credit judgments, 65 economic enfranchisement, 64 government paternalism, 65 joint-stock banks, 63 loan securitization, 66 mass-market retail banking, 66 national and multilateral development agencies, 65 non-credit worthy segments, 66 ownership society, 66 paychecks, 64 premium/reward cards, 66 individual banker accountability, 55 interest reduction, 56 predatory lending, 56 product differentiation, 68–69 public utility, 55, 56 regulatory, capital, and litigation costs, 56 regulatory compliance and fraud losses, 56 savers and investors, 71–73 shell game asset-securitization process, 61 commercial and industrial loans, 62 credible assessment, 62 Dodd-Frank Act, 63 Federal Reserve Bank, 63 free-market creative destruction, 63 globalization, 62–63 Great Depression, 61 Great Moderation, 61 least-regulated jurisdictions, 61 regulatory arbitrage, 61 relationship banking, 62 retail banking revolution, 63 return-on-equity business, 62 rules-based regulation, 61 securitization and market-based funding, 63 supervision vs. rule making, 59–60 unbanking, 70–71 utility-style banking, 56 European Central Bank (ECB), 6, 99, 102–103 F Federal Deposit Insurance Corporation (FDIC), 34 Index Federal Reserve, 101 Finance consumers, 117 American Revolutionary War song, 118 bondholders and money market funds, 138 Bureau of Labor Statistics, 126 business-to-business commerce, 119 consumerism, 118 credit score, 120–121 debt free, 138–139 “dot-com” bubble, 1264 employment and consumer credit, 121–122 Gallup polling organization, 127 Great Society, 126 house prices, 133 “infrastructure”, 119 innovation and education, America advantage, 129 American living standards, 129 global success, 128 high-stakes examinations, 130 industrial policy, 128 student loans, 131 mass-market pottery, 119 money saving, 136–137 New Class, new elite educated caste, 132–133 non-tradable private sector, 127 one’s station in life, 118 overseas trade, 119 pent-up demand, 119 private-sector employment, 125 property taxes, 127 “self-liquidating”, definition, 119 shelter asset bubbles and distorts markets, 133 electoral process, 134 Japanese economy, 135–136 retirement plans and financial advisors, 134 Travellers Club, 133 wealth effect, 133 short-term insurance scheme, unemployment assistance, 127 stock market, 137–138 structural unemployment American economy, 123–125 labor force participation rate, 123 labor markets, Europe, 122 solidarity, 123 three-tiered system, 122 subsidy-based industries, 125 super-safe government debt, 125 technological creativity and economic progress, 117 unionized public-service employees, 125 US job growth, 126 “welfare to work” requirements, 126 You, Inc., 139 Finance-driven economy, 1, 72 anti-capitalism, 2 capitalism, 1 chronic debt crisis, 22 corporate America, 20 current movie artificial bank earnings, 7 asset prices, 6 banking implosions, 6 borrowers and investors connection, 10 borrowing demand, 7 catastrophic financial bubble, 10 civilization, 10 corporatism, 9 democratic crony capitalism, 9 Dodd-Frank act, 8 economic growth and social stability, 10 financial repression, 9 Glass-Steagall Act, 8 human ingenuity, 10 interbank funding markets, 6 low interest rates and easy money, 6 market collapse, 10 money market, 6 overexuberence, 6 overinvestment and speculation, 6 pre-crisis conditions, 8 printing money, 7 private capital, 7 167 168 Index Finance-driven economy (continued) profitability, 7 quantitative easing, 8 recovery, 8 regulation, 8 regulatory capital rules, 8 resources and tools, 9 shell-shocked enterprises and households, 8 end of employment, 21–22 financial leverage magic and poison CEO class, 14–15 consumer debt, 15–16 disconnection problem, 11–12 market bargain, 10 real economy, 10 wealth financialization, 13–14 working capital, 11 global financial crisis, 2 Great Moderation, 16–18 Great Panic, 18–19 household sector agony, 19–20 investor class, 22 Marx, Karl asset bubble, 5 cash nexus, 4 dot-com bubble, 5 economic revolution, 3 First World War, 4 free markets, 3 French Revolution, 3 globalization, 3 Great Depression, 5 liberalism, 3 normalcy, 4 overproduction and speculation, 3 Wall Street, 4, 5 revolutionary socialism, 2 sovereign debt, 8, 22 Finance reconstruction, 142 bank bashing, 146 “bankers”, 142 business model, challenges, 145 Citigroup, 145 cyclical businesses, 143 government management, 142 legitimacy bonus culture, 148–150 privileged opportunity, longestablished bank, 146 short-term share-price manipulation, 148 state and legal systems, 147 stock price, 147 mark-to-market price, 144 “producers”, 143 profession, definition, 163 prudence, 145, 161–163 root-and-branch transformation, 145 talent pool, 144 “the race for talent”, 143 trust cash management, 160 Financial Market Meltdown, 159 FSA, 159 hackneyed term, 159 information asymmetry, 159 non-bank financial service provider, 161 oversold/up-sold products, 159 utility Anglo-Saxon-type banking systems, 156 big data tools, 158 bills-of-exchange market, 150 branch and payment services, 157 clearinghouse creation, 158 core banking, 154 economic value transmission, 150 exchange of claims, 151 fee-income growth, 155 fiat money system, 151 financial intermediation, 150 financial transactions, 157 flexible contractor/subcontractor relationship, 158 information technology, 156 “liquidity premium”, 152 multidivisional/M-form organization, 153 non-interest income, 155 old-media companies, 157 Index overhead value analysis, 154 “privileged opportunity”, 152 quill pen–era practice, 158 sheer utility value, 155 silos, product business, 153 transaction accounts, 152 venture capital industry, 142 “War for Talent”, 143 Financial crises, 23 affordable housing, 24 banking “transmission” mechanism, 43 Basel III process, 50–51 basel process, 27–28 consumer banking(see Consumer banking) Dodd-Frank, 49–50 domestic banking system, 38 European Union, 51–53 FDIC, 40 finance-driven economy’s leverage machine, 43 Financial Market Meltdown, 25 GDP, 38 Government Policy and Central Banks, market meltdown(see Regulation process) government policy failure, 45 “government-sponsored” public companies, 24 Great Depression, 44 GSEs, 24 legal missteps, 47–48 New Deal, 43 panic-stricken markets, 40 political missteps, 45–47 Ponzi scheme, 42 postwar financial order, 25–27 printing money, 38 private profits and socialized losses, 40 private-sector demand, 43 public-sector demand, 42 quantitative approach, 25 TARP, 39 too-big-to-fail institutions, 41 Triple A bonds, 41 US Federal Reserve System, 38 Financial liberalization, 89 Financial Market Meltdown, 25, 61, 89, 109, 159 Financial repression, 9, 78, 111 Financial Services Authority (FSA), 60, 159 Food and Drug Administration (FDA), 69 Fordism, 68 Free-market capitalism, 89 Free markets, 3 French Revolution, 3 Front-end trading systems, 107 FSA.See Financial Services Authority G GDP, 11 “Giro” payments systems, 151 Global imbalance, 96 Globalization, 3 Global whirlwinds, 93 Asia, finance movement cultural differences, 110–111 Financial Market Meltdown, 109 Interest Equalization Tax, 109 language, law, and business culture, 109 primacy, 109 austerity(see Austerity) British Empire, 30 Chimerica, 97 China and United States cross-Pacific economy, 97 foreign interference and aggression, 98 headline growth rates, 97 repression revolution and series, 97–98 Second World War, 98 Smoot-Hawley Tariff, 98 surpluse trade, 97 sustainable development, 98 Chinese ascendancy, 113 clearing and settlement bottleneck, 106–107 Dynastic China, 112 169 Download from Wow!

Home: Why Public Housing Is the Answer
by Eoin Ó Broin
Published 5 May 2019

While it is broadly accepted that the liberalisation of mortgage finance and the high-risk lending to the domestic mortgage market was a key factor in the Celtic Tiger boom and subsequent recession, there is a misplaced assumption in some quarters today that post-crash reforms have removed the vulnerability to such systemic risks. However, as Ryan-Collins points out, what has actually happened is that the site of potential risk has shifted. He has argued that the policies of quantitative easing pursued by Central Banks across the world, including the ECB, since 2009 have ‘together bought up more than €11 trillion-worth (as of early 2018) of Government bonds and other safe assets from investors, replacing it with zero-interest newly created money’.3 Rather than being invested in the productive economy, however, this ‘wall of liquidity created by QE catalysed a global search for high yielding, but safe assets’.4 Namely landed property in the world’s largest cities.

…

Ireland (1994), 222 Help to Buy Scheme, the, 112–13, 196, 197 HFA (Housing Finance Agency), the, 172, 178 Higgins, Michael D., 252, 254 high-rise housing developments, 36 Hogan, Phil, 83 Home Building Finance Ireland initiative, the, 201, 202 home improvement grants, 52 Home Sweet Home, 111 Homeless Policy Statement, 87 homelessness, 41–2, 60, 95, 99, 101, 116, 134, 136, 144, 157, 235–6, 238; and delivery of homes under Rebuilding Ireland, 102–3, 114; and legislation for, 58, 61, 78; levels of, 1, 83, 92, 93, 110–11, 121–5; and tackling the long-term homeless, 78, 83, 87 Homelessness, An Integrated Strategy (report), 87, 235 Homelessness Consultative Forum, the, 122 homeownership, 144, 145, 149, 180; as party policy objective, 53, 60, 84, 85, 86; of private homes, 38, 40, 44–5, 55; as a social objective, 58, 64, 73, 77–8, 85, 86, 161–2 hotel and B&B accommodation, 6, 10, 101, 102, 115, 121, 122 house price inflation, 39, 55, 63, 65–7, 68, 75, 112–13, 125, 139, 140 house purchase and reconstruction grants, 34–5 housebuilding programmes in the UK, xvi (see also Bevan, Aneurin (Nye)) Household Budget Survey, the, 169 housing: as an electoral issue, 241–2; as a right, 153–5, 156–9, 246 Housing (Traveller Accommodation) Act (1998), 232 Housing Act (1924), the, 24 Housing Act (1929), the, 24 Housing Act (1931), the, 27 Housing Act (1932), the, 27–8, 31 Housing Act (1948), the, 33 Housing Act (1966), the, 36–7 Housing Act (1988), the, 61 Housing (Ireland) Act (1919), the, 21 Housing (Miscellaneous Provisions) Act (1988), the, 58, 59, 61 Housing (Miscellaneous Provisions) Act (1992), the, 76 Housing (Miscellaneous Provisions) Act (2009), the, 74, 78–9 Housing (Miscellaneous Provisions) Act (2014), the, 87 housing advocates from religious communities, 42 Housing Agency, the, 106, 119, 167, 171, 175, 199 Housing and Homeless Coalition, the, 131–2, 133, 136, 243 housing conditions in nineteenth-century Dublin, 18, 19–21 housing-finance feedback cycle, 139 Housing First tenancies, 99, 114 Housing in Ireland, Performance and Policy (report), 70–2 Housing in the 1970s (1969 White Paper), 40 Housing Management Group, the, 203 Housing Management Initiative Grants, 203 Housing Needs Assessments, 59, 63, 80, 83 housing policy during the 1980s economic recession, 49–51 Housing Policy Statement (2007), 77 Housing Policy Statement (2011), 83–6 Housing Procurement Agency proposal, 96 housing production during the Celtic Tiger, 75 HSE, the, 99 HUB accommodation, 121 human dwelling patterns, xvi Human Rights and Equality Commission, the, 233–4, 236 ICTU (Irish Congress of Trade Unions), 133, 135, 244 Independent Alliance, the, 101 independent community development sector, the, 204–5 independent planning regulator proposal, 216 Industrial Tenements Company, the, 19 infant mortality rate, the, 20, 24 Institute of Chartered Surveyors, the, 129 interest rates, 28, 33, 53 International Covenant on Economic Social Rights, the, 154 interventions proposed to reduce construction and development costs, 198, 200–1 Irish Collective Asset Management Vehicles, 141 Irish Examiner (newspaper), 115 Irish Home Builders Association, the, 67 Irish Human Rights and Equality Commission, the, 153 Irish Mail on Sunday (newspaper), 131 Irish Parliamentary Party, the, 17 Irish Property Owners Association, the, 76, 77 Irish Qualifying Investor Funds, 141 Irish Real Estate Investment Trusts, 141 Irish Times, The (newspaper), 106, 139–40 Irish Trades Union Congress, the, 20 Iveagh Trust, the, 19 Joint Venture funding model, the, 178 Joint Ventures and Enhanced Leasing Scheme, the, 141 Kelly, Alan, 88, 92, 93, 98, 120, 219 Kemeny, Jim, 180 Kenna, Padraic, 17, 34, 40 Kenny, Brendan, 120–1, 123, 240 Kenny, Enda, 94 Kenny, John, 39, 221 Kenny Report (Report from the Committee on the Price of Land), 39, 221, 226 Keyes, Michael, 33 Kilmainham Treaty, the, 16 Kirby, Peadar, 81, 145 Labour Party, the, 20, 27, 30, 32, 81, 93, 94, 176 Labourers Acts, the, 17 Labouring Classes (Lodging Houses and Dwellings) Act (1866), the, 19 Lalor, James Fintan, 15 land acquisition at below market prices, 223 Land Act (1881), 16 Land Act (1909), 17 Land Act (1923), 24 land and speculative investment, 220–1, 223 Land Commission, the, 16 Land League, the, 14, 15–16, 17, 21–2 land ownership after the Land Acts, 17–18 land price inflation, 39 land prices and a live land market registry, 225 Land Purchase Act (1887), 17 Land Purchase Act (1891), 17 land reforms, 16–17, 224, 225–6 land taxation, 22, 226 landless labourers, 18 Landlord and Tenant (Ireland) Act (1870), 16 landlords, 21, 22, 23, 45, 77, 86, 87, 135; and accidental and non-professional landlords, 1, 182–3, 191–2, 193; in the nineteenth century, 14, 15, 16, 17, 19, 242; and the private rental sector, 74, 76, 117, 127–8, 137, 182–4, 186, 187, 188, 189; and the RTB (Residential Tenancies Board), 77, 114, 207; and tax treatment, 75–6, 141, 184, 185, 192–3, 194 Lane, Philip, 113 language used to describe the housing market, 1–4 large-scale developments and the planning process, 219 large-scale mixed tenure estates, 104 latent defects insurance, 213, 214 LDA (Land Development Agency), the, 130–1, 178, 224, 226 leased private sector properties and the State, 89 Lee, J.J., 29 legislation for Building Control, 209–10 Lemass, Seán, 30 lending limits of the Local Loans Fund, 48 Lewis, Eddie, 80–1 LIHAF (Local Infrastructure Housing Activation Fund), 104–5, 197, 201 living patterns in the nineteenth century, the, 14–15 Local Authorities, the, 21, 24, 31, 34, 59, 61, 82, 86, 90, 159, 173–4, 175, 178, 203, 205, 206, 240; and affordable homes, 61, 126, 162–3, 179; and allocation schemes, 179; and certification of projects, 212–13; and cost rental housing, 161; and current and capital expenditure funding of, 28, 106, 171, 172, 173; and development costs, 198; and direct build, 174; and economic rents, 29; and the Help to Buy scheme, 197; and homelessness, 61, 92, 108, 123; and housing provision, 36, 37, 40, 62, 64–5, 71, 96, 103, 104, 118, 164, 175, 244; and infrastructure, 39; and inspection rates for building standards, 128, 183, 184, 185, 190, 194, 210, 212; and maintenance services, 207; and mortgages, 61, 125–6; and RAS (Rental Accommodation Scheme), 74, 78, 79; and retrofitting programmes, 230; and social ‘polarisation’ and ‘segregation,’ 56–7; and the Traveller community, 232, 233, 238; and triennial social housing needs assessments, 58; and vacant properties, 120–1, 225; and waiting lists, 167; and zoning and planning, 217, 219, 220 Local Government (Planning and Development) Act (1963), the, 37 Local Infrastructure Housing Activation Fund, the, 126, 196–7 Local Loans Fund, the, 28, 33, 48 Lockout of 1913, the, 20 Logos, 4 long-term leasing, 86, 89, 96, 103, 108, 118, 141, 177 long-term tenure and rental stability, 194 long-term vacant Council properties, 120–1 Maastricht Treaty, the, 67 MacEntee, Seán, 32, 35 Mahon Tribunal report, the, 215, 216, 220 Marino, Dublin and public housing, 23 ‘market failure’ to describe the housing crisis, 1, 3 marketisation of the housing sector, xiii–xiv Markievicz, Constance, 27 Marshall Aid Programme, the, 33 McCreevy, Charlie, 217 McDowell, Michael, 153 McEnroe, Juno, 115 McGilligan, Patrick, 22 McVerry, Fr Peter, 93, 134 mental health support for the homeless, 99 Mercy Law Centre, 153–4 mica block, 208–9 Minton, Anna, 75 mixed-income communities (see affordable purchase housing model) mixed tenure, 164, 165, 166–7 Monaghan, Philip, 31 Moran, John, 141 Morgan, Arthur, 156 mortgage lending in Britain, 54–5 mortgages: and affordable housing measures, 63, 79–80, 169; allowances for Council tenants, 61; and arrears, 95, 97, 100, 101, 103, 184, 245; and households on lower incomes, 169–70; and lending and standardisation of banking regulation, 67–9, 139; and mortgage credit, 56, 68, 139; and mortgage interest tax relief, 48, 52, 75–6, 185, 193 Mulcahy, Richard, 22 Municipal Tenants Association, the, 29 Murphy, Eoghan, 116–17, 118, 120–1, 122–3, 124–5, 129–32, 136, 156, 219 Murphy, Mary, 146, 153 Murphy, Timothy, 33 MyHome.ie, 113 NAMA (National Asset Management Agency), 89, 95, 111, 140, 147 NARPS (National Asset Residential Property Services), 89 National Building Agency, the, 37 National Homeless & Housing Coalition, the, 244 National Housing Strategy 2011–2016 (report), 234 National Oversight and Audit Commission, the, 120; Local Authority Performance Indicator Report, 190 national planning and regional balance, 216–18, 220 National Planning Network as statutory plan, the, 218, 219 National Spatial Strategy and decentralisation, the, 217 National Women’s Council, the, 133, 134 NDP (National Development Plan), the, 171, 195, 196, 200, 202, 219 Nearly Zero Energy Building regulations, 226, 227, 228 negative equity, 183 neoliberalism, 48, 53–5, 138, 145, 146, xvi NESC (National Economic and Social Council), the, 67, 73, 88–9, 130, 218, 220; and The Developmental Welfare State (report), 79, 108, 145, 149, 166; Housing in Ireland (2004 report), 70–2, 84, 109, 148, 149, 161, 169, 180, 181–2, 217; review on housing policy, 56–7, 58, 75, 78, 96; Urban Development Land (report), 221 Nevin Economic Research Institute, the, 161, 174 NHS (National Health Service), the, 247 Ninth Progress Report of the All-Party Oireachtas Committee on the Constitution (report), 221 no confidence motion in Eoghan Murphy, 132–3 non-market component in public housing provision, 180–1 non-nationals and access to housing, 236 non-subsidised public housing, 160–1, 163, 179 non-subsidised rental tenants, 91, 186 Noonan, Michael, 92, 112, 141 Norris, Michelle, 34–5, 40, 44, 48, 51, 63, 75–6, 107, 233 not-for-profit and social housing, 60, 72, 119, 141, 159, 161, 175–6 Nunan, Sheila, 133–4, 244 nZEB (Near Zero Energy Building) obligations, 227, 228, 230 Ó Cualann Co-Housing Alliance, 162 Ó Riain, Seán, 81 O’Brien, Darragh, 133 O’Connell, Cathal, 18, 137 O’Connell, Hugh, 131 O’Connor, Fr Ferghal, 42 O’Connor, Orla, 134 off-balance sheet delivery mechanisms, 175–6 Oireachtas Committee on Housing and Homelessness, the, 102, 118, 123, 124, 126, 129, 130, 156, 211–13, 233 Oireachtas Disability Group, the, 234 O’Riordan, Michael, 42 O’Sullivan, Eoin, 123–4 O’Sullivan, Jan, 83 Outlook (TV programme), 42 over-expenditure on the rent supplement, 64, 74 over-reliance on the private market, 12 overcrowded accommodation, 24, 33, 190, 236 owner occupiers (see homeownership) Parnell, Charles Stuart, 15, 16 Part 8 planning permissions, 96, 174 Passive House Standard, the, 230 Pathfinder Projects, 104 Peabody Trust, the, 19 pensioner homelessness, 121, 245 people with disabilities and access to housing, 233–4, 238 Pettifor, Ann, 139–40 pilot Participative Budgeting programme and community funding, 207 Plan for Social Housing, A (1991 White Paper), 58–62, 63, 80, 81, 85, 137, 141, 164, 203, 241 Planning and Development Act (2000), the, 71, 217, 222; and Part V acquisitions, 166, 176, 195, 222, 223 Planning and Development (Amendment) Act (2018), the, 216 planning corruption, 215–16, 220 planning process, the, 35, 57, 216–17, 219; and procurement rules, 96, 104, 173–4 planning reforms for the private sector, 104–5 political ties to building contractors, 29, 45, 215 post-war coalition government, the, 32–5 prejudices, 30 Priory Hall and building defects, 209 private housing: and affordability, 197–8; and home ownership levels, 38, 40, 44–5, 55; and subsidies, 26, 104 private loan finance and grants, 28, 52–3, 55 private property right restrictions, 188, 222, 244 private purchase sector proposal, 202 private rental sector, the, 127–8, 145, 169–70, 180, 228; and increasing reliance on for social housing, 88, 91, 95, 109, 137, 138, 166; and Rebuilding Ireland, 105, 108, 109; and reform of, 182–3, 185–94; and security of tenure, 76–7, 90, 137–8, 187; size and regulation of, 56, 62, 64, 82, 86; and subsidies, 63, 65, 74, 78–9, 88, 89, 108, 137, 138, 145, 177, 186, 235 private sector, the, 12, 34, 89, 104, 121, 138, 144, 162, 180, 201; and the property crash, 82; and social and affordable housing provision, 73, 105, 106, 176–7, 241; and supply of new homes, 1, 35, 39, 104, 195, 196–200; transfer to via tenant purchase, 36–7, 38, 40, 41, 44, 51, 61, 84, 143, 179 procurement rules for housing delivery, 104, 173–4, 208; and the Housing Procurement Agency, 96 production of new homes since the financial crash, 195–6 professional certification of building standards, 210, 212–13 Programme for Government Commitment for the Joint Oireachtas Committee on Housing, the, 155 Programme for National Recovery, the, 57–8 project loan finance and Dublin City Council, 172 Property, Family and the Irish Welfare State (book), 44 property boom and the Celtic Tiger, the, 65–7, 69, 71, 75–6, 81–2, 139, 195 property speculation, 38, 67, 75, xiv protests on the housing crisis, 131–2, 133–6, 243–5 public consultation process, the, 220 Public Health Committee of Dublin Corporation, the, 18 public housing (see social housing) Public Participation Networks, the, 206 public private partnerships, 90, 131, 141, 177 public rent register, the, 128 public service recruitment embargo, the, 205 Public Utility Societies, 24, 28 publicly owned land, 224 Punch, Michael, 66 Purchase of Land (Ireland) Act (1885), 17 Putting People First reforms, 205–6 pyrite, 208, 210 quantitative easing, 146–7 Quarryvale and planning corruption, 215–16 Raise the Roof, 133, 135, 157, 243–4 Rapid Build Programme, the, 114 RAS (Rental Accommodation Scheme), the, 75, 78, 87, 89, 96, 121, 167, 173; as a long-term social housing support, 74, 79, 137; as proportion of social housing delivery, 88, 90, 91, 103–4, 110, 118; and rental subsidy transfer to the Local Authority, 79, 80, 82, 83 re-categorised families removed from the homeless list, 122–5 Reagan, Ronald, 48 Rebuilding Ireland (Action Plan for Housing and Homelessness), 101–10, 115, 133, 136, 138, 141, 184–5, 196, 226–7, 240–1; and delivery of homes for the homeless, 102–3, 114 Rebuilding Roland Home Loan Scheme for first-time buyers, the, 201 reclassification of AHBs (Approved Housing Bodies) into the Government sector, 119, 166, 175–6 RedC opinion polls, 241 redress scheme for structural problems, 130, 210–11, 215–16 referendum proposal on the right to housing in the Constitution, 156, 158, 159 Regan, Maeve, 154–5 regulation of the private rental sector, 62 regulation of the short-term letting sector, 128–9 renewable energy sources, 228, 230 rent arrears, 28–9 rent prices, 9; increases in, 1, 91, 92, 113, 114; linkage to the Consumer Price Index, 92, 96–7, 135, 187; and a price freeze, 187–9, 194; and the RTB index, 91, 112, 114, 188, 189 rent regulation proposals, 92 Rent Subsidy Scheme, 63, 137, 177–8 rent supplements, 64, 74, 83, 91, 92, 97, 103, 137, 189 (see also RAS (Rental Accommodation Scheme), the) Rent Switch programme proposal, 97 rental inspections Bill motion, 128 Rental Subsidy Scheme, the, 60, 80 rental tenancies, 78–9, 88, 96, 97, 107–8, 137–8, 166, 170, 173, 182, 185, 190, 235 (see also HAP (Housing Assistance Payment); RAS (Rental Accommodation Scheme)) renting a second home, 183 Repair and Lease scheme, the, 106, 119 Report of the Commission on Itinerancy (1963), 41 report of the Dáil Housing and Homeless Committee, 95–7, 98, 108, 109 Report of the Joint Oireachtas Committee on Building Land (report), 221 repossessions, 97 Residential Property Tax, 68, 141 Residential Tenancies Act (2004), 77, 97, 113, 127, 183, 207, 238 Residential Tenancies (Amendment) Bill, 92–3 residents’ groups, 204 residual public housing provision during the era of bank liberalisation, 56, 137 Rethinking the Economics of Land and Housing (book), 220–1 retrofitting grants and programmes, 229, 230, 231 Returning Vacant Properties to Productive Use programme, the, 103 review of Rebuilding Ireland, 117 rezoning of agricultural land, 39 Ribbonmen, the, 15 rights and obligations of landlords and tenants, 183–4 Roche, Dick, 81 Royal Commission of Inquiry into Working Class Housing, the, 18, 19 RPZs (Rent Pressure Zones), 113, 114, 127, 185 RTB (Residential Tenancies Board), the, 86, 105, 182, 184, 192, 207; and impact on landlords, 77, 183, 193; and inspection reports, 190, 191; as mediator and adjudicator on legislation, 128, 183, 193; and the RTB index, 91, 112, 114, 188, 189 RTE Investigates (TV documentary), 127–8, 184 rural housing prioritisation over urban, 23, 24, 28 rural labourers, 17, 28 Ryan-Collins, Josh, 54–5, 67–8, 146, 147 Safe as Houses, A Report on Building Control, Building Standards and Consumer Protection (report), 211–15 safety inspections and Completion Certificates, 213 SEAI (Sustainable Energy Authority of Ireland), the, 228, 229 second homes as a property investment, 182 Section 10 of the 1988 Housing Act, 61 Section 23 tax reliefs, 62, 182 Section 34 and Notices to Quit, 187 securitisation, 147 security of tenure, 16, 17, 76, 90, 135, 167, 187, 191 Shared Ownership affordable housing scheme, 79 shared ownership schemes, 61, 79 short-term investment (vulture) funds, 194 short-term letting sector, the, 128–9 short-term license agreements, 187 short-term private sector tenancies, 137–8 Simon Community, the, 41, 124 single Housing Benefit system, a, 178 Sinn Féin, 94, 127, 128, 132, 177, 200 Sirr, Lorcan, 196 Skehan, Conor, 106, 196 skills shortages and apprenticeships, 201–2 ‘skinning down,’ 31 slum clearance, 38, 40 Small Dwellings Acquisitions Scheme, the, 24, 28, 33, 52 social and economic infrastructure for housing estates, 35, 37–8, 39, 215–16; and community building, 202–6 social housing, 23, 145, 148–9, 177, 200, 239; and allocation and eligibility, 131, 179; and association with poverty, 51, 164, 165; calculating existing need, 167–9, 171; and delivery targets, 71, 72, 73, 78, 79, 83, 88, 91, 96, 102, 103, 107–10, 114–15, 116, 117–18, 121, 145; and provision of, 148, 159–65, 168, 171, 174; and emergency accommodation, 98–9; funding of, 171–2, 177, 178–9; and increasing reliance on the private rental sector, 88, 91, 95, 109, 137, 138, 166; and investment by the Free State, 23, 24–5; and maintenance and management, 203, 205, 206, 207; and needs assessments, 58, 59; and non-subsidised housing, 160–1, 163; and production of, 24, 28, 29, 30, 32, 33, 34, 36, 38, 40, 44, 47, 49, 60, 83, 95; by the Local Authorities, 62, 73; and proposal for a programme for public housing, 181–2, 200; for rent, 1, 64–5, 179, 208, xv–xvi; and State funding, 87–90, 98 Social Housing, Disadvantage and Neighbourhood Liveability (policy review), 203 Social Housing, The Way Ahead (policy review), 63–4, 203 Social Housing Current Expenditure Programme (SHCEP), the, 103 Social Housing in Ireland (book), 164 Social Housing Investment Programme, the, 103, 138, 178 Social Housing Reform Agenda, the, 80 Social Housing Strategy 2020 (report), 88–90, 93, 108–9, 141, 241 Social Inclusion Community Activation Programme, the, 206 social partnership, 57, 70 social segregation, 59 social to private housing ratios, 34, 38, 40, 65, 88 socially mixed housing communities, 57 Society of Chartered Surveyors of Ireland, 198–9, 200, 223 socio-economic marginalisation of housing estates, 57–8 Special Branch, the, 42 speculative land investment, 225–6 Stamp Duty, 141 standardisation of banking regulation, 67–8 State agency for public housing delivery proposal, 174–5 State and housing, the, 3, 42–6, 53, 58–62, 63–4, 73, 77–8, 80–1, 138, 141–4, 240–1, 248; funding of social housing, 87–90, 98; interventionist role of, 145–6; and public housing provision, 159–60, 165–7, 231–2; since the 2008 financial crash, 81–2, 195–7, 200, 201–2 (see also Fianna Fáil; Fine Gael) State intervention and the common good, 222–3 Strategic Development Zones, 217 Strategic Housing Development legislation, 219 Strategic Investment Fund, the, 201 Strategic Policy Committees in Local government, 205 stress endured in unsuitable accommodation, 5–11 student accommodation, 105, 126–7, 180 Student Accommodation Strategy, 126–7 Studies (periodical), 20, 21 subsidies, 27, 31, 44, 46, 60, 63, 143, 179; of private home ownership, 12, 26, 40, 41, 48, 52–3; and the private rental sector, 63, 65, 74, 78–9, 108, 137, 138, 145, 177, 186, 235; and transfers to the Local Authority through RAS, 79, 80, 82, 83 suburbanisation and the 1963 Local Government (Planning and Development) Act, 37 Summary of Housing Need (report), 167–8 Sunday Business Post, The (newspaper), 131 supplementary grant for lower-income home buyers, 33 supplementary welfare allowance scheme, the, 64 Supreme Court and State intervention for the common good, 222–3 Surrender Grant, the, 49–50, 61 Sutton Housing Trust, the, 19 Sweetman, Michael, 42 Take Back the City, 132 Task Force on the Travelling People (report), 232 tax code, the, 68 tax credits, 194 tax proposal for vacant homes, 117 tax relief for renters, 189 Technical Guidance Document L, 228 tenancies and long-term planning, 137–8 tenancy and emergency accommodation arrangements, 124–5 tenancy protections, 77, 187, 207; and security of tenure, 16, 17, 76, 90, 135, 167, 187, 191 (see also RTB (Residential Tenancies Board), the) tenant farming system, the, 14–16, 17–18 tenant purchase from Local Authorities, 36–7, 40, 41, 44, 51, 61, 84, 143, 179 Tenant Right League, the, 15 tenements of Dublin, the, 20, 23, 25, 36 tenure neutrality, 80, 81, 86, 148–9, 163, 180 Thatcher, Margaret, 48, 54, 250 Threshold, 50, 76–7, 128, 184 town centre plan for Lucan and Clondalkin, 215–16 town planning debates, 25 trade unionism and Unionist politics, 22 training and accreditation for landlords, 192 Traveller community, the, 41, 61, 144, 232, 233, 238 Treaty for Stability, Coordination and Governance, the, 98 trilateral social partnership agreements, 57, 70 Troika, the, 82 Tusla, 103 UFHDs (Unfinished Housing Developments), 82, 195, 196 under-provision of public non-market housing, the, 12 unitary rental markets, 180–1 Universal Declaration of Human Rights, the, 154 urban densification, 219, 220 urban housing conditions in the nineteenth century, 18, 19–20 urban housing provision, 21, 32 vacant homes, 105–6, 117, 119, 120–1, 132, 185, 195 Vacant Homes Strategy (report), 119–20 vacant site tax, the, 225, 226 Varadkar, Leo, 115, 117, 130, 131, 136 voids (long-term vacant Council properties), 120–1 waiting lists for council accommodation, 6, 7, 35–6, 40, 73–4, 80, 83, 111, 121, 167, 233 Wallace, Mick, 225 Wallich-Clifford, Anton, 41 water ingress, 209 Way Home, A Strategy to End Adult Homelessness (report), 87, 235 Whitaker, Thomas, 35 White Paper (1948), 33, 35 White Paper (1964), 36 Whiteboys, the, 15 Why Can’t You Afford a Home (book), 55 women and homelessness, 134 Woulfe, Séamus, 128

Scotland’s Jesus: The Only Officially Non-Racist Comedian
by Frankie Boyle
Published 23 Oct 2013

And to this day my gran still uses Bisto instead of stockings. Can’t say I approve; seems to me to be a pretty racist way of robbing a post office. But don’t despair, there are lots of ways to make a bit of extra cash. My tip is to go along to your local shopping centre dressed as a fountain. Quantitative easing and low interest rates are just ways to make money for speculators by taking it almost directly from savers. There’s no point in saving any more. I’ve less interest in my bank account than I have in the Blue reunion. William Hague’s said there’s only one true growth strategy for the UK. Work harder.

…

The anti-regulation campaign say it’s not the government’s job to bring up children. I agree. I didn’t buy that huge TV for nothing. Somehow I always knew it was going to require state intervention to stop me watching porn. Of all the measures Cameron has taken to get us out of recession – quantitative easing, banking tax, austerity cuts – this might be the one move that actually gets Britain back to work. What’s the point of being in the house all day if there’s nothing to wank to? You might as well go to work. All it means is that men will evolve, and within two years we’ll have developed the ability to masturbate to a picture of a cat that looks like Hitler.

The Controlled Demolition of the American Empire
by Jeff Berwick and Charlie Robinson
Published 14 Apr 2020

This official number is actually much lower than the real figure, like most governmental numbers that are massaged, inflated, deflated, ignored, or just plain false. One should add another zero to the end of the government’s $22 trillion figure to find the real level of debt and liabilities accumulated. What will happen when things get bad and the Fed decides that they need to restart quantitative easing for the fifth time, or as it should be called, money printing and debasing the currency? If a thousand billion dollars needed to be spent by the federal government over and above the listed budget, and things are “good”, then how much more will they add when the stock market, the housing market, jobs market, and bond market all go into the toilet?

…

Perception management is important when trying to make a crime not look like a crime, so very technical and important names are used to give the looting an air of credibility. When the central banks crank up the printing press and generate billions of dollars that they give to their criminal friends running the big banks, they refer to that as “quantitative easing” and not counterfeiting. Central banks manipulate interest rates, something that would be illegal for anyone else to do so that people cannot calculate the real cost of money. Any arrests for this? Of course not, because the banks run the world, not the governments. The people of America no longer even hold out any hope of justice being served because, after years and years of watching these criminal banks steal with impunity, with nobody going to prison for these crimes, the public has essentially gone numb.

…

The problem is that after being said thousands and thousands of times, the true meaning and the absurdity of the words all kind of fades away, and a new meaning is created through repetition. For years the corporate media has been talking about how the Federal Reserve has come to the rescue of the American economy over and over again by instituting a policy called “quantitative easing”, which sounds really important, official, and technical until one realizes that it is just a fancy name for printing money out of thin air and debasing the value of the currency. Take, for instance, the War on Terror. The actual meaning of this term does not make any sense because it is not possible to declare a war on an idea, but beyond that, what is lost is that war is terror, so to create a war against terror cannot happen because the act of declaring war is a terrorist action.

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds
by Maneet Ahuja , Myron Scholes and Mohamed El-Erian
Published 29 May 2012

Investors that opted for the gold share class earned any dollar returns, plus any incremental returns in the appreciation of gold versus the dollar. In 2009, Paulson and his credit team were closely monitoring government actions to stimulate the economy and aid the recovery. When the Fed adopted quantitative easing as a tool for monetary stimulus Paulson became concerned about the potential for future inflation and dollar depreciation. Quantitative easing historically had not been used in the United States and was a very unorthodox monetary tool, but the United States had entered into a financial crisis that was deeper than any since the Great Depression. And it required innovative and unusual thinking in order to stem the crisis and return the country to recovery.

Mythology of Work: How Capitalism Persists Despite Itself
by Peter Fleming
Published 14 Jun 2015

The income bracket represents only 5% of the population … in exchange for peanuts for the unemployed, the rich received $315 billion over two years. To have an idea of the handout, one should remember that the US government investment in the economy came to $800 billion in 2008. (Lazzarato, 2012: 119–20) The current policy of quantitative easing (the governmental allocation of money for big business) fulfils a similar purpose that is perhaps even more striking in its ‘trickle up’ characteristics. Here the capitalist state is directly fostering conditions that make work a permanently present problem that merits our practical attention: (a) we now have to pay for the resources that the collective tax pool used to take care of, and (b) our work is no longer about making a living but about avoiding social catastrophe.

…

capitalism ref1, ref2, ref3, ref4 General Motors plant (Michigan) ref1 Goffee, R. ref1 Goldman Sachs ref1 The Good Soldier Svejk (Hasek) ref1 Gordon, D. ref1 Gorz, A. ref1, ref2 Graeber, D. ref1 Groundhog Day (Ramis) ref1 Guattari, F. ref1, ref2, ref3 on criticism/criticality ref1 and de-subjectification ref1 language ref1, ref2 Gujarat NRE ref1 Gulf of Mexico oil spill (2010) ref1 Hamper, B. ref1 Hanlon, G. ref1 Hardt, M. ref1 Hart, A. ref1 Harvard Business Review (HBR) ref1 Harvey, D. ref1, ref2 Hayek, F. ref1, ref2, ref3 health and safety ref1, ref2 ‘Help to Buy’ support scheme ref1 Hirschhorn, N. ref1 Hodgkinson, T. ref1 holiday policy ref1 Houellebecq, Michel ref1, ref2, ref3 human capital ref1, ref2, ref3, ref4, ref5, ref6, ref7 human relations movement ref1 Human Resource Management (HRM) ref1, ref2, ref3, ref4, ref5, ref6 humour ref1 ‘I, Job’ function ref1, ref2, ref3, ref4, ref5, ref6 and biopower ref1, ref2 and death drive ref1, ref2 as escape into work ref1 and illness ref1, ref2, ref3 resisting ref1, ref2, ref3, ref4, ref5, ref6 see also escape; totality refusal see also work, as all-encompassing; working hours illegal immigrants, deportations ref1 illness ref1, ref2 collective ref1, ref2 see also Social Patients’ Collective as desirable experience ref1, ref2, ref3, ref4 of managers ref1, ref2 and productive power ref1, ref2 as weapon against capitalism ref1 ‘immersion room’ exercise ref1, ref2, ref3, ref4 imperceptibility ref1 see also invisibility incentivization ref1 indexation process ref1, ref2, ref3, ref4, ref5 informality and authoritarianism ref1, ref2 see also deformalization insecurity ref1 Institute of Leadership and Management (ILM) ref1, ref2, ref3 invisibility ref1, ref2 ‘Invisible Committee’ ref1, ref2 Italian autonomist thought ref1, ref2 Jameson, F. ref1 Jones, G. ref1 Junjie, Li ref1 Kamp, A. ref1 Kein Mensch ist illegal ref1 Kellaway, L. ref1 Key Performance Indicators (KPIs) ref1 Keynes, J.M. ref1, ref2 Khrushchev, Nikita ref1, ref2 Kim, Jonathan ref1 King, Stephen ref1 ‘Kitchen Debate’ ref1 Kramer, M. ref1, ref2 labour unions ref1 dissolution of ref1, ref2 language, evolution of ref1 Larkin, P. ref1 Latour, B. ref1, ref2 Laval, C. ref1, ref2 Lazzarato, M. ref1, ref2 leaders backgrounds ref1 remuneration and bonuses ref1, ref2, ref3, ref4, ref5 see also managers Lefebvre, H. ref1 Leidner, R. ref1 Lewin, D. ref1 liberation management ref1, ref2, ref3, ref4, ref5 life itself, enlisting ref1, ref2, ref3, ref4, ref5 lines of flight ref1, ref2 Lordon, F. ref1, ref2, ref3 Lucas, R. ref1, ref2 Lukács, G. ref1 Lynch, R. ref1 McChesney, R. ref1 McGregor, D. ref1 management ref1, ref2 and class function ref1, ref2 as co-ordination ref1 and inducement of willing obedience ref1, ref2 information deficit ref1 and power ref1, ref2 self-justification rituals ref1 as transferable skill ref1, ref2 managerialism ref1, ref2, ref3, ref4, ref5, ref6, ref7 and abandonment ideology ref1, ref2, ref3, ref4, ref5 and boundary management ref1 and conflict-seeking behaviour ref1 division between managers and managed ref1, ref2 general principles of ref1 and leadership ref1 profligate management function ref1 refusing ref1 and securitization ref1 as self-referential abstraction ref1 managers as abandonment enablers ref1, ref2 and deformalization ref1 and engagement of workers ref1, ref2 lack of practical experience ref1 overwork ref1, ref2 see also leaders Marcuse, H. ref1 Market Basket supermarket chain ref1 Marx, K. ref1, ref2, ref3, ref4, ref5, ref6 Maslow, A. ref1 Matten, D. ref1 meat consumption ref1 Meek, J. ref1 Meyerson, D. ref1 Michelli, J. ref1 Miller, W.I. ref1 Mitchell, David ref1 mobile technology ref1, ref2, ref3, ref4, ref5, ref6, ref7 Modafinil ref1, ref2 Monaghan, A. ref1 money ref1, ref2 see also accumulation Mooney, G. ref1 Moore, A.E. ref1 Moore, Michael ref1, ref2 music industry ref1 Naidoo, Kumi ref1 NASA ref1 Natali, Vincenzo ref1 Negri, A. ref1, ref2 neoliberal capitalism ref1, ref2, ref3, ref4, ref5, ref6, ref7 and bureaucracy ref1 and ideal worker ref1, ref2 and non-work time ref1, ref2 and paranoia ref1, ref2 resisting ref1, ref2 see also post-labour strategy and threat of abandonment ref1, ref2 and truth telling ref1, ref2, ref3 neoliberalism ref1, ref2, ref3, ref4, ref5, ref6 and class relations ref1, ref2, ref3 and disciplinary power ref1 and human-capital theory ref1 and impossibility ref1, ref2, ref3, ref4, ref5, ref6 and micro-fascism ref1 and reign of technocrats ref1 role of state ref1 and truth telling ref1, ref2 and worker engagement ref1, ref2, ref3 Nestlé ref1 New Public Management ref1, ref2 New Zealand, and capitalist deregulation ref1 New Zealand Oil and Gas (NZOG) ref1 Newman, Maurice ref1 Nietzsche, Friedrich ref1, ref2 Nixon, Richard ref1, ref2 Nyhan, B. ref1 obsession ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 Onionhead program ref1 overcoding ref1, ref2, ref3, ref4, ref5, ref6, ref7 The Pain Journal (Flanagan) ref1, ref2, ref3 paranoia ref1, ref2, ref3, ref4 overwork/paranoia complex ref1, ref2 Paris Commune ref1, ref2 Parkinson’s Law ref1 Parnet, C. ref1 Parsons, T. ref1 Peep Show (TV comedy) ref1 pensions ref1, ref2 personnel management ref1 see also Human Resource Management Peters, T. ref1 Philip Morris ref1 Pike River Coal mine (New Zealand) ref1 Pollack, Sydney ref1 Pook, L. ref1 Porter, M. ref1, ref2 post-labour strategy, recommendations ref1 postmodernism ref1, ref2, ref3 power ref1, ref2, ref3, ref4, ref5 and truth telling ref1 Prasad, M. ref1 Price, S. ref1 private companies, transferring to public hands ref1 privatization ref1, ref2, ref3, ref4, ref5, ref6, ref7 profit maximization ref1, ref2, ref3, ref4, ref5 quantitative easing ref1 Rand, Ayn ref1 rationalization ref1, ref2, ref3 Reifler, J. ref1 reserve army of the unemployed ref1 Ressler, C. ref1 results-only work environment (ROWE) ref1, ref2, ref3 Rimbaud, A. ref1 Rio+20 Earth Summit (2012) ref1 ‘riot grrrl’ bands ref1 rituals of truth and reconciliation ref1 Roberts, J. ref1 Roger Award ref1 Roger and Me (Moore) ref1 Rosenblatt, R. ref1 Ross, A. ref1, ref2 Ross, K. ref1 Rudd, Kevin ref1 ruling class fear of work-free world ref1, ref2 and paranoia ref1, ref2 Sade, Marquis de ref1 Sallaz, J. ref1 Saurashtra Fuels ref1 Scarry, E. ref1 Securicor (G4S) ref1 Segarra, Carmen ref1 self-abnegation ref1 self-employment ref1 self-management ref1, ref2, ref3, ref4, ref5 self-preservation ref1, ref2, ref3, ref4 self-sufficiency ref1, ref2, ref3 shareholder capitalism ref1, ref2, ref3, ref4 shift work ref1, ref2 see also working hours Shragai, N. ref1 sleep and circadian rhythms ref1 as form of resistance ref1 working in ref1, ref2, ref3 smart drugs ref1, ref2 Smith, Roger ref1 smoking and addiction ref1 dangers of ref1, ref2 scientific research ref1 sociability ref1, ref2 ‘the social’ ref1, ref2 social factory ref1, ref2, ref3, ref4, ref5, ref6, ref7 and structure of work ref1 social media ref1 Social Mobility and Child Poverty Commission ref1 Social Patients’ Collective (SPK) ref1, ref2, ref3 social surplus (commons) ref1, ref2, ref3 socialism ref1, ref2, ref3, ref4 Sontag, S. ref1 Spicer, A. ref1 stakeholder management ref1, ref2 Starbucks ref1 state, theory of ref1 subcontracting ref1, ref2, ref3 subsidization ref1, ref2, ref3, ref4, ref5, ref6, ref7 suicide as act of refusal ref1 Freud’s definition ref1 work-related ref1, ref2, ref3, ref4, ref5 surplus labour ref1, ref2 surplus living wage ref1 ‘tagged’ employees ref1 ‘tagged’ prisoner ref1 Tally, Richard ref1 taxation ref1, ref2, ref3 Taylor, F.W. ref1 Taylor, S. ref1 Taylorism ref1 technological progress, and emancipation from labour ref1 Thatcher, Margaret ref1 Thatcherism ref1 They Shoot Horses Don’t They?

A Pelican Introduction: Basic Income
by Guy Standing
Published 3 May 2017

Though the grants were not a basic income, since they went only to certain groups, they nevertheless showed the effectiveness of stimulating the economy by giving millions of people extra cash to spend.7 From QE for Bankers to QE for People The anti-deflationary monetary policies introduced first in Japan and then more generally in the aftermath of the financial crash of 2007–8 were a missed opportunity to phase in at least a short-term basic income plan. Through so-called ‘quantitative easing’ (QE), the US Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank, among others, have injected billions of dollars, yen, pounds and euros into financial markets in a largely unsuccessful bid to stimulate growth. The allocation of even a modest part of that money to fund a basic income would have been more efficient at boosting growth, less regressive in its impact and clearly affordable.

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Standing (2011), ‘Responding to the crisis: Economic stabilization grants’, Policy & Politics, 39(1), pp. 9–25. 7. T. McDonald and S. Morling (2011), ‘The Australian economy and the global downturn. Part 1: Reasons for resilience’, Economic Roundup Issue 2. Canberra: Treasury, Australian Government. 8. Standing, ‘Responding to the crisis’. A. Kaletsky (2012), ‘How about quantitative easing for the people?’, Reuters, 1 August. G. Standing (2014), A Precariat Charter: From Denizens to Citizens. London: Bloomsbury. M. Blyth and E. Lonergan (2014), ‘Print less but transfer more: Why central banks should give money directly to the people’, Foreign Affairs, September/October. V. Chick et al. (2015), ‘Better ways to boost eurozone economy and employment’, letter to Financial Times, 27 March.

Smarter Investing
by Tim Hale
Published 2 Sep 2014

Yet by the time the second edition was published, readers and investors had suffered the trauma of the credit crisis and the demise of Lehman Brothers and a range of other near collapses, such as RBS and Lloyds, which were saved only by the largesse of the UK taxpayer. The UK market fell during the period November 2007 to February 2009 by over 40%, and the economy was deeply in recession. By the time of this third edition, we have suffered through the Eurozone crisis (which may well raise its ugly head again), double dip recession, quantitative easing (printing money), record low interest rates and the signs of a few shoots of recovery. Equity markets in 2013 have roared ahead, pricing in better future earnings. What does all this tell us? Not a lot really, other than we have virtually no idea what lies ahead of us in the next few years, and no one else does either.

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Pragmatism over dogmatism on this one! Past returns The past returns on short and intermediate index linked gilts are set out below. In the past few years they have performed exceptionally well as real yields (remember back to Chapter 6) have fallen as money has flooded towards safe assets, quantitative easing has driven down real yields, growth is benign and pension funds seek to match their inflation-linked liabilities with inflation-linked assets (see Figure 11.13). Future returns The simplest and most effective way to estimate the future returns on bonds is to look at their current yields.

Less Is More: How Degrowth Will Save the World
by Jason Hickel
Published 12 Aug 2020

House prices are astronomically high, to the point where a normal two-bedroom flat may cost £2,000 a month to rent, or £600,000 to buy. These prices bear no relationship to the cost of the land, materials and labour involved in building a house. They’re a consequence of policy decisions, such as the privatisation of public housing since 1980, and the low interest rates and quantitative easing that have pumped up asset prices since 2008. Meanwhile, wages in London have not kept pace – not even close. To cover the gap, ordinary Londoners have had to either work longer hours or take out loans (which represent a claim on their future labour), just to access a basic social good they used to be able to get for a fraction of the cost.

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The US presidential candidate Bernie Sanders laid out a clear plan for cancelling student debts, which in 2020 stood at a staggering $1.6 trillion. Academics at King’s College London have published a plan for how governments could write off not just student debts but also other unjust debts: mortgage debts created by housing speculation and quantitative easing, old debts whose lenders have been bailed out by governments, and unpayable debts that are devalued on secondary markets.47 We know it’s possible. In the wake of the coronavirus disaster in 2020, governments in a number of countries suddenly found the ability to make debts disappear. We can do the same thing with the debts held by global South countries, which have been rising at an alarming rate.

Framers: Human Advantage in an Age of Technology and Turmoil
by Kenneth Cukier , Viktor Mayer-Schönberger and Francis de Véricourt
Published 10 May 2021

See also financial markets classical models of, 130 death of business monocultures, 182–183 essence of market, 176–177 financial crisis of 2008, 49–51, 101 Edison, Thomas, 10, 117 efficiency of choosing and applying mental models, 153, 208–209 framing and, 110, 144 human processing and, 110 in reframing, 129–131, 144 Einstein, Albert, 8, 35, 78, 131–132, 138–139 electric cars, 142 The End of History and the Last Man (Fukuyama), 20 Entebbe raid, 97–100, 101, 107, 115, 235 e-sports, 69–70 evolution, theory of, 7 explainability causality enables, of reality, 60 as essential to success of mental model, 62 as foundation of human agency, responsibility, and control, 64 helps learning, 63–64 as human need, 65 Fasciculus Medicinae, 6 Fearless Girl statue, 198–199 Fermat’s Last Theorem, 137 financial markets Charging Bull and Fearless Girl statues, 198–199 free flow of information and, 215 historical mental models for, 50 mental models for financial crisis of 2008, 50–51 options pricing in, 39–40 quantitative easing, 51 Fitzgerald, F. Scott, 216 Flipkart, 119 Florida, Richard, 192 Foote, Eunice, 73–74, 168, 232 framing. See also causality; constraints; counterfactuals; mental models agility of mind as undergirding, 217 AI as reinforcing significance of, 211 AI’s inability to do, 44, 45–46 to allow adaptation and survival, 21 attention to agency and, 107 being open-minded and, 204 conditions for, 221 dangers of poor, 214–215 described, 4–5, 36–38 efficiency and, 110, 144 emotionalists as poor at, 210 as empowering agency, 27 as enabling creativity and imagination, 26, 33 envisioning alternative realities and, 9, 79, 90, 94 as fundamental to decision-making, 5, 8 as fundamental to human cognition, 5, 25 governments, 29–30 homophily and, 89, 162, 234 humans cannot stop, 46 as liberating, 27 magnification of certain elements and minimization of others, 6 need for flexibility in, 214 oppression and, 175–176 other terms for, 25 as process, 39 processes involved in, 208–209 as subconscious action, 8 technology’s inability to do, 17–18, 44, 45–46 terrorists and, 213–214 uniformity as end of successful, 207 “framing effect,” 10 Francis I (king of France), 169 Freud, Sigmund, 25, 80 Frisch, Otto, 133 Fukuyama, Francis, 20, 181 Fung, Inez, 75–76, 168 Gabriel, Peter, 112 Gazzaniga, Michael, 62–63 Gehry, Frank, 102–103 Geisel, Theodor Seuss, 101–102, 103 gene editing, 137 generalization.

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Chan, 35 King, Martin Luther, Jr., 41 Kleiner, Eugene, 42 Kodak, 182 Kuhn, Thomas, 10 Langdell, Christopher Columbus, 86–87 Langley, Samuel, 37 language, grammatical, 57, 58 Lanier, Jaron, 112 “latticework of models,” 129 Laurel, Brenda, 85 learning and explainability, 63–64 learning as disruptive, 152–154 “Lego Ideas,” 165–166 Leopold the Pious, 169 Lilienthal, Otto, 36 Lister, Joseph, 61–62 Lo, Andrew, 130 “local optimum,” 166–167, 243 Lombrozo, Tania, 63–64 Lysenko, Trofim, and Lysenkoism, 7 MacGyver (television program), 91 Mandžukić, Mario, 77–78 maps, 27–28 Mauborgne, Renée, 35 McCarthy, John, 44 McDowell, Alex, 114 Meitner, Lise, 133 mental diversity advantages of, when identifying solutions, 166–167, 176 broadening range of frames, 155–156, 160–161, 241 business monocultures and, 183 clean-slate strategy for increasing, 158–160, 241 “cognitive foraging” for increasing, 156–158, 160 conceptual leaps necessary for, 152–153 friction resulting from, 194–195 ideological silos and, 207 importance of, when reframing, 162–163 as mind-set, not method, 151–154 within organizations, 161–166, 241–242 Podolny and, 150–151 rise and fall of social structures and, 183–185 social structure’s belief in validity of dominant mental model and, 179 variation not volume as important, 154 mental models art and, 11 banning certain, 186–187 broadness of, and ability to work in different circumstances, 144–146 building real models to support, 115–117 business and management and, 35 causal, from ability to abstract from direct observation and, 54–55, 59 choosing new, 40–44 coexistence of competing, 198–199 coexistence of new and old, 134 cognitive dexterity necessary to entertain many different, 168 convincing causal explanations needed for application of, 62 dangers of exclusion of alternative, 179–182 defined, 226 efficiency of choosing, 153, 208–209 emotionalists and, 69 employed affect options, 5 end of history and liberal, market democracy as only, 181–182 everyday use of, 9, 25 explainability as essential to success of, 62 for financial crisis of 2008, 50–51 flawed causal, 66–67 as foundation of human cognition, 5, 25, 26, 208 hard constraints and, 104 harnessing, 139–140, 219 historical, for financial markets, 50 importance of diversity of, when reframing, 162–163 invention of new, 7–8 keep world manageable and thus actionable, 9 learning enabled by, 64 maps as physical representations of, 27–28 as means of finding solutions, 4–5, 8, 38–39 need for diversity of, 151–152, 186 nine-dot test and, 46 as operationalizing values, 39 other terms for, 25 pluralism as flourishing of many clashing, 177–178 pluralism of, versus uniformity of, 14–15 poor, 6–7, 60–61, 178–179, 186 reapplication of same successful, 127, 179, 207 reduce cognitive load by focusing mind, 11–12 as shaping worldview, 39–40 single, as truth, 179 social structure’s belief in validity of dominant, 179 space exploration and, 33–35 technology’s need for human input of causal, to outperform humans, 70 as templates for human cognition, 11 tendency toward homophily and, 89, 162, 234 tension between, 160–161 use and validation of, 40 Messner, Reinhold, 123–126, 127 metaphors, importance of, 57 MeToo movement, 24 migration and mobility, 191–194 Milano, Alyssa, 23–24 minimal-change principle, 108–110 Minority Report (film), 111–114 misframing, 6–7, 10, 30–31 Mokyr, Joel, 183–184 monocultures, 179–183 monolithic thinking, 20, 180 Monument Valley, 85–86 moon landing, 33–34 Morris, Jan (formerly James), 160 Mosia, Nthabiseng, 203–204 mountain climbing, 123–126, 127 Mount Everest, 123–126, 127 Munger, Charlie, 129 Murdoch, Rupert, 194 Musk, Elon, 105–106, 194 mutability, 104–107, 110 mutilated checkerboard problem, 152–153 Nadella, Satya, 194 Neptune, prediction of existence of, 35 Netanyahu, Jonathan “Yoni,” 100 Newton, 7–8, 78, 131 New York Times, 34, 170–171 Nie Yunchen, 202–203 nine-dot test, 46, 47 Nix, Kevin, 189 Nokia versus Apple, 6–7 Norgay, Tenzing, 123 Norway, 163 Occam’s razor, 108 Ono, Koichi, 65 OpenAI, 70 options AI’s failure to conjure restraints creates too many, 118 constraints enable identification of viable, 117 counterfactuals and, 90 framing as ideal for efficiently identifying valuable, 208 mental models employed affect, 5 reframing provides new, 126 “Our World in Data” project, 19 Page, Scott, 166–167, 243 paradigm shifts, 10–11 “paradox of tolerance,” 178, 244 Parker, Robert, 109 Pasteur, Louis, 61 pattern recognition, 56 Pauling, Linus, 132 Pearl, Judea, 68 Perec, Georges, 103, 236 Perfume (Süskind), 83 Piaget, Jean, 80 Pichai, Sundar, 194 Pinker, Steven, 56, 57 Plato, 77 play, 80–82 pluralism banning certain mental models, 186–187 benefits of, 176 Chinese versus European societies, 183–185 coexistence of competing mental models, 198–199 cultural diversity and, 193 debate in “public sphere,” 195–197 in economic and political spheres, 176–177 education and childhood socialization to foster, 190–191 embracing variation to foster, 188–190 expansion and restriction of, 173–176 flourishing of multiplicity of clashing mental models, 177–178 as fostering and celebrating differences, 14–15 friction resulting from, 194–195 goal of, 186 importance of, 151–152, 179–181, 186 as means to end, 177 migration and mobility to foster, 191–194 as necessary for societal survival, 177–178 reapplication of same mental models and, 179 social pressure to censor and, 186 versus uniformity of mental models, 14–15 as unnatural state for humans, 187–188 Podolny, Joel, 149–151, 164–165 Poetics (Aristotle), 84–85 Popper, Karl, 178, 244 Porat, Ruth, 194 possibilities. See options Pozo, Susan, 154 pretending/pretend play, 80–82 problem-solving. See solutions “problem space,” 166–167 progress, counterfactuals as crucial to, 12–13 quantitative easing, 51 racial discrimination and color-blindness, 191 Rand, Ayn, 194 reading, silently or aloud, 42–44 reality/realities. See also alternative realities causality enables comprehension and explainability of, 52, 60 constraints as impacting current, 117–118 frames simplify, 9 human cognition as simulation of, 26 human comprehension of, through analogies, 230 order in, 71 of terrorists, 214 Redd, Dana, 135 reframing characteristics of individuals involved in, 136–137 circumstances surrounding, 140–141 difficulty of repeatedly, 138–139 difficulty of unlearning, 140 efficiently, 129–131, 144 effort demanded by, 139–140 examples of, 123–126, 202–203 failure and, 132–133 frequency of, 11, 143 impacts of inventions on, 10 importance of mental diversity when, 162–163 paradigm shifts and, 10–11 provides new options, 126 by reinvention, 131–132, 220 by repertoire riffling, 13–14, 128–129, 220 by repurposing, 129–131, 203–204, 220 as revolutionary act, 133 as riskier and potentially more rewarding than staying with existing mental models, 209 tendency to coalesce around consensus position when, 164 timing of, 141–142 Regional Advantage (Saxenian), 183 Remarque, Erich Maria, 83–84 The Republic (Plato), 77 responsibility, 64, 65–66 right-wing populists, governance by innate sense of rightness of one’s beliefs, 16 The Rise of the Creative Class (Florida), 192 Rorschach tests, 6 Rousseau, Jean-Jacques, 16–17, 80, 132 Sacco, Joe, 135 same-sex marriage campaign (US), 188–190 Sapiens (Harari), 79 SARS, 31, 32 Saxenian, AnnaLee, 183 Schwartz, Peter, 111–113 Science, 163–164 sciences broadening range of frames, 160–161, 241 China versus Europe, 184–185 development of drugs, 2–3 free flow of information and, 215 invention of new frames and physics, 7–8 reframing in, 131–132, 137 tension between mental models in, 160 understanding human cognition and, 206 scientific management theory, 17 scientific method, 67 self-driving cars, 92–93 Semmelweis, Ignaz, 60–61, 62 Seuss, Dr.

Restarting the Future: How to Fix the Intangible Economy
by Jonathan Haskel and Stian Westlake
Published 4 Apr 2022

But fiscal policy is not perfect either. It can lag. Or it can be held up. Or it is unpopular. There are at least three alternatives. The first is to give more power to the monetary authorities. Governments can, as they have done since the financial crisis in the United Kingdom, for example, guarantee central banks’ quantitative easing (QE) programmes—that is, back their purchases of government bonds or commercial debt. Alternatively, central banks might implement “dual rates” that allow commercial banks to fund themselves cheaply from the central bank. (The European Central Bank is currently using dual rates, along with negative interest rates.)

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See COVID-19 pandemic Papanikolaou, Dimitris, 58 patent wars, 2–3, 109, 269n43 Peltzman, Sam, 219 personalised pricing, 223–24 Phelps, Edmund, 136 Philippon, Thomas, 30, 41, 242 Phillips curve, 166–67 Piketty, Thomas, 27, 75, 242 Pinter, Gabor, 174 Piton, Sophie, 218 platforms, 114 Plath, Robert, 123 policy: competition, 15; financial and monetary, 14, 162–74, 168f, 170f political bargains, 16 politics, institutions and, 110–12 Posner, Eric, 98 postindustrial economy, 56–59 postmodernism, 7 Preston model, 205 prices, 220–27 priming, 129–30 productivity, 17, 24, 30f, 37, 39–43, 45, 67–70, 68f, 187, 264n31, 265n3 property rights, 93–94, 97–98, 267n13, 268n22 Proud, Steven, 277n22 public funding, 13–14, 140–43, 275n27 public investment, 127–28, 136–37, 145–46, 203 Puga, Diego, 186 Putnam, Robert, 259 quantitative easing (QE), 178, 274n58 Race between Education and Technology, The (Goldin and Katz), 126 Ratnovski, Lev, 152 reciprocity, 92–93 regulation, sectoral, 228–30 remote work. See work from home (WFH) rent seeking, 117, 138, 141, 216, 244, 254–55 replication crisis, 129–30 reputation, 92–93 research and development (R&D), 48, 53, 55–58, 124–26, 160, 178, 193, 203 retooling hypothesis, 40, 45 reversion to the mean, 156 Ridley, Matt, 123, 136 Roads and Bridges (Eghbal), 139 Robert-Nicoud, Frédéric, 204 Roberts, John, 142, 245 Robinson, James, 85, 96, 266n1 Rock, Daniel, 243 Rogers, Mark, 133 Romer, Paul, 247 Rossi-Hansberg, Esteban, 217 Ruiz-Valenzuela, Jenifer, 232 “Ryan’s World” (YouTube program), 35–36 Sawhill, Isabel, 208 scalability, 52–53, 115 Schoenholtz, Jim, 151 Schulz, Nick, 10, 86 Schumacher, Ernst, 58 Schwartz, Peter, 25 Scott, James C., 58 Second Machine Age, The (Brynjolfsson and McAfee), 39 segmentation, market, 223 Selden, George, 2 Sena, Vania, 133 Sever, Can, 155, 178 Shadbolt, Nigel, 146 shareholder value management, 158–62 Sheer, Lia, 160–61 Shiller, Robert, 36–37 Shleifer, Andrei, 156 Shockley, William, 204 short-termism, 159, 161–62 Sichel, Dan, 42, 45 signalling, human capital, 233–34 Simon, Hermann, 57 Skelton, David, 202 skeuomorphs, 106–7 Smith, James, 179 Smith, Noah, 236 Southwood, Ben, 138 special interests, capture by, 130 specificity, 104–6 spillovers, 52–53, 113, 121–36, 134f, 158–62, 269n48 Srivastava, Anup, 157 stagnation, 4, 23–26, 24f, 26f, 67–70, 68f state capacity, 16, 143–46, 240, 244, 245f, 247, 249–53 State We’re In, The (Hutton), 41 status, inequality of, 28 Stoker, Gerry, 29 street votes, 197–98 suitcase, wheelie, 123–24 Summers, Lawrence, 33, 163 sunkenness, 114, 115t, 116, 181 synergies, 53–54, 68–69, 114, 158–62, 269n48 Syverson, Chad, 243 Tabarrok, Alex, 133 Tabarrok curve, 133–34, 134f Taylor, Mark Zachary, 144, 256 Taylor, Tim, 268n24 tech-governance fit, 105 technical debt, 12 technocrats, 193–96 technological approach, 87 technological change, 99–104 technology, 39, 42–43, 68–69, 128–30 technopopulism, 257 Theranos, 80 Thicke, Robert, 131–32 Thiel, Peter, 35, 137, 141, 258 Timmis, Jonathan, 217 Tobin’s Q, 25–26, 26f, 264n13 total factor productivity (TFP), 43, 45, 67–68, 68f, 69–70, 264n31, 265n3 transactions costs, 95, 266n8 transport infrastructure, 188–89, 199–200 Tranter, Justin, 132, 270n19 Trump, Donald, 7, 202, 258 trust, 92–93, 99 uncertainty, 88, 265n49 unemployment/inflation trade-off, 166 unpredictability, 108–10 vaccines, 22, 43 value-based management, 158–62 value investing, 155–58 van Bavel, Bas, 111, 242 van Zandt, David, 101, 268n24, 268n31 VC.

Road to Nowhere: What Silicon Valley Gets Wrong About the Future of Transportation
by Paris Marx
Published 4 Jul 2022

But that has not stopped Tesla’s share price from soaring far beyond its value on paper, or the value of any other automaker, because of how the stock prices of highly hyped tech companies have become divorced from their earnings after a decade of near-zero interest rates and governments flooding the market with cash through quantitative easing programs. At the time of writing, however, Tesla has not crashed. Investors and Musk’s devout followers continue to believe he can deliver all that he promises, and until they lose faith, the company will likely continue to operate. So, which company have I described if it is not Tesla? While Tesla gets a lot of attention and credit for the growing share of electric vehicle sales in the present—though its shine has diminished in recent years as more automakers have unveiled their own battery-powered options—electric vehicles are not a new invention.

…

Cloud computing and other software products made it much cheaper than in the past to launch a start-up and compete for a piece of the rapidly growing industry. Meanwhile, financing was abundant, not just because decades of inequality had caused more wealth to flow to those at the top, but also due to policy choices taken to combat the recession. The trillions of dollars printed by the Federal Reserve and other central banks through quantitative easing and the low interest rates that persisted throughout the 2010s created an environment that boosted the stock market even as most workers’ prospects continued to stagnate, which benefited venture capitalists and made it much easier for new companies in the tech sector to access capital. Such a dynamic granted investors, influential founders, and executives at the dominant companies in the industry a significant degree of power in shaping what the post-recession economy looked like—and who it served.

India's Long Road
by Vijay Joshi
Published 21 Feb 2017

So far, his policy was entirely in consonance with Reddy’s. Then, strong inward capital flows resumed because a) it looked as if the worst of the crisis was over and India had come out of it in better shape than many countries; and b) Western governments slashed interest rates to very low levels and started ‘quantitative easing’, which raised the relative return on Indian assets. At this point, Subbarao appears to have had a change of heart. Perhaps he thought that a stronger rupee would be good for damping down inflation. Perhaps he was persuaded by the reports of some government committees that had advocated moving towards a floating exchange rate.

…

The IMF now recognizes that capital controls may be necessary to defend national financial stability. The East Asian crisis of 1997 was partly responsible for the change of view. More recently, in the aftermath of the GFC, this was reinforced by the experience of the highly expansionary monetary policies (including so-​ called ‘quantitative easing’ [QE]) that were undertaken by central banks in the advanced countries. When the US Fed introduced the second round of QE in 2010, many emerging counties were threatened with huge and disruptive capital inflows. Several of them (e.g. Brazil, South Korea, Thailand, Indonesia) introduced capital inflow controls to prevent their currencies from rising to uncompetitive levels.

…

References [ 335 ] 336 ╇ 337 INDEX Aadhar card, 206, 207, 214, 304 and Aadhar-╉linked bank accounts, 207, 214, 287, 304 administration, see government administration advanced countries (ACs), 53, 65, 97, 129, 132, 141, 145, 188, 202, 255, 257, 262, 263–╉4, 266–╉8, 277, 298 Agreement on Government Procurement (GPA), 269, 298 agriculture, 55, 67–╉70, 93, 100–╉4, 121, 126, 141–╉2, 163, 229, 248, 267, 292–╉3, 296, 309 exports, 103 marketing, 101, 293, 309 price controls in, 102 public investment in, 102, 293, 296, 309 reform in, 100–╉4, 292–╉3 share in GDP, 67–╉8 subsidies in, 102–╉3, 293, 296, 309 surplus labour from, 70 trade liberalization in, 103, 267 workers in, 66–╉7 Agricultural Produce Marketing Committees (APMCs), 101 air quality, 124–╉6 ASEAN, 265 Asia Pacific Economic Cooperation (APEC), 266, 298 backward states, 29 balance of payments, 22, 139–╉40, 155–╉9, 248–╉50, 254, 259, 299 Bangladesh, 28, 176, 186, 187 Bank Investment Company (BIC), 118, 295 bankruptcy, 7, 97–╉9, 154–╉5, 291, 294 Basel committee on Bank Regulation (BCBR), 258 Basel III standards, 258 basic income, 197, 210–╉15, 216–╉19, 285–╉8, 293, 303–╉4 cost of providing, 216–╉19 recommended magnitude of, 212, 214, 216–╉19 universal, 211, 212, 214–╉15, 216–╉19 Bharatiya Janata Party (BJP), 22–╉3, 24–╉5, 227–╉8, 278, 311–╉12 -╉led NDA government, 117 see also Modi Government black money, 237–╉8 Board of Industrial and Financial Restructuring (BIFR), 97–╉8 business houses, 61, 62 capital, 26, 52–╉3, 69–╉70, 72, 105, 248, 258, 291 accumulation of, 52–╉3, 58–╉60, 312; see also investment -╉intensive sectors, 69, 80 markets, 97–╉9 movements, 155, 159, 252, 262, 267 of banks, 154, 258, 284, 295 per worker, 52, 52 physical capital, 52–╉3 reform of capital markets, 97–╉9, 291 see also human capital; investment; environment capital capital account convertibility (CAC), 155, 159, 253, 262 capital controls, 155–╉6, 262–╉3 capital flows, 157, 250, 254, 282 volatility of, 262 338 capital-​output ratio, 19 capitalism, 60–​2 carbon tax, 130 cash transfers, 91, 164, 206–​14, 288, 296 objections to, 208 technology of, 206–​10 universal, 214–​15 see also basic income Central Government Public sector enterprises (CPSEs), 113–​23 Central Vigilance commission (CVC), 115, 234 Centre and States, 161, 228, 313–​15 child/​infant mortality, 20, 72, 125, 186 nutrition, 28, 186, 189 China, 6, 8–​10, 25, 28, 29, 55, 70, 72, 73, 124, 125, 130, 131, 132, 163, 176, 179, 185, 186, 249–​50, 252, 254, 255, 256–​7 Churchill, Winston, 3 civil servants, 43, 151, 233, 308 climate change, 128–​33 and India, 129–​33, 256–​7 and low-​carbon strategies, 131 and Paris Conference, 131-​2 coal, 88, 89, 114, 122, 130, 132, 214, 285 collective action, 42, 97, 226, 229, 306 companies, 26, 52, 61, 72, 78, 79–​80, 97–​8, 114–​16, 148, 153–​4, 284 competition, 26, 42–​3, 61, 92–​4, 115–​17, 120–​2, 181, 183–​5, 290, 303, 268, 313–​14 Competition Commission, 93, 283, 290 concentration, 61 conditional cash transfers (CCTs), 209–​10 Congress Party, 18, 22–​3, 24, 24, 25, 114, 227–​8, 229, 235, 278, 295, 301 contracts, 41–​3, 119–​21, 123, 230, 237, 308 contract labour, 67, 79, 290 Contract Labour Act (CLA), 79, 81, 82 contract teachers, 179, 182, 301–​2 controls, 18, 19, 43, 44, 87–​91 coordination, 37, 39, 43, 92, 104, 120, 152, 256, 264, 292 [ 338 ] Index corporate: investment, 23, 26–​7, 56, 59–​61, 145–​8, 285 savings, 26, 27 sector, 58, 61–​2, 154, 284 corruption, 22, 44, 74, 79, 96, 105, 185, 207–​8, 235–​43, 307–​10 courts, 234–​5 credit, 19, 25, 27, 74, 76, 99, 118, 188, 280–​1, 284 access to, 75–​6, 253 bank, 153–​4, 276 directed, 75 for small firms, 75, 295 short-​term, 22 wilful defaulters and, 99 criminal politicians, 238 crisis, 22, 23, 30, 157–​9, 259, 260, 280, 315 of 1991, 26 crony capitalism, 7, 8, 62, 105, 235–​43, 277, 283, 306–​7, 310, 313 crop insurance, 296, 309 cross-​border outsourcing, 70, 250, 263 crowding out, 151, 160 current account deficit, 23, 27, 59, 139, 155, 156, 156–​7, 248–​9, 253, 280–​1 debt overhang, 148, 153–​5, 284 decentralization, 179, 185, 232–​3, 306, 308, 314–​15 ‘deep fiscal adjustment’, 165, 279, 285–​8, 290, 300, 309–​10, 314 and economic reform, 91–​2, 163–​5, 212–​14, 285–​8 and universal basic income 285–​7 Modi government and, 287–​8 democracy, 3–​4, 9, 10, 18, 35, 36, 141, 225–​6, 229, 232–​3, 306, 311–​12, 315–​17 demographic transition, 52, 59, 72–​3 deprivation, 27–​30, 35, 201 devaluation, 18, 23, 252, 254 developing countries (DCs), 15, 27, 44, 53–​4, 130, 132, 141, 176, 252, 256, 263–​4 diesel, 88–​9, 126, 164, 287, 288 disadvantaged: castes, 306 groups, 28–​9, 204, 226, 228, 339 Doha Development Agenda, 300 Draft National Health Policy, 305 droughts, 17–​18, 22, 104, 130, 139, 141, 316 Ease of Doing Business, 60, 74, 75, 77, 94, 105, 284, 289–​90, 308 see also World Bank East Asia, 55, 68, 70, 71, 105, 155, 157, 247, 253, 265 East Asian crisis, 157, 253, 262 economic development, 8, 16, 35, 44, 67, 72, 101, 225, 230, 243, 277–​8 economic reform/​reforms, 54, 77–​82, 87–​91, 92–​4, 94–​7, 101–​4, 104–​5, 117, 119–​23, 126–​7, 130–​1, 151–​3, 154, 159, 162–​5, 182–​5, 188–​91, 195–​7, 210–​15, 233, 240–​3, 263–​9, 275–​308 in 1980s, 22, 24, 26 in 1991, 4, 26, 27 education, 19–​20, 37, 42–​3, 53–​5, 175–​85, 212–​13, 229–​32, 300–​2, 304–​5, 310 enrolment in, 28–​9, 176, 184 ‘free and compulsory’, 181, 231–​2 government schools and, 42, 179–​83, 229, 232, 301–​2 higher, 29, 184–​6, 302 pedagogic practices in, 179, 301 primary, 28–​9, 42, 176–​83, 185, 300, 305 private providers in, 234 private schools in, 177, 172–​7, 301–​2 private universities in, 184, 185 quality of, 53, 179, 183, 301, 312 reform, 181–​5, 301–​2, 305 secondary, 29, 53, 71, 176–​83, 185, 300, 305 teacher accountability in, 179, 301–​2, 305 teacher effort in, 179 universal free, 304 vocational, 185 vouchers, 181 see also Right to Education Act election expenditures, 238, 241, 307–​8 electricity, 89–​90, 117, 121–​2, 214, 309 Electricity Act of 2003, 122 Emergency, 18 see also Gandhi, Indira employment, 19, 51, 65–​8, 71, 73, 77, 79–​82, 94, 203–​4, 288–​90, 300–​1 formal and informal, 67, 69 in organized and unorganized sectors, 66–​7 problem, 54, 65–​70, 77, 87, 288–​90, 297 sectoral shares, 68 see also labour ends of economic policy, 35–​6 energy, 88, 113, 128–​31, 254, 296 entrepreneurship, 40, 61, 62, 75, 313; see also corporate sector environment, 123–​33 capital, 123–​8 degradation of, 124, 126–​7, 312 Modi government and, 296 pollution, 124–​6, 296, 309 property rights and, 123–​4 protection of, 102, 113, 165, 229, 293 reform, 124–​8, 130–​3, 293, 296 exchange rate, 155–​6 and external payments regime, 155 policy, 155–​9, 282 reform of policy framework, 159 regime, 155, 282 exports, 23, 55, 69–​70, 72, 92, 103, 153, 159, 248–​9, 255, 281–​2, 297 external economic engagement, 257–​69, 297–​300 Modi Government and, 299–​300 external: balance, 140, 155–​9, 279, 282 liberalization, 253, 297 payments regime, 155–​9 see also balance of payments external effects/​externalities, 38, 39, 43, 124, 130, 191–​2, 286 factor markets: capital, 97–​9 finance 99–​100 labour, 77–​82, 94 land, 94–​7 Modi government and, 294 reform of, 94–​102, 291 Index [ 339 ] 340 farmers, 89–​91, 101–​3, 126–​7, 143–​5, 202, 228, 238, 293 and pricing of fertilizers, 90 and subsidies, 90 self-​sufficient, 103 see also agriculture federalism: competitive, 314 cooperative, 214, 314 see also Centre and States female labour force participation rate, 73 fertilizers, 90, 103, 164, 206, 212, 285, 290 Finance Commission, 161, 228, 281, 308, 313, 314–​15 financial: inclusion, 99–​100, 291, 309 institutions, 76, 100, 140, 258 repression, 152, 162, 282 sector reform, 99–​100, 294 firms: in unorganized sector, 76, 77 size-​distribution of, 71 see also small firms; companies fiscal: adjustment, 162, 165 balance, 159–​65 consolidation, 30, 59, 159, 161–​3, 281, 282, 309 crackdown, 18 deficits, 30, 139, 143, 148, 156, 157, 159–​65, 213, 280, 287 policy/​policies, 25–​6, 30, 142, 145, 151–​2, 159–​65, 281, 282 problem, 159, 280 reform, 92–​3, 159–​65, 282 sustainability, 160, 280 see also ‘deep fiscal adjustment’; subsidies Fiscal Responsibility Act ( 2003), 162 food: articles, 141, 143, 144 market, 142–​3, 144 security, 41, 203, 267 subsidies, 91, 143, 164, 202–​3, 205–​6, 212–​13, 288 see also public distribution system; issue prices; procurement prices Food Security Act (FSA), 164, 202, 231 [ 340 ] Index foreign: aid, 18, 256 borrowing, 23, 26, 30, 156 capital, 247 investment, 24, 247–​50, 255, 258–​9, 297–​8, 299–​300 relations, 8, 9 foreign direct investment (FDI), 93, 151, 250–​1, 253, 268, 284, 299 from China, 254 Indian diaspora’s role in, 254–​5 liberalization of, 229, 299 policy regime, 250 reform, 93, 299 foreign exchange: intervention, 156 reserves, 156, 157, 158, 249, 260; see also global reserve system forests, 127–​8 free capital mobility, 157; see also capital account convertibility Gandhi, Indira, 17–​18, 22, 26, 227, 229, 233, 237 Gandhi, Rajiv, 22–​3, 26 Gandhi, Sonia, 24 Gini Coefficient, 29, 30 global: ambition 8–​10 credit crisis, 25, 58–​9, 139, 160, 253, 258–​9, 277 economic issues, 257–​9 engagement, 247–​69 exchange rate system, 259 imbalances, 259–​60 manufacturing networks, 250 reserve system, 261–​2 slowdown, 25, 151; see also recession supply chains, 264 global credit/​financial crisis (GFC), 25, 27, 58–​9, 139, 253, 257–​9, 262, 277 global warming, see climate change globalization, 247, 254; see also global engagement goods and services, 41–​3, 92, 94, 113, 163, 206, 210, 247–​8, 257, 290–​1, 293 carbon-​intensive, 130 reform of markets in, 87–​91, 92–​4, 290 341 goods and services tax (GST), 92–​3, 291, 293–​4 government administration, 230–​5, 307, 308 consumption, 59 corruption in, 235–​43 debt, 160–​1 employees, 43, 239 expenditure, 163–​5 failures, 7, 39–​40, 44, 187–​8, 191–​2, 276, 304 interest payments, 165 intervention, 19, 40, 87, 91, 104, 144, 236 procurement, 236–​7, 241 services, 44 spending, 88, 102, 131, 148, 163, 203, 302 subsidies, 44, 87–​92, 102, 180 see also state gross fixed capital formation (GFCF), 145 growth acceleration, 15, 16, 27, 55, 61 accounting, 54–​8 fast, 5–​6 high-​quality, 5, 8, 276, 279, 315–​17 Hindu rate of, 15, 100 of output per head/​per worker, 51–​4 rate of, 4, 5–​6, 15–​16, 19, 23, 26, 30, 36, 51, 53–​7, 101, 144, 151 rapid, 17, 19, 35, 51, 52, 54, 60, 65, 70, 73, 87, 93, 104, 119, 153, 230, 236, 240, 279, 297, 300, 302, 309 slow, 19–​20, 144, 275 slowdown, 25, 56, 144, 145, 153–​4, 281, 317 sources of, 51–​8 ‘super-​fast’, 6, 28, 139, 157, 297 sustainable, 35, 113, 123–​33, 279 health/​health care, 7, 19, 37, 43, 175, 186–​8, 188–​97, 300, 302–​3, 304–5, 310, 312, 313 future of, 195–​7 money follows patient scheme, 303 primary care, 19, 187, 191–​4, 195–​6, 302–​3, 305 public health and, 72, 186–​8, 302 quality of, 189, 191–​7 reform of, 195–7, 305 secondary care, 187, 189–​91, 195–​6, 302–​3, 304–​5 state intervention in, 187 universal, 195 health insurance, 39, 190, 205, 210, 303 high-​income countries, 4–​5, 51, 276, 316 Hinduism, extremist version of, 311–​12 Hirschman, A. 42 household savings, 58–​9 human capital, 21, 53, 66, 189, 254, 287, 289, 302 inclusion, 6, 30, 35, 91, 99, 113, 135, 175, 215, 293, 300 see also financial inclusion income: agricultural, 163 distribution, 29, 36–​7, 44, 256–​7 redistribution, 43, 88, 91–​2, 201–​19, 253 ‘India shining, ’ 24 Indian capitalism, 60–​2 Indian university system, 184; see also education, higher India’s global engagement evolution and extent, 247–​52 impact on India, 252–​5 impact on the world, 255–​7 India’s stance on global economic issues, 257–​69 Indradhanush initiative, 295 industry/​industries, 26, 55, 61, 67–​70, 88, 94, 97, 100, 101, 104–​5, 113–​14, 153, 158, 267 Industrial Disputes Act (IDA), 78–​82, 256 industrial policy, 104–​5, 284 reform of, 104–​5 industrialization, 105, 202, 253 inequality, 4, 29–​30, 226 regional, 29 inflation, 18, 23, 25, 27, 59, 139–​45, 151–​3, 157–​8, 162, 166–​8, 208, 279–​80 and government debt ratio, 162 and Modi government, 152, 280–​1 demand factors, 144–​5 high, 36, 59, 140, 144–​5, 148, 151, 162, 279 Index [ 341 ] 342 inflation (Cont.) supply-​side factors, 142–​4 targeting, 151, 166–​8, 279–​80 see also monetary policy information problems, 39 information technology (IT) sector, 61, 70, 233, 240, 249, 253, 298 infrastructure, 7, 24, 60, 113, 119–​23 and the Modi government, 295–​6 reform, 119–​23, 292, 295–​6 see also Public–​Private Partnerships Insolvency and Bankruptcy Code, 97–​8, 294; see also bankruptcy institutional decay, 226, 229, 230, 306–​7 Integrated Child Development services(ICDS), 189 Intended Nationally Determined Contributions (INDCs), 132 international: liquidity, 260–​1 migration, 252, 254–​5 money, 258–​63 reserves, 259, 299 International Monetary Fund (IMF), 18, 22, 23, 26, 253, 259–​62 international monetary system, 259, 260–​2 international trade, 18–​19, 78, 92–​4, 101, 103, 156–​7, 247–​8, 252–​5, 255–​7, 263–​9, 276–​7, 297–​300, 310 and ‘behind-​the-​border’ items, 264 between India and EU, 300 liberalization of, 18, 24, 38, 93, 103, 117, 163, 248, 253, 263, 290, 298 policies, 92–​3, 248, 256, 262–​3, 297 policy reform, 93, 263–​9, 297–​300 investment, 19–​20, 26–​7, 39–​40, 52–​3, 56, 60, 93-​5, 102, 145, 148, 153-​5, 250–​2, 282–​5 and Modi Government, 282–​5 climate, 60, 282–​5 corporate, 26, 59, 145–​8 household, 59 in infrastructure, 59, 95, 119, 120–​1, 163 in 1980s, 23 private, 59, 89–​91, 103, 119, 120, 123, 148, 162, 280–​1, 283, 287 public, 17, 22, 23, 59, 91, 102, 104, 119, 123, 213–​14, 292–​3, 296, 309 [ 342 ] Index reforms in climate for, 74–​6, 282–​5 revival, 284 risk-​premium on, 148 see also public–​private partnerships issue prices, 91, 143, 164, 202 Jan Dhan, 207 Janata party coalition government, 18 Judicial Appointments Bill, 235 justice, administration of, 43 Kashmir, 8, 227 kerosene, 88–​9, 164, 285, 288 labour, 7, 19, 39, 52, 54–​5, 65, 69–​74, 76–​8, 79–​80, 94, 104–​5, 176, 229, 257, 288–​91 as resource, 52, 55, 69 bias against use of, 69–​72 -​demanding growth, 76 -​intensive industries, 80, 253 -​intensive manufacturing, 70, 72, 250, 266, 298 -​intensive products, 70, 72, 73, 77, 80, 290 low-​skilled, 70–​2, 77, 254 reallocation of, 54 skilled, 77 shift from agriculture, 69, 70 training, 38, 185 see also contract labour; labour laws; labour market labour force participation rate, 73 labour laws/​regulations, 65, 77–​82, 94, 97, 253, 289–​90, 294, 299, 309 reform of, 77–​82, 294 studies on impact of, 80 labour market, 7, 39, 77–​82, 94, 290, 310 reform of, 81–​2, 294 labour productivity, 52, 54, 66–​9, 69, 72, 73, 76, 104, 288–​9 growth of, 55 in organized industry, 69 see also output per worker land, 55, 74, 76, 94–​7, 120, 211, 213, 236, 291, 294, 309–​10 Land Acquisition, Rehabilitation and Resettlement Act (LARR), 95–​6, 294 343 land market 94 price-​discovery in, 96, 291 land law: reform, 95–​7, 294 liberal democracy, 35–​6, 279, 311–​12, 315–​16 liberalization, 7, 18, 22–​4, 26, 54, 61–​2, 104, 159, 215, 252–​5, 262 of foreign direct investment (FDI), 299 license raj, 27, 184, 307 licenses, 19, 40, 100, 122, 230, 235, 237–​9, 283 life expectancy, 20, 186 literacy, 28 adult, 20 female, 29 local government, 314–​15 low-​income countries, 28, 186, 256, 300, 302 macroeconomic stability, 7, 35, 37, 43, 53, 59, 139–​65, 279–​82 and external balance, 155–​9 and fiscal balance, 159–​65 and internal balance, 141–​55, 281–​2 Modi Government and, 280–​2 Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS) 203–​5, 210, 213, 215, 239 arguments for and against, 204–​5 description of, 203–​4 ‘Make in India’, 105, 310 managed floating, 155–​6, 280–​1; see also exchange rate policy Mandal commission, 22, 226–​7; see also reservations manufacturing, 68, 71–​2, 250, 310 share of employment in, 68 market/​markets, 7, 19–​20, 35–​41, 43–​4, 102–​4, 123–​4, 154, 187–​8, 276–​7, 288–​93 failures of, 37–​9, 40–​1, 44, 75, 94, 187–​8, 190, 191–​2, 276, 303–​4 for factors of production, 65–​72, 77–​82, 94–​102, 289, 291, 294 for goods and services, 87–​94, 290–​1, 293–​4 liberalization of, 36, 229 prices, 37, 41, 90–​1, 95, 143, 164, 202, 288 reform of, 77–​82, 87–​105, 290–​6 virtues of, 37 see also competition; natural monopoly Mayawati, 227 mega-​regional agreements, 297, 309 merit goods, 38, 213 Mid-​Day Meals scheme, 177, 206 middle class, 313 mobile banking, 207 Modi, Narendra, 25 foreign tours, 299 pan-​Indian electoral support for, 312 as RSS pracharak, 312 Modi government, 82, 96, 100, 105, 278, 280–​1, 299–​300, 304–​6, 307–​8, 310–​12 Monetary Framework Committee, 151, 281 monetary policy, 142, 144–​5, 151–​2, 166–​8, 281–​2 transmission of, 152, 281–​2 reform of policy framework, 151–​2, 166–​8, 281–​2 monopolistic exploitation, 39, 117 multi-​currency system, 261–​2 multilateral negotiations, 264 Narasimha Rao, P.V., 23, 26 National Rural Employment Guarantee, Act, 232; see also Mahatma Gandhi National Rural Employment Guarantee Scheme nationalization, 40, 41 natural capital, 123–​8 natural monopoly, 38–​9, 117 Nayak, P.J., 118, 285, 295 Nehru, Jawaharlal, 4, 17–​18 non-​tradable goods, 117 nuclear agreement with US, 24 nutrition, 186, 189 oil prices, 18, 22, 89, 144, 152, 159, 288 oil-​related products, 88, 285 ‘Old India Model’, 275–​5 organized industry, 69–​70 Index [ 343 ] 344 organized sector, 65–​7, 69–​70, 73–​4, 76–​7, 79–​80, 94, 283, 288–​9 bias against labour in, 69–​72 definition of, 66 and demand for labour, 69–​72, 73–​82 labour productivity in, 69 output per worker, 52, 57, 69, 87, 288 ownership, 43–​4, 113–​18, 123, 211, 279, 288–​96, 299, 310 Pakistan, 8–​9, 17, 18 Paris conference on climate change, 131–​2 Partial Reform Model, 22–​7, 276 Patel, U., 151, 281 payments regime, see external payments regime per capita: growth, 5–​6, 306, 317 income, 4–​5, 6, 30, 51, 75, 240, 256, 276, 316 planning, 17, 39, 40 plurilateral agreements, 267, 269, 298 police, 234 political: awakening, 226, 228, 306 economy, 8, 30, 209, 225–​30, 278, 315, 317 political parties, 92, 227, 229, 237, 238, 241–​2, 306–​7, 308 financing of, 241, 307 pollution, 38, 124, 125–​6, 189, 235–​6, 293 population, 21, 27–​8, 52–​3, 72–​3, 77, 101, 105, 123, 163–​4, 210–​12, 215 age-​distribution of, 72 poverty, 4, 15, 21, 27–​30, 44, 53, 65, 66, 77, 88, 201, 210–​11 among disadvantaged groups, 28 extreme, 4, 28, 211, 215, 277, 286–​7, 300, 309 in states, 28 programmes, 205 power, 8–​10; see also electricity Pratham, 177, 180 preferential trade agreements (PTAs), 264–​7 price/​prices/​price system, 19, 42–​4, 87–​91, 96, 103, 122, 126, 128, 130, 141, 202–​3, 212, 214, 237, 285, 293 [ 344 ] Index price and output stability 141–​55 price controls, 7, 87–​91, 102, 236, 285 price stabilization, 203 price subsidies, 90, 206, 285, 300 reform, 87–​91, 92–​7, 101–​3, 121–​2, 125–​6, 130–​1, 285, 290, 292, 293, 294, 296 see also inflation; monetary policy; issue prices; procurement prices priority sector lending, 99 private: companies, 7, 61, 94, 95, 102, 114–​16, 119, 291 health insurance markets, 190–​1 ownership, 36, 101, 116 partners, 42, 119 providers, 43, 175, 190–​3, 234, 303–​4 sector, 17, 37, 41–​4, 62, 101, 191–​2, 194–​6, 232–​6, 292–​3, 302–​3, 306 privatization, 24, 41–​2, 92, 113–​18, 121, 165, 213, 287, 291, 295 and efficiency, 116 fiscal case for, 116 procurement prices, 91, 143, 145, 152 production, pattern of, 69 productivity, 23, 26, 27, 52, 53–​4, 60–​2, 66, 70, 87, 94, 233, 288–​9 growth of, 62, 87, 113, 116, 247, 253, 288, 290–​2, 297, 310, 312 see also labour productivity; total factor productivity promoter/​promoters, 62, 98, 128, 154, 308 prosperity, 4, 276 public and private providers, 43, 193, 303–​4 public distribution system (PDS), 41, 91, 143, 164, 202–​3, 209, 239, 253 reform of, 202–​3 public goods/​public services, 7–​8, 37–​8, 41–​3, 92, 175, 181, 201, 210, 228, 230, 242, 277, 313–​14 public health, see ‘traditional public health’; see also health/​health care public interest litigation, 125–​6 public–​private partnerships, 42, 59, 95, 119–​23, 292, 296, 309 reform of, 119–​20, 295–​6 Public Procurement Bill, 241 345 public sector, 7, 19–​20, 42–​3, 58, 66, 115, 119–​21, 180, 193, 196 public sector banks (PSBs), 118, 154–​5, 284, 295, 309 reform of, 118, 154, 295 public sector enterprises (PSEs), 19–​20, 24, 41, 93, 113–​18, 164–​5, 180, 213, 287, 291, 295, 309 and the Modi government, 294 reform of, 115–​18, 291, 295 public telecom companies, 114 Punjab, 30, 102, 127, 226, 227 separatist movement in, 22 purchasing power parity (PPP), 5, 276 pure public goods, 37–​8, 43, 102, 140, 164, 188, 191, 210, 212, 277, 285–​6 quantitative easing, 158, 262 Radical Reform Model, 276 -​308 Ram, K., 227 rail services, 90, 285 Rajan, R., 99, 152, 159 Rangarajan, C., 28, 210 Rashtriya Swasthya Bima Yojana (RSBY), 191, 195–​6, 205, 303, 305 Rashtriya Swayamsevak Sangh (RSS), 311–​12 real effective exchange rate (RER), 158, 281 recapitalization, 118, 154, 162, 285 recession, 18, 23, 36, 160; see also slowdown Reddy, Y.V., 157 reform/​reforms, see economic reform/​ reforms Regional Comprehensive Economic Partnership (RCEP), 265, 266, 297 regulation, 7, 43–​4, 77–​8, 117–​18, 125, 240–​2, 258–​9, 276–​7, 288–​93, 303–​4, 307 remittances, 249, 254 reservations, 22, 72, 234, 276 Reserve Bank of India (RBI), 100, 145, 151–​2, 154, 156–​9, 162, 258, 279, 281–​2, 284, 295 resource/​resources allocation, 7, 36, 44, 87, 91–​3 degradation of, 124, 127 scarcity of, 38, 40, 236–​7, 260 Right to Education Act (RTEA), 181–​3, 231, 301; see also education Right to Information Act (RTIA), 240 rights, 18, 36, 38, 40, 43, 76, 95, 96, 98, 123–​4, 231–​2, 236–​7, 268, 293, 307, 311, 313, 315 sanitation, 28, 76, 126, 188–​9, 196, 201, 203, 302, 312 Sarva Shiksha Abhiyan, 177 savings, 19, 26–​7, 52–​3, 58–​9, 70, 73, 92, 152, 213, 282, 286–​7 domestic, 56, 156 household, 27, 58–​9 public, 58–​9, 148 scandals and scams, 25, 27, 62, 151, 191, 203, 237 security, 9–​10 services, 41–​3, 55, 67–​8, 70, 71, 72, 93–​4, 100, 104–​5, 247–​50, 266–​8, 290–​2, 298 shadow banks, 258 Shanta Kumar committee, 203 Shastri, Lal Bahadur, 17 Sick Industrial companies Act (SICA), 97–​8 Singh, Manmohan, 23–​5, 206 Singh, V.P. 22–​3; see also Mandal Commission; reservations skill/​skills, 77, 252, 310; see also human capital; vocational and technical education and training skill-​intensive sectors, 69–​70, 104–​5 small firms, 71, 72, 73–​7, 283, 295 small-​scale industry reservations, 72 social: awakening, 226, 306 democracy, 36, 201–​2, 300 security benefits, 66–​7 social enablement 163, 165, 201, 202, 300-​6 Modi government and, 304–​6 social protection, 163, 201–​22, 279, 300, 304 framework for, 202, 203, 210, 300–​4 Modi government and, 304 reform, 208-​15 schemes, 202, 206, 210, 300 social safety net, 201–​22, 239, 277 Index [ 345 ] 346 South Korea, 5, 6, 20, 68, 70, 157, 262, 265, 316 Special Drawing Rights (SDRs), 261–​2 state: accountability, 230–​5 capacity, 231–​5, 254 intervention, 7, 19, 36, 37-​44, 142, 187–​90, 192, 226, 228, 300, 302 and market relationship, 8, 36–​44 ownership, 18, 36, 40, 41, 113-​18, 163 political economy of, 225–​30 reform of, 233–​5, 241–​3, 247 state electricity boards (SEBs), 89–​90, 122, 309; see also UDAY state public sector enterprises (SPSEs), 114, 115, 116 states: deprivation in, 28 growth in, 27 inequality between, 29–​30 poverty in, 28 see also Centre and States sterilized intervention, 156 stressed assets, 122, 154, 284 subsidies, 30, 38, 43–​4, 87–​92, 101–​4, 163–​4, 205–​8, 212–​13, 230, 285–​8, 293–​4 elimination of, 214–​15, 230 explicit, 163–​4 hidden, 87, 92, 123, 164, 212, 285 problems in unwinding, 214 Subbarao, D., 158–​9 Subramanian, T.S.R., 127 Swachh Bharat, 306, 310 Targeted Public Distribution System (TPDS), see Public Distribution System tax/​taxes/​tax system, 35, 38, 40, 44, 89, 92–​3, 124–​5, 128, 131, 163, 286–​7, 290–​1 exemptions, 93, 163, 213, 284 indirect tax, 92–​3, 163, 290–​1 on international trade, 93, 247; see also trade liberalization minimum alternate tax, 299 reform, 92-​3, 162–​3, 291, 293 retrospective, 151, 299 and revenue, 35, 37, 51, 163 [ 346 ] Index see also government expenditure; subsidies teachers, 179–​83 telecom spectrum, 38, 236 Tendulkar, S., 28, 210–​11, 216 total factor productivity (TFP), 52, 53–​7, 72, 80, 87, 104; see also productivity tradable goods, 88, 117, 291 trade, see international trade Trade Facilitation Agreement (TFA), 264–​5 Trade in Services Agreement (TISA), 269, 298 trade unions, 66, 79, 82 and political parties, 82 teachers’ unions, 179, 183, 229 ‘traditional public health’ (TPH), 188–​9, 196, 303 tragedy of the commons, 38 Transatlantic Trade and Investment Partnership (TTIP), 265 Trans-​Pacific Partnership (TPP), 265–​6, 298 transparency, 44, 240 UDAY, 296 unemployment, 65 United Progressive Alliance (UPA), 24–​5, 95, 97, 117, 143, 164, 202, 283, 307–​8 United States, 8, 252, 255 and China rivalry, 10 gilded age, 240, 243 as ‘hyper-​power’, 9 and India, civil nuclear agreement, 9 University Grants Commission (UGC), 184–​5 unorganized sector, 66–​7, 69–​70, 76–​7, 78, 99, 288–​9 definition of, 66 low-​labour-​productivity in, 66 low-​quality jobs in, 73 output of, 67, 69 as ‘own account enterprises’, 76 workers in, 65 urban: infrastructure, 97, 120, 123, 292 land, 96, 131 urbanization, 96 347 Vajpayee, Atal Behari, 24 value-​added tax (VAT), 92–​3 vocational and technical education and training (VTET), 185 water, 75, 90–​1, 101–​3, 125–​7, 206, 212, 285, 290, 293, 309 over-​extraction of, 126 pricing, 126–​7 women, 29, 72, 73, 204, 205, 210, 233, 304, 311; see also female labour force participation rate; literacy, female workforce, 66–​7, 77, 80, 94, 292 income of organized, 145 informal, 67, 69 mal-​distributed, 66 non-​farm, 67 poor, 100 in unorganized sector, 66–​7 see also labour/​labour force World Bank, 28, 186 ‘Ease of Doing Business’ reports of, 74, 283 and foreign aid, 18 survey of Indian firms, 74 World Trade Organization (WTO), 263–​4, 267–​8 Yadav, Lalu Prasad, 227 Yadav, Mulayam Singh, 227 zamindari, abolition of, 226 Index [ 347 ] 348 

Principles: Life and Work
by Ray Dalio
Published 18 Sep 2017

While the ECB had offered loans on attractive terms to banks in an attempt to solve this issue, banks weren’t taking them up on the offer sufficiently to make a difference. I believed that things would continue to worsen unless the ECB “printed money” and pushed it into the system by buying more bonds. The move toward quantitative easing appeared obvious and necessary to me, so I visited Draghi and the ECB’s executive board to share my concerns. At the meeting, I told them why this approach would not be inflationary (because it is the level of spending, which is money plus credit, and not just the amount of money, that drives spending and inflation).

…

In that meeting, and in all such meetings, I shared our calculations as well as the important cause-effect relationships as I saw them, so that together we could assess whether the conclusions made sense. A major impediment to this action was that there is no single bond market for the entire Eurozone, and the ECB, like most central banks, isn’t supposed to favor one area/country over another. Given those conditions, I shared my theory for how the ECB could do quantitative easing without breaking its rules by buying bonds proportionately across every member country, even though Germany didn’t need or want the easing that such purchases would bring them. (The German economy was doing relatively well and inflation fears were beginning to emerge there.) In the course of those eighteen months, I met with several top European economic policymakers, perhaps most importantly German finance minister Wolfgang Schäuble, whom I judged to be exceptionally thoughtful and selfless.

…

Doing that was consistent with the ECB’s mandate, and the Southern European debtor countries had the votes to allow it to do that, so I figured that it would be the Germans who would get overruled and face the decision to leave the Eurozone, which they would ultimately not do because their leaders had a strong commitment to the Eurozone with Germany as part of it. Draghi finally announced the move in January 2015. It had a great effect and created a precedent that would allow more quantitative easings in the future if they were needed. The market reaction was very positive. On the day of Draghi’s announcement European equities were up a percent and a half, government bond yields fell across the major European economies, and the euro fell 2 percent against the dollar (which helped stimulate the economy).

Endless Money: The Moral Hazards of Socialism
by William Baker and Addison Wiggin
Published 2 Nov 2009

Upon the occasional lapses when faith in government obligations has waned, especially in the context of inflation, its value was partially restored, because citizens saw it as an alternative to fiat currency. However, it held up well through much of the 2008 panic, but its strength then was correlated with fears of debasement when monetary authorities discussed quantitative easing or injected reserves. The thesis that gold should decline in price when deflation occurs is contradicted by the history The Rise and Fall of Hard Money 69 of the metal having roughly doubled its purchasing power in the early 1930s. Silver was once the preeminent form of specie, but for a century its value relative to gold has remained depressed.

…

With loan demand sated and a need for banks and consumers to deleverage, they saw any Fed action to inject reserves into the monetary system as “pushing on a string,” to use the phrase invented by the monetarist Friedman in his analysis of the Great Depression. From within the Fed in the days that the policy of quantitative easing became official, Philadelphia Federal Reserve Bank President Plosser alerted us that “(recent economic statistics) prompted some commentators to suggest that the United States is facing a threat of sustained deflation, as we did in the Great Depression or as Japan faced for a decade. I do not believe this is a serious threat … (but) the Fed must credibly commit to preventing sustained deflation from becoming widely anticipated, just as it must prevent sustained inflation from becoming widely anticipated.”7 All this is well and good.

…

These more aggressive moments of market intervention would epitomize the gearing up of the printing press technology to which Bernanke refers. It might lead to nominal growth in the economy, but it remains to be seen if real growth or wealth creation would ensue. However, in the momentous meeting in which quantitative easing was ratified, FOMC members thought that this extraordinary measure could be undone. Meeting notes declare: “as economic activity recovered and financial conditions normalized, the use of certain policy tools would need to be scaled back, the size of the balance sheet and level of excess reserves would need to be reduced, and the Committee’s policy framework would return to focus on the level of the federal funds rate.”

The-General-Theory-of-Employment-Interest-and-Money
by John Maynard Keynes
Published 13 Jul 2018

It is odd then to attribute Keynes’s scepticism about monetary policy to interest rates being ‘close to zero’. One would have thought that in the circumstances he would have advocated vigorous quantitative easing to push up the price level. In fact, in the same circumstances in the United States in 1930, he had advocated open-market operations ‘to the point of saturation’ (TM, 331). But by the early 1930s he thought the excess demand for money had become too entrenched for quantitative easing to work. ‘If, however, we are tempted to assert that money is the drink which stimulates the system to activity, we must remind ourselves that there may be several slips between the cup and the lip.

…

Third, Introduction by Paul Krugman    xxxix given the non-responsiveness of interest rates, deficit spending wouldn’t crowd out private spending—in fact, changes in government spending would have a multiplier effect, so that increases or reductions in public spending would be reinforced by additional increases or reductions in private spending. Non-Keynesians disagreed violently with these predictions. When central banks expanded the monetary base as part of “quantitative easing” to fight the crisis, there were widespread predictions of high inflation. When a combination of declining revenues, rising spending on safety net programs, and deliberate stimulus led to large budget deficits, many insisted that interest rates would soar. And while many governments did initially offer some fiscal stimulus, from 2010 on many officials embraced the literally anti-Keynesian doctrine of “expansionary austerity”, which said that cutting spending would actually raise employment.

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity
by Douglas Rushkoff
Published 1 Mar 2016

The Federal Reserve’s primary function is to protect the wealthy—those who are holding cash—by preventing the inflation that would make that cash less valuable. During hard times, a compassionate central bank can choose instead to pump more money into the economy—but it really has only two ways to accomplish that. It can lend money to banks at the lowest interest rate possible—even zero—or it can buy the banks’ stashes of bonds (what’s known as “quantitative easing”). But for this money to reach the real economy, the banks still have to lend it to people and businesses. Nothing is forcing them to do that part, and in a low-interest environment, their profit margins on lending are squeezed anyway. Most banks would rather invest the money in more leveraged financial instruments or buy the stock of existing companies.

…

Clean Magic Eraser, 107 music industry, 100 positive reinforcement feedback loop and, 28 power-law dynamics and, 26–27 360 deals and, 34 Musk, Elon, 121 Myspace, 31 Nakamoto, Satoshi, 143, 145 National Commission on Technology, Automation and Economic Progress, 52–53 negative income tax, 64 Neilsen Soundscan, 26–27 Nelson, Jonathan, 26 Nelson, Matthew, 25, 26 Netflix, 29, 48 New Deal, 99 New York Stock Exchange (NYSE), 182 New York Times,37–38, 87, 177 99designs, 200 Nixon, Richard, 63 not-for-profits (NFPs), 121–23 obsolescence Amazon business model and, 89–90 corporations and, 70–71, 73 employment opportunities, technology as replacing and obsolescing, 51–54 Occupy Wall Street movement, 100, 152, 153 Oculus Rift, 201 offshoring, 78–79 Olen, Helaine, 170 OMGPop, 192, 193 online trading platforms, 176–78 open-source corporate strategies, 106–7 Open Source Ecology project, 217 Organic, Inc., 26 Ostrom, Elinor, 216 Pacific Lumber Company, 117 Palmer, Amanda, 38–39, 199 PandoDaily, 197–98 Pandora, 34, 218 Parker, Sean, 191–92 PayPal, 140–41 paywalls, 37–38 peer-to-peer economy/marketplaces, 16–17, 18 alternative corporate models for fostering, 93–97 Bandcamp and, 29–30 central currency as means of shutting down, 128–29 digital transaction networks and, 141 distribution of ability to create and exchange value by, 29–30 eBay and, 29 Known business model versus Blackboard’s in fostering, 95–97 obsolescence of, as effect of corporations, 70–71, 73 Sidecar business model versus Uber’s in fostering, 93–94 pensions, 170–71 Perez, Carlota, 98, 99 personhood, of corporations, 72, 73–74 Amazon and, 90 artificial intelligence and, 91 perspective painting, 235 Piketty, Thomas, 53–54, 131 Pitbull, 36 Pius X, Pope, 228–29, 230 platform cooperatives, 220–23 platform monopolies, 82–93, 101 acceleration in extraction of value and opportunity from economy and, 92–93 Amazon (publishing industry) and, 87–90 becoming entire environment and, 87 creative destruction and, 83–87 distributive alternatives to, 93–97 Uber (transportation industry) and, 85–87 Plum Organics, 119 Poole, Steven, 201 populists, 99–100 positive reinforcement, 28 Pound Foolish (Olen), 170 power-law distribution, 26–29, 30 precious metals currencies, 128 present shock, 6 price gouging, 86 privatization, 114–16 Proctor & Gamble, 107–8 productivity gains corporations failure to capitalize on, 77 great decoupling and, 53 income disparity and, 53–54 sharing of, with employees, 60–62 Prosper Marketplace, 203, 204 publishing industry, 87–89 Publix Super Markets, 117–18 quantitative easing, 137 Quirky, 199 Reagan, Ronald, 64 Real Pickles, 205–6 Renaissance, 45, 71, 230, 235–37 repatriation of jobs, 80 retirement savings plans, 170–75 fees and commissions charged for, 173–74 financial services industry and, 171–73, 175 401(k) plans and, 171–74 individual retirement accounts (IRAs), 171 pension accounts and, 170–71 performance of, 173–75 retrieval, 71–72, 73 return on assets (ROA), 76–77 Rifkin, Jeremy, 62 Roaring Twenties, 99 robotic ad-viewing programs, 37 Rolling Jubilee, 153 Rosenberg, Dan, 205–6 Rothschild, Lynn Forester de, 111 Ryan, Paul, 138 Ryan, William F., 63 Santa Barbara Missions, 156 scarcity, 62 Scholz, Trebor, 50, 223 Schor, Juliet, 58 Schumpeter, Joseph, 83, 84, 85 Second Machine Age, The (Brynjolfsson & McAfee), 23 secrecy, 106–7 seed-sharing networks, 217 self-help cooperatives, 159 Series A round of investment, 188–89 shareholder.

Capitalism: Money, Morals and Markets
by John Plender
Published 27 Jul 2015

It was against this background that President Obama declared late in 2013 that the basic bargain at the heart of the American economy had frayed, as increasing inequality combined with declining upward mobility posed a fundamental threat to the American dream, to Americans’ way of life and to what the US stood for around the globe.213 Inequality has been further increased by the measures adopted by central bankers to address the aftermath of the financial crisis. Asked in 2012 by the UK’s parliamentary Treasury Select Committee to highlight the redistributional impact of its asset-purchasing programme – so-called quantitative easing – the Bank of England explained: ‘By pushing up a range of asset prices, asset purchases have boosted the value of households’ financial wealth held outside pension funds, but holdings are heavily skewed with the top 5 per cent of households holding 40 per cent of these assets.’ The Bank emphasised its belief that without its asset purchases, most people in the United Kingdom would have been worse off because economic growth would have been lower, unemployment would have been higher and many more companies would have gone out of business.

…

That would have had a significant detrimental impact on savers and pensioners, along with every other group in society. A rise in inequality should obviously be seen in that light. Yet there is no escaping the fact that the rich have been the biggest beneficiaries. In the words of Marc Faber, an influential Asia-based investment strategist, quantitative easing funnels money to the ‘Mayfair economy’ of the well-to-do and ‘boosts the prices of Warhols’.214 In continental Europe, the increase in inequality is less pronounced. Yet there is angst in the eurozone about inequality and imbalances between countries. As we saw in the previous chapter, northern Europeans resent a monetary union that has permitted southern Europe to engage in what they see as fiscally profligate behaviour, while southern Europeans and the Irish are required to submit to extreme austerity programmes that exacerbate their sovereign debt problems and keep living standards depressed.

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century
by Ryan Avent
Published 20 Sep 2016

And the crisis introduced a new vulnerability into the system: as central banks worked to buoy demand, they slashed their interest rates to zero or, in some cases, to negative rates. Central banks are not entirely without options once rates fall so low. They can keep cutting, a bit, or they can print money to buy assets such as government bonds (a stimulative procedure known as quantitative easing). But these options are limited in a number of ways: as interest rates become increasingly negative, for instance, households have an incentive to shift more of their savings to cash – to keep their money in shoeboxes or safe-deposit boxes, where negative rates do not apply. Central banks themselves are also wary of acting aggressively in using these ‘unconventional’ policy tools: they worry about risks known and unknown.

…

Ray labour abundance as good problem bargaining power cognitive but repetitive collective bargaining and demographic issues discrimination and exclusion global growth of workforce and immigration liberalization in 1970s/80s ‘lump of labour’ fallacy occupational licences organized and proximity reallocation to growing industries retraining and skill acquisition and scarcity and social value work as a positive good see also employment Labour Party, British land scarcity Latvia Le Pen, Jean-Marie Le Pen, Marine legal profession Lehman Brothers collapse (2008) Lepore, Jill liberalization, economic (from 1970s) Linkner, Josh, The Road to Reinvention London Lucas, Robert Lyft maker-taker distinction Malthus, Reverend Thomas Manchester Mandel, Michael Mankiw, Gregory marketing and public relations Marshall, Alfred Marx, Karl Mason, Paul, Postcapitalism (2015) McAfee, Andrew medicine and healthcare ‘mercantilist’ world Mercedes Benz Mexico Microsoft mineral industries minimum wage Mokyr, Joel Monroe, President James MOOCs (‘massive open online courses’) Moore, Gordon mortality rates Mosaic (web browser) music, digital nation states big communities of affinity inequality between as loci of redistribution and social capital nationalist and separatist movements Netherlands Netscape New York City Newsweek NIMBYism Nordic and Scandinavian economies North Carolina North Dakota Obama, Barack oil markets O’Neill, Jim Oracle Orbán, Viktor outsourcing Peretti, Jonah Peterson Institute for International Economics pets.com Philadelphia Centennial Fair (1876) Philippines Phoenix, Arizona Piketty, Thomas, Capital in the Twenty-First Century (2013) Poland political institutions politics fractionalization in Europe future/emerging narratives geopolitical forces human wealth narrative left-wing looming upheaval/conflict Marxism nationalist and separatist movements past unrest and conflict polarization in USA radicalism and extremism realignment revolutionary right-wing rise of populist outsiders and scarcity social membership battles Poor Laws, British print media advertising revenue productivity agricultural artisanal goods and services Baumol’s Cost Disease and cities and dematerialization and digital revolution and employment trilemma and financial crisis (2008) and Henry Ford growth data in higher education of highly skilled few and industrial revolution minimum wage impact paradox of in service sector and specialization and wage rates see also factors of production professional, technical or managerial work and education levels and emerging economies the highly skilled few and industrial revolution and ‘offshoring’ professional associations skilled cities professional associations profits Progressive Policy Institute property values proximity public spending Putnam, Robert Quakebot quantitative easing Race Against the Machine, Brynjolfsson and McAfee (2011) railways Raleigh, North Carolina Reagan, Ronald redistribution and geopolitical forces during liberal era methods of nation state as locus of as a necessity as politically hard and societal openness wealth as human rent, economic Republican Party, US ‘reshoring’ phenomenon Resseger, Matthew retail sector retirement age Ricardo, David rich people and maker-taker distinction wild contingency of wealth Robinson, James robots Rodrik, Dani Romney, Mitt rule of law Russia San Francisco San Jose Sanders, Bernie sanitation SAP Saudi Arabia savings glut, global ‘Say’s Law’ Scalia, Antonin Scandinavian and Nordic economies scarcity and labour political effects of Schleicher, David Schwartz, Anna scientists Scotland Sears Second World War secular stagnation global spread of possible solutions shale deposits sharing economies Silicon Valley Singapore skilled workers and education levels and falling wages the highly skilled few and industrial revolution ‘knowledge-intensive’ goods and services reshoring phenomenon technological deskilling see also professional, technical or managerial work Slack (chat service) Slate (web publication) smartphone culture Smith, Adam social capital and American Constitution baseball metaphor and cities ‘deepening’ definition/nature of and dematerialization and developing economies and erosion of institutions of firms and companies and good government and housing wealth and immigration and income distribution during industrial revolution and liberalization and nation-states productive application of and rich-poor nation gap and Adam Smith and start-ups social class conflict middle classes and NIMBYism social conditioning of labour force working classes social democratic model social reform social wealth and social membership software ‘enterprise software’ products supply-chain management Solow, Robert Somalia South Korea Soviet Union, dissolution of (1991) specialization Star Trek state, role of steam power Subramanian, Arvind suburbanization Sweden Syriza party Taiwan TaskRabbit taxation telegraphy Tesla, Nikola Thatcher, Margaret ‘tiger’ economies of South-East Asia Time Warner Toyota trade China as ‘mega-trader’ ‘comparative advantage’ theory and dematerialization global supply chains liberalization shaping of by digital revolution Adam Smith on trade unions transhumanism transport technology self-driving cars Trump, Donald Twitter Uber UK Independence Party United States of America (USA) 2016 Presidential election campaign average income Bureau of Labour Statistics (BLS) Constitution deindustrialization education in employment in ethno-nationalist diversity of financial crisis (2008) housing costs in housing wealth in individualism in industrialization in inequality in Jim Crow segregation labour scarcity in Young America liberalization in minimum wage in political polarization in post-crisis profit rates productivity boom of 1990s real wage data rising debt levels secular stagnation in shale revolution in social capital in and social wealth surpasses Britain as leading nation wage subsidies in university education advanced degrees downward mobility of graduates MOOCs (‘massive open online courses’) and productivity see also education urbanization utopias, post-work Victoria, Queen video-gamers Virginia, US state Volvo Vox wages basic income policy Baumol’s Cost Disease cheap labour and employment growth and dot.com boom and financial crisis (2008) and flexibility and Henry Ford government subsidies and housing costs and immigration and industrial revolution low-pay as check on automation minimum wage and productivity the ‘reservation wage’ as rising in China rising in emerging economies and scarcity in service sector and skill-upgrading approach stagnation of and supply of graduates Wandsworth Washington D.C.

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

Financiers never hesitate to lend to a prosperous concern.”8 In response to the GFC, central banks reduced official rates to historical lows, often to zero (known as ZIRP, or zero interest rate policy). When the ability to change the price of money (that is, the interest rate) became restricted as the rate went to zero, central banks increased the quantity of money, in a process known as quantitative easing (QE). If an economy is cash-based, this means printing money. In Weimar Germany, the government took over newspaper presses to print money to meet demand for banknotes. In modern economies, the process requires central banks to purchase securities, primarily government bonds, to inject liquidity into the financial system.

…

The strategy was to allow prices to fall below the production costs of high-cost producers and non-traditional oil sources, especially shale, forcing them out of business and thus protecting Saudi's and OPEC's market share. Some argued that oil prices had entered a new, permanent long-term range of US$20–60 per barrel. Others saw the fall as temporary. The consensus was that lower oil prices would assist the global economy. Quantitative greasing would augment quantitative easing, supporting economic activity. A US$40 fall in oil price equates to an income transfer of around US$1.3 trillion (around 2 percent of global GDP) from oil producers to oil consumers. The 50 percent fall in 2014 was expected to boost global growth by around 1 percent. The essential assumption is that a lower oil price increases GDP by shifting income from producers to consumers, making them more likely to spend.

Net Zero: How We Stop Causing Climate Change
by Dieter Helm
Published 2 Sep 2020

New national investment banks and national transformation funds are going to be tasked with borrowing to finance the investments. It is going to be pay-when-delivered, rather than pay-as-you-go (the model under the nationalised industries in the postwar period). Some go even further and argue for a ‘green QE’ (quantitative easing), printing the money to pay for the investments.[14] The trouble with borrowing rather than raising taxes is twofold. First, it assumes that the multiplier effects of all this spending will increase economic growth and hence pay for itself. It relies on the borrowing increasing spending, multiplied through the economy.

…

acid rain 25, 194 Africa xiv, xv, 2, 25, 30, 38, 44, 45, 47, 48, 51, 137, 229 agriculture 2, 6, 12, 13, 14, 23, 35–6, 43, 44–5, 70, 76, 86, 87–8, 95, 100, 102, 109, 116, 146–7, 149, 159, 163–80, 181, 183, 192, 197, 198, 206, 220 baseline, the 164–8 biodiversity loss and 2, 5, 100, 164, 165, 168, 169, 171, 172, 174, 180 biofuels and 197–8 carbon emissions and 2, 12, 13, 35–6, 76–7, 146–7, 163–80 carbon price and 167–70, 171, 172, 173, 180 China and 28–9, 35, 45, 180 economics of 76, 165, 166–7, 171, 174 electricity and 13, 166, 168, 174, 178, 180 fertiliser use see fertiliser lobby 14, 110, 164, 165, 169, 170, 197 methane emissions 23, 84, 177, 178, 179 net gain and 172–4 net value of UK 76, 166 new technologies/indoor farming 87–8, 174–9, 180, 213 peat bogs and 2, 179 pesticide use see pesticides petrochemicals and 166 polluter-pays principle and 76, 168–70, 172, 173 pollution 36, 86, 163, 165–6, 168–70, 172, 173, 177–8, 230 public goods, agricultural 170–4, 180 sequestering carbon and 12, 95, 163, 166, 168, 169, 170, 171, 172, 173–4, 177, 179, 180 soils and 2, 146, 163, 164, 165, 166, 168, 169, 171, 172, 175, 179 subsidies 14, 76, 102, 109, 116, 164, 165, 166, 167, 169, 170, 172, 180, 228 25 Year Plan and 179–80 Agriculture Bill (2018), UK 170 air conditioning 135–6, 224, 233 air quality xiii, 13, 25, 46, 52, 61, 70, 135, 153, 177, 180, 201, 216, 230, 232 air transport 3–4, 6, 11, 13, 22, 50, 53, 73, 87, 88, 92, 107, 125, 128, 129, 132, 133, 134, 149, 156–7, 186, 195, 201, 203–5 aluminium 7, 117 Amazon rainforest 2, 34, 35, 95, 145, 149–50, 151, 155, 229, 230 ammonia 35, 137, 191 anaerobic digesters 35, 165, 230 animal welfare 167, 177 antibiotics 93, 165, 174 Arctic 26, 46, 114, 178 artificial intelligence (AI) 32, 175, 220, 231 autonomous vehicles 13, 129, 132, 175, 189–90, 231 Balkans 137–8 Bank of England 121 batteries 6, 31, 131, 135, 141, 183, 184, 185–90, 191, 199, 204, 213, 214, 219, 220, 221, 225, 231 beef 5, 95, 116, 117, 167, 230 Berlin, Isaiah 104 big 5 polluter products 117–18, 120 bin Salman, Mohammad 27 biocrops 36 biodiversity xiv, 2, 5, 12, 13, 28, 35, 51, 76, 94, 100, 148, 149, 152, 153, 158, 159, 164, 165, 168, 169–70, 171, 172, 174, 180, 227, 233 bioenergy 31, 34–5, 36 biofuels 21, 35, 49, 50, 67, 70, 95, 135, 183, 184, 197–8, 210, 230 biomass 32, 34, 49, 50, 67, 69, 109, 146, 147, 151, 210, 217 bonds, government 220 BP 27, 149, 187, 199 Deepwater Horizon disaster, Gulf of Mexico (2010) 147 Brazil 2, 35, 38, 44–5, 47, 95, 145, 149–50, 155, 198 Brexit 42, 47, 56, 117, 165 British Gas 102, 139 British Steel x, 194 broadband networks 6, 11, 90, 92, 125, 126, 127–8, 130–1, 132–3, 135, 140–1, 199, 201, 202, 205, 211, 214, 231, 232 Brundtland Commission 45 BT 127–8, 141 Openreach 214 Burn Out (Helm) ix, xiv Bush, George W. 36, 48, 53, 103 business rates 76, 165 Canada 52, 191, 193 capitalist model 26, 42, 99, 227 carbon border tax/carbon border adjustment xii, 11, 13, 60, 80, 115–20, 194–6, 204 carbon capture and storage (CCS) xiv, 12, 75–6, 95, 109, 146, 147–8, 149, 154, 159, 203–4, 207, 209, 222, 223 Carbon Crunch, The (Helm) ix, xiv, 221 carbon diary 4–5, 8, 10, 11, 64–6, 83, 86, 116, 143, 144, 155, 156, 167, 180, 181, 185, 203, 205 carbon emissions: agriculture and see agriculture by country (2015) 30 during ice ages and warm periods for the past 800,000 years 21 economy and 81–159 electricity and see electricity global annual mean concentration of CO2 (ppm) 19 global average long-term concentration of CO2 (ppm) 20 measuring 43–6 since 1990 1–14, 17–37 transport and see individual method of transport 2020, position in 36–7 UN treaties and 38–57 unilateralism and 58–80 see also unilateralism carbon offsetting xiii–xiv, 4, 5, 12, 34, 45, 72, 74, 79, 94–6, 97, 105, 143–59, 192, 201, 203, 207, 214, 222, 223, 234 for companies 148–50 for countries 151–5 for individuals 155–7 markets 71–2, 110–13, 117, 144, 157–9, 208 travel and 156, 201–3 see also sequestration carbon permits 71–2, 79, 110–13, 117, 144, 208 carbon price/tax xii, xiii, xv, 8, 11, 12, 13, 26, 60, 61, 71, 72, 77, 79, 80, 84, 85–6, 102–3, 105, 106–24, 134, 143, 146, 147, 150, 151–4, 157, 159, 192, 197, 198, 199, 203, 227–30, 232, 234 agriculture and 167, 168, 169–70, 171, 173, 180 domain of the tax/carbon border adjustment xii, 11, 13, 60, 80, 115–20, 121, 124, 192, 194–6, 197, 204, 227 electric pollution and 216–18 ethics of 107–10 floor price 115, 117, 208 for imports 11, 13 prices or quantities/EU ETS versus carbon taxes 110–13 setting 113–15 transport and 192–9 what to do with the money 121–4 where to levy the tax 119–20 who fixes the price 120–1 carbon sinks 2, 5, 166, 169, 203 carboniferous age 34 cars 1, 3, 4, 7, 20, 22, 36, 44, 70, 73, 114, 129, 181, 182, 183, 184–5, 190, 191, 193, 196, 197, 198, 199 see also electric vehicles cartels 39, 40, 43, 45, 46, 47, 56 cattle farming 35, 36, 95, 150, 166, 167, 173, 177, 198 Central Electricity Generating Board (CEGB) 102, 139, 218 cement 6, 7, 26, 29, 34, 87, 117, 171 charging networks, electric vehicle 91, 129–30, 141–2, 184, 185–90, 199, 200, 202, 219 Chernobyl 78 China xi, xv, 1–2, 5, 8, 18, 42, 46, 47, 48, 64, 66, 74, 101, 180, 229 Belt and Road Initiative 28, 45 coal use 1–2, 8, 23–4, 24, 28, 31, 38, 117, 154, 206, 208 Communist Party 2, 27, 42, 46 demand for fossil fuels/carbon emissions 1–2, 8, 18, 20, 22, 23–4, 24, 25, 27–31, 36, 38, 51, 73, 117, 154, 206, 208 export market x–xi, 5, 9, 64, 66, 117, 155, 194 fertiliser use 35 GDP xv, 27, 29 nationalism and 42 petrochemical demand 22 renewables companies 9, 32, 73, 74, 77, 79 Tiananmen Square 42 unilateralism and 58, 59 UN treaties and 46, 47, 48, 53, 54, 55, 58, 59 US trade war 56, 118 Churchill, Winston 183 citizen assemblies 99–101 climate change: carbon emissions and see carbon emissions 1.5° target 38, 57 2° target 1, 10, 22–3, 28, 30, 38, 39, 45, 47, 54, 55, 57, 108, 122, 155, 206 see also individual area of climate change Climate Change Act (2008) 66, 74–7 Clinton, Bill 40, 48 Club of Rome 98 coal 1–2, 5, 8, 13, 20, 23–5, 28, 29, 30, 31, 32, 34, 36, 38, 50, 52, 53, 60–1, 67, 72, 77, 78–9, 101, 109, 112, 116, 117, 119, 134, 136, 145, 147, 148, 151, 154, 155, 182, 183, 194, 196, 206–9, 210, 212, 214, 216, 217, 218, 229, 230 coastal marshes 146, 159 colonialism 45 Committee on Climate Change (CCC), UK x–xi, 7, 74–5, 120, 164, 166, 169, 217, 235 ‘Net Zero: The UK’s Contribution to Stopping Global Warming’ report x–xi conference/video calls 6, 129, 156, 202, 205 Conference of the Parties (COP) xii, 10, 48, 50, 53–4, 55, 59, 205 congestion charges 198 Copenhagen Accord 48, 53–4, 59 Coronavirus see Covid-19 cost-benefit analysis (CBA) 71, 108, 110, 114, 138 cost of living 116 Covid-19 x, xi–xii, 1, 3, 6, 9, 18, 19, 22, 25, 27, 30, 37, 44, 46, 50, 57, 65, 69, 80, 89, 93, 129, 135, 148, 171, 201, 202, 204, 232 CRISPR 176 crop yields 172, 177 dams 2, 36, 52–3, 179 DDT (Dichlorodiphenyltrichloroethane) 100 deforestation 2, 5, 34, 35, 36, 38, 43, 44, 47, 55, 87, 95, 145, 146, 149–50, 155, 172–3, 179, 197–8, 229 Defra (Department for Environment, Food and Rural Affairs) 170 deindustrialisation x, 29, 46, 52, 54, 59, 72–4, 218 Deng Xiaoping 27 Denmark 69–70, 136–7 desalination 135–6, 179 diesel 4, 20–1, 70, 76, 86, 109, 119, 121, 129, 132, 164, 165, 166, 174, 175, 178, 179, 181, 182, 185, 186, 191, 192, 196–7, 208, 217, 230 ‘dieselgate’ scandal 196–7 digitalisation 1, 8, 11, 13, 33, 92, 117, 136, 174, 175, 180, 206, 211, 215, 221, 228–9, 231 DONG 69 Drax 147, 151, 154, 218 economy, net zero 10–12, 81–159 delivering a 96–103 intergenerational equity and 96–7 markets and 103–5 net environmental gain see net environmental gain political ideologies and 98–101 polluter-pays principle see polluter-pays principle public goods, provision of see public goods, provision of technological change and 98 EDF 139, 218 Ehrlich, Paul 98 electricity 1–2, 4, 6, 11, 12, 13, 23, 31, 32, 49, 53, 61, 65, 66, 68, 70, 73, 77, 78, 79, 91, 92, 101, 102, 109, 117, 125, 127, 128, 129–30, 131–2, 134, 135, 136, 137, 139, 140, 141, 149, 158, 166, 168, 174, 178, 180, 182, 183, 228, 229, 231, 232, 234, 235 coal, getting out of 206–7 electric pollution and the carbon price 216–18 electric vehicles 4, 6, 13, 20, 23, 49, 61, 91, 92, 94, 121, 125, 128, 129–30, 131–2, 134, 141, 183–92, 193, 194, 197, 200, 201, 202, 206, 219, 228 equivalent firm power auctions and system operators 210–16 future of 206–25 gas, how to get out of 207–9 infrastructure, electric 185–90, 218–20 low-carbon options post-coal and gas 209–10 net gain and our consumption 222–5 R&D and next-generation renewables 220–2 renewable see renewables Energy Market Reform (EMR) 219 equivalent firm power (EFP) 212–16, 217, 220 ethanol 35, 71, 95, 197 eucalyptus trees xiv, 152 European Commission 60, 71, 72, 112 European Union (EU) xiv, 2, 7, 8, 9, 37, 42, 44, 46, 47, 117, 137, 165, 166, 197; baseline of 1990 and 51–2 Common Agricultural Policy (CAP) 76, 165 competition regime and customs union 56 deindustrialisation and 46, 52, 54, 59, 72–4 directives for 2030 66 Emissions Trading System (EU ETS) 71–2, 73, 79, 110–13, 117, 144, 208 importing carbon emissions 59 Internal Energy Market (IEM) 68, 71 Kyoto and 9, 51, 59, 66–7 Mercosur Agreement 44, 95 net zero target for 2050 66, 115, 143, 155, 167, 180 Paris and 54 Renewable Energy Directive 68–71, 73, 109 2020 targets signed into law 66 2020–20–20 targets 67, 69, 74 unilateralism and 59, 66–71, 80 Eurostar 133 externalities 104, 170, 180, 196 Extinction Rebellion 6 farmers 14, 26, 35, 36, 43, 71, 76, 86, 95, 102, 109, 110, 146–7, 164, 165, 166, 169, 170, 174, 175, 196, 197, 198 fertiliser 4, 6, 7, 26, 29, 35, 61, 73, 86, 87, 116, 117, 119, 163, 165, 169, 174, 175, 178, 179, 191, 194, 197 fibre/broadband networks 6, 11, 90, 92, 125, 126, 127–8, 130–1, 132–3, 135, 140–1, 201, 202, 205, 211, 214, 231, 232 financial crisis (2007/8) 1, 19, 69 first-mover advantage 75 First Utility 199 flooding 13, 77, 149, 152, 153, 159, 170, 233 food miles 167 food security 170–1 food waste 178, 180, 231 Forestry Commission xiv Formula One 186, 196 fossil fuels, golden age of 20–5 see also individual fossil fuel France 46, 47, 52, 56, 73, 78, 101, 113, 130, 136, 138 free-rider problem 39–40, 43, 62–4, 106, 119 fuel duty 121, 195–6 fuel efficiency 197 fuel prices 26, 112–13, 209 fuel use declaration 195 Fukushima Daiichi nuclear disaster (2011) 52, 78 Fukuyama, Francis: The End of History and the Last Man 40–1 gardens 6, 43, 143, 156 gas, natural ix, 2, 5, 8, 20, 23, 24, 25, 26, 29, 31, 32, 36, 50, 52, 68, 69, 79, 102, 109, 117, 119, 129, 136, 137, 146, 147–8, 149, 183, 190, 193, 194, 207–9, 210, 211, 214, 216–17 G8 47 gene editing 172, 176, 231 general election (2019) 121 genetics 98, 172, 174–6, 231 geoengineering 177 geothermal power 137, 178 Germany 9, 30, 47, 52, 59, 60, 62, 66, 67, 69, 70, 71, 72, 73, 75, 77–80, 83, 91, 101, 112, 136, 137, 138, 144, 206, 208, 209 Energiewende (planned transition to a low-carbon, nuclear-free economy) 59, 69, 77–80, 112, 144, 208 Gilets Jaunes 101, 113 GMOs (genetically modified organisms) 176, 177 Great Northern Forest, Britain 151 Green and Prosperous Land (Helm) xiii, xiv, 165, 169, 234 greenbelt 173 greenhouse effect 17 green new deal 90, 102, 234 green parties/green votes 69, 77, 78 green QE (quantitative easing) 102–3 green walls 153, 231 greenwash 156 gross domestic product (GDP) xii, xv, 1, 25, 27, 29, 41, 57, 59, 73, 76, 83, 93, 98, 103, 133, 165, 207, 227, 229, 233 growth nodes 133 G7 47 G20 47 Haber-Bosch process 35, 163 Hamilton, Lewis 186 ‘hands-free’ fields 175 Harry, Prince 6 Heathrow 133, 134 hedgerow 76, 166, 167, 172 Helm Review (‘The Cost of Energy Review’) (2017) ix, 120, 141, 200, 210, 212, 215, 217, 220, 238 herbicide 163 home insulation 102 House of Lords 170 housing 101, 223–4 HS2 92, 125, 132–4, 138, 202 Hume, David 49 hydrogen 13, 49, 92, 125, 128, 135, 137, 183, 184, 190–2, 199, 200, 204, 206, 213, 228 hydro power 31, 35, 36, 50, 52–3, 70, 136, 137, 191 Iceland 137, 178 imports x–xi, xiii, 5, 8, 10, 11, 12, 13, 62, 68, 70, 117–18, 155, 167, 178, 173, 180, 196, 227 income effect 72, 111 income tax 121, 122, 232 India xiv, xv, 25, 30, 31, 38, 43, 44, 47, 48, 51, 54, 55, 57, 154, 229 individuals, net zero for 155–7 Indonesia 2, 35 indoor farming 87–8, 177–8, 180, 213 indoor pollutants 223, 232 Industrial Revolution 1, 18, 19, 25, 47, 116, 145 INEOS Grangemouth petrochemical plant xi information and communications technology (ICT) 117, 202, 231 infrastructures, low-carbon xiii, xiv, 11–12, 14, 28, 60, 62, 65, 66, 90, 91–4, 96, 105, 109, 123, 125–42, 143, 147, 151, 154, 159, 171, 184, 186, 187, 190, 199–200, 214, 218–20, 228, 230, 231–2, 234–5 centrality of infrastructure networks 128–30 electric 125–41, 218–20 making it happen 141–2 net zero national infrastructure plan 130–6 private markets and 125–8, 141–2 regional and global infrastructure plan 136–7 state intervention and 126, 127–8, 141–2 system operators and implementing the plans 138–41 inheritance tax 76, 165 insects 164, 177, 231 insulation 102, 224 Integrated Assessment Models 114 intellectual property (IP) 75 Intergovernmental Panel on Climate Change (IPCC) 17–18, 47, 55, 57, 108, 172 internal combustion engine 13, 22, 181–2, 183, 184, 200, 221, 228 Internal Energy Market (IEM) 68, 71, 138 International Energy Agency (IEA) 25, 207 International Monetary Fund (IMF) 51 internet banking 131, 213 internet-of-things 128, 175 Iran 27, 42, 113, 137 Iraq 56, 192 Ireland 43, 157 Italy 137, 182 Japan 27, 28, 30, 52, 73, 78, 101, 185 Jevons Paradox 224 Johnson, Boris 89–90 Kant, Immanuel 104 Keynes, John Maynard 89, 102, 103, 105 Kyoto Protocol (1997) xii, 2, 7, 9, 13, 17–18, 37, 38, 39, 40–1, 47–8, 49, 51, 52–3, 59, 66–7, 119 laissez-faire 104, 138, 188 land use 35, 61, 95, 172, 237 LED (light-emitting diode) lighting 87, 178, 179, 180, 213 liquefied natural gas (LNG) 136, 183 lithium-ion battery 185 lobbying 10, 14, 33, 69, 71, 109, 110, 111–12, 115, 121, 157, 169, 170, 187, 197, 209, 223, 227, 228 location-specific taxes 194 maize 35, 165, 197 Malaysia 2, 229 Malthus, Thomas 98 Mao, Chairman 27, 42 meat xi, 65, 164, 177, 180, 232 Mekong River 2, 28, 179, 229 Mercosur Agreement 44, 95 Merkel, Angela 78 methane 4, 23, 84, 177, 178, 179, 216 microplastics 22 miracle solution 49–50, 55, 209 mobile phone 5, 125, 185 National Farmers’ Union (NFU) 110, 164, 165, 169, 170, 171 National Grid 139, 141, 189, 200, 211, 214, 219 nationalisations 101–2, 126–7 nationalism 41, 43, 55, 56, 138 nationally determined contributions (NDCs) 54–5 natural capital xiii, 14, 33–6, 51, 85, 86, 88, 90, 94, 97, 154, 158, 168, 171, 173–4, 236 Nature Fund 123, 169, 234 net environmental gain principle xiii, xiv, 10, 12, 62, 84, 94–6, 105, 143–59, 169, 172–4, 192, 201–3, 222–5 agriculture and 169, 172–4 carbon offsetting and see carbon offsetting electricity and 222–5 principle of 94–6, 143–4 sequestration and see sequestration transport and 192, 201–3 Netherlands 138 Network Rail 214 net zero agriculture and see agriculture defined x–xv, 3–14 economy 10–12, 81–159 see also economy, net zero electricity and see electricity transport and see individual method of transport 2025 or 2030 target 89 2050 target x, xi, 5, 59, 66, 74, 75, 115, 120, 135, 143, 155, 167, 169, 180, 184, 216, 217, 222, 226, 230, 231, 232 unilateralism and see unilateralism NHS 65 non-excludable 91, 93, 126, 170 non-rivalry 91, 93, 126, 170 North Korea 42 North Sea oil/gas 9, 40, 75, 97, 102, 137, 139, 147, 148, 193 Norway 130, 137, 191 nuclear power 5, 9, 12, 18, 23, 52, 60, 73, 77–9, 109, 125, 128, 129, 136, 140, 178, 194, 199, 206, 207, 208, 209–10, 212, 214, 216, 218, 219, 222, 228 Obama, Barack 48, 53, 54, 59 oceans 2, 14, 22, 33, 85, 86, 88, 148, 163, 231 offsetting see carbon offsetting offshore wind power 31, 69, 75–6, 208, 212, 219, 221 Ofgem 220 oil ix, 2, 20, 22–3, 25, 26, 27, 31, 32, 33, 36, 39, 40, 50, 67, 69, 86, 97, 117, 119, 129, 136, 137, 146, 147, 148–9, 150–1, 152, 181–3, 184, 185, 187, 189, 190, 192–4, 196, 197, 199, 206, 209, 210, 216–17, 229 OPEC 39, 40, 193 Orbán, Viktor 41, 42 organic food 61, 87, 178 Ørsted 70 palm oil 2, 5, 6, 35, 36, 66, 71, 167, 173, 197–8, 230 pandemic see Covid-19 Paris Climate Change Agreement (2015) xii, 2, 10, 13, 18, 30, 37, 38, 39, 48, 49, 54–5, 56, 57, 58, 66, 80, 105, 106, 118, 119, 227 peat bogs xiv, 2, 13, 14, 33, 35, 36, 43, 109, 146, 169, 179 pesticides 4, 26, 61, 163, 165, 169, 174, 178, 231 petrochemicals xi, 7, 8, 20, 22–3, 29, 73, 80, 86, 117, 166, 182 petrol 4, 86, 119, 121, 129, 185, 186, 187, 191, 192, 199 photosynthesis 34, 197 plastics 1, 22, 28, 35, 43, 66, 86, 87, 119, 143, 166, 184, 231 polluter-pays principle xiii, xv, 84–90 agriculture and 76, 168–70, 172, 173 carbon price and see carbon price/tax generalised across all sources of pollution 86 identifying polluters that should pay 86 importance of 10–11, 13, 61, 62, 65 intergenerational balance and 96–7 net environmental gain and 94 sequestration and see sequestration, carbon sustainable economy and 96–7, 105, 106 transport and 192–5, 198–9 see also individual type of pollution population growth 93, 97, 177, 178, 179, 232 privatisation 127, 140, 218–19, 220 property developers 94 public goods, provision of xiii, 10, 11–12, 62, 75, 84, 90–4, 96, 104, 105, 109, 122, 123, 126, 128, 141, 147, 151, 153, 159, 164, 168, 173–4, 180, 192, 199–200, 202, 218, 229, 230 agricultural 170–4, 180 low-carbon infrastructures see infrastructures, low-carbon research and development (R&D) see research and development (R&D) Putin, Vladimir 27, 41, 42, 89 railways 11, 13, 13, 87, 91, 92, 94, 125, 128, 129, 130, 131, 132–3, 138, 139, 156, 182, 183, 187, 202, 212, 214, 232 rainforest 2, 5, 34, 35, 36, 38, 44, 47, 55, 87, 95, 145, 149, 155, 173, 179–80, 197, 229 rationalism 40–1 Reagan, Ronald 103 red diesel 76, 109, 164, 165, 196 regulated asset base (RAB) 127, 141, 215, 220 remote working 128, 156, 201–2, 205 renewables ix, 6, 8, 9–10, 18, 19, 21, 26, 31–5, 36, 49, 50, 55, 61, 67, 72, 77, 79, 85, 86, 109, 110, 112, 123, 125, 128, 131, 135, 138, 140, 144, 149, 178, 188, 191, 194, 197, 199, 207, 209–10, 211, 212, 213, 214, 215, 216, 217, 219, 220–2, 224, 228 Chinese domination of market 9, 32, 73, 74, 77, 79 cost-competitiveness of 9–10, 49, 51, 61, 68 failure of, 1990-now 19, 31–3, 36 modern global renewable energy consumption measured in TWh per year 32 miracle solution and 49–51 Renewable Energy Directive 68–71, 73, 109 subsidies ix, 9, 10, 50, 68–9, 71, 79, 80 see also individual renewable energy source Renewables UK 110 research and development (R&D) xiv, 12, 13, 14, 62, 65, 66, 90, 93–4, 104, 109, 123, 165, 172, 192, 200, 218, 220–2, 223, 228, 234 reshoring businesses 8, 204 rivers 2, 22, 28, 86, 128, 152, 165, 169, 179, 214, 230 roads 11, 28, 45, 91, 92, 125, 129, 131–2, 140, 165, 182, 189, 194, 198, 202, 232 robotics 32, 175, 204, 206, 231 Rosneft 26 Royal Navy 183 Russia 26, 27, 30, 40, 42, 44, 45, 46, 47, 48, 50, 52, 55, 56, 192, 193 RWE 139, 218 Ryanair 156–7 rye grass 35 salmon 169, 177 Saudi Arabia 26, 33, 40, 42, 50, 137, 192, 193 Saudi Aramco 26, 50 seashells 34 sequestration, carbon xi, xiv, 12, 61, 66, 85, 90, 95, 143–59, 228, 229, 231, 232 agriculture and 12, 163, 166, 168, 169, 170, 171, 172, 173, 176–7, 179, 180 baseline definition and 146–7 biofuels and 35, 146, 217 carbon capture and storage (CCS) xiv, 12, 75–6, 95, 109, 146, 147–8, 149, 154, 159, 203–4, 207, 209, 222, 223 companies, net zero for 148–51 countries, offsetting for 151–5 electricity and 222, 223 gas and 207 individuals, net zero for xi, xiv, 155–7 markets, offsetting 157–9 natural capital destruction and 2, 19, 33–6, 44, 45, 51 natural sequestration xi, xiii, 2, 7, 12, 14, 33–6, 37, 45, 52, 66, 85, 90, 94–6, 105, 143–59, 163, 168, 171, 173, 176–7, 179, 180, 203, 206, 207, 222, 223 net gain principle and 143–4, 146, 149–50 offsetting principle and 143–5 peat bogs and see peat bogs principle of xi, xiii, 2, 7, 12–13 soils and see soils transport and 185, 190, 203 tree planting and see trees, planting/sequestration and types of 145–8 wetlands/coastal marshes and 146, 159, 233 shale gas 8, 208 Shell 27, 149, 199 shipping 8, 13, 22, 28, 36, 49, 114, 125, 137, 181, 182–3, 191, 194–5, 203–5, 217 Siberia 2, 46 smart appliances 128, 129, 132 smart charging 11, 13, 128, 129, 130, 139, 214, 219 soils xiii, 2, 5, 7, 12, 14, 33, 35, 36, 43, 55, 76, 109, 146, 149, 152, 156, 159, 163, 164, 165, 166, 168, 169, 171, 172, 175, 179, 203, 228 solar panels/solar photovoltaics (PV) 5, 6, 9, 12, 13, 21, 31, 32, 33, 49, 53, 68, 69, 71, 74, 79, 87, 91, 135, 136, 137, 178, 179, 188, 204, 207, 208, 209, 210, 211, 213, 214, 216, 217, 221, 222, 223, 224–5 Sony 185 Soviet Union 18, 40, 52, 67–8, 89 soya 95 Spain 69, 130, 137 sport utility vehicles (SUVs) 106, 121, 192 spruce xiv, 152, 170 standard of living xv, 1, 5, 8, 10, 11, 14, 229, 233 staycations 201 steel x–xi, 6, 7, 8, 26, 28, 29, 53, 66, 73, 80, 87, 116, 117, 118, 119, 171, 184, 194–5 Stern, Nicholas: The Economics of Climate Change 41, 63 subsidies ix, 9, 10, 14, 32, 50, 51, 52, 53, 69, 71, 76, 79, 80, 89, 102, 109, 110, 113, 116, 123, 140, 154, 164, 165, 166, 167, 169, 170, 172, 180, 193, 196, 198, 209, 215, 221, 222, 228, 230 sugar cane 35, 71, 95, 197, 198 sulphur pollution 22, 25, 28, 78, 191, 194, 197, 230 sustainable economic growth xv, 10, 12, 14, 61, 83, 92, 94, 97, 98, 105, 227, 233 Taiwan 42 taxation xii, 11, 62, 71, 72, 76, 80, 87, 89, 90, 91, 92, 97, 101, 102, 103, 106–24, 126, 127, 130, 133, 147, 150, 151–2, 153–4, 157, 159, 165, 169, 170, 192–6, 197, 198, 199, 203, 232, 234 technological change 98, 127, 141, 174–5, 221 Thatcher, Margaret 17 Thompson, Emma 6 3D printing 175, 204 Thunberg, Greta 6, 205 tidal shocks 159 top-down treaty frameworks 13, 38–57, 80, 110, 119 tourism/holidays 6, 22, 36, 88, 94, 107, 114, 128, 156, 201, 204–5 transport, reinventing 181–205 aviation 195, 201, 203–5 see also air transport batteries and charging networks 185–90 biofuels 196–8 electric alternative 183–5 hydrogen and fuel cells 190–2 innovation, R&D and new infrastructures 199–200 internal combustion engine 181–2 net gain and offsets (reducing travel versus buying out your pollution) 201–3 oil 183–4 polluter pays/carbon tax 192–6 shipping 203–5 urban regulation and planning 198–9 vehicle standards 196–8 see also individual type of transport Treasury, UK 120–2 trees, planting/sequestration and xi, xiii, xiv, 2, 7, 13, 14, 33, 34, 45, 76, 85, 94–6, 146, 148, 149–51, 152–3, 155, 156, 157, 158, 159, 168, 169, 172, 179, 203, 231 trophy project syndrome 133 Trump, Donald 2, 8, 41, 42, 48, 89, 99, 103, 121 25 Year Environment Plan xiii, 153, 170, 179–80 UK 47, 69 agriculture and 164, 166, 167, 173 carbon emissions (2015) 30 carbon price and 115, 120 Climate Change Act (2008) 66, 74–7 coal, phasing out of 24–5, 60–1, 77, 208 Committee on Climate Change (CCC) x–xi, 7, 74–6, 120, 164, 166, 169, 217, 235 deindustrialisation and 72–4 80 per cent carbon reduction target by 2050 74 electricity and 206, 208, 218, 219, 224 Helm Review (‘The Cost of Energy Review’) (2017) ix, 120, 141, 200, 210, 212, 215, 217, 220, 238 infrastructure 125, 132–3, 134, 137, 139–40 net zero passed into law (2019) 66 sequestration and 145, 150, 153, 154, 155, 156 transport and 195–6, 197, 198 unilateralism and 58–9, 60–1, 65, 66, 69, 72–7, 80 unilateralism xi, 8, 10, 11, 25, 58–80, 83, 105, 106, 119, 125, 143, 144, 155, 164, 167, 197, 203, 227 in Europe 66–80 incentive problem and 58–60 morality and 62–6 no regrets exemplars and/showcase examples of how decarbonisation can be achieved 60–2 place for 80 way forward and 80, 83 United Nations xi, xii, 6, 10, 17, 37, 38, 118 carbon cartel, ambition to create a 39–40, 43, 45, 46–7, 56 climate treaty processes xi, 6, 10, 13, 17–18, 36, 37, 38–57, 59, 80, 110, 118, 119, 204–5 see also individual treaty name Framework Convention on Climate Change (UNFCCC) 17–18, 36, 38, 59 miracle solution and 50–1 origins and philosophy of 41 Security Council 46, 47, 57 United States 8, 74, 139, 206 agriculture in 175, 176, 197 carbon emissions 8, 29, 30 China and 27–8, 42, 118 coal and 2, 24, 28, 29, 208 economic imperialism 45 energy independence 50 gas and 8, 20, 23, 24, 29, 50, 208 oil production 40, 50, 193 pollution since 1990 29 unilateralism and 58, 59, 74 UN climate treaty process and 38, 40–1, 44, 45, 46, 47, 48, 53, 54, 56 universal service obligations (USOs) 92, 126, 131, 202 utilitarianism 41, 63–4, 108, 110 VAT 117, 119–20, 121, 122, 232 Vesta 69 Volkswagen 196–7 water companies 76, 214, 230 water pollution/quality xiv, 12, 22, 61, 76, 152, 153, 165, 169, 170, 171, 172, 175, 177, 178, 179, 180, 232 Wen Jiabao 53, 59 wetlands 159, 233 wildflower meadow 164, 184 wind power 5, 9, 12, 21, 31, 32, 33, 49, 53, 68, 69–70, 71, 74, 75, 76, 78, 79, 91, 135, 136, 137, 138, 139, 178, 188, 191, 207, 208, 209, 210, 211, 212, 213, 214–15, 216, 217, 219, 221, 222 wood pellets 67, 217, 230 Woodland Trust 156, 158 World Bank 51 World Trade Organization (WTO) 52, 56, 118 World War I 183 World War II (1939–45) 78, 90, 92, 101, 106, 171 Xi Jinping 27, 41, 42 ACKNOWLEDGEMENTS So much is now discussed, written and published about climate change that it is impossible to keep track of all the ideas and conversations that have influenced my understanding of the subject.

Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy
by George Gilder
Published 16 Jul 2018

We are living it, printed out in 3D. Right now. Government monetary systems and financial institutions are floundering. As the economist John Mauldin writes, it’s “Code Red” for fiat paper.3 Gold and commodity markets gyrate portentously. Central Bankers meet solemnly to decide on levels of “quantitative easing”—on how many trillions of dollars of bonds to buy or sell, thus issuing new money into a flagging economy or sopping up money from a booming one. They hope against hope that these metafictional money fabrications can somehow overflow into the real world of economics and job creation. Lots of luck with that.

…

He believes in the efficacy of foreign exchange trading, the Dodd-Frank law, central banking, gigantic commercial banks guaranteed by government as “systemically important,” the Volker rule, the Securities and Exchange Commission, insider-trading laws, and the magic of zero interest rates and quantitative easing. He is part of the problem. He sees the fabric of global finance as static and capable of only incremental improvements. Just imagine, says he, the global complexities solved by a Visa card. His answer to people who are frustrated with the existing bureaucracies is not to hide behind some Rube Goldberg crypto-variation, but simply to “vote” them out.

May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases—And What We Can Do About It
by Alex Edmans
Published 13 May 2024

For example, The Spirit Level authors seem eager to believe that inequality is the source of every single problem in the world. A clever paper by Brian Fabo and co-authors inspected these biases systematically. Called ‘Fifty shades of QE’, it investigated fifty-four studies on the effect of quantitative easing – central banks buying government bonds – which became popular following the 2007–8 financial crisis.11 Some of these studies were written by economists working for central banks, others by academics at universities. The authors found that papers by central bank economists claimed much more positive effects of QE than those by academics.

…

Anders 61, 62–3, 66, 104 errors of commission 250 errors of omission 250 estimation 246 evaluation 223, 233 evidence 5, 12, 13, 122 average results 280, 282 credentials 226–8 identity and 266 is not proof 192–210 scientific management 198–9 lack of 219 limitations of 280, 282 smarter thinking 288–9 in social sciences 224 systematic reviews 222 testing 217–18 validity 199 EXCOMM 237–8, 244, 254 cognitive diversity 238–9, 240 deliberation process 244–5 demographic make up 238 executive pay 67–9 exogenous parts of instruments 178–9, 179–80, 182, 190 experts 223–4 explained components of instruments 178–9 explorers 170, 171–2 external validity 199, 202, 204, 209 Fabo et al. 225–6 Facebook 272 Fact Check (Reuters) 270 fact-checking websites 270–71, 277, 282 facts 12, 13 are not data 89–114 learning from a blank slate 108–13 narrative fallacy 104–8, 113 seeing the full picture 95–104 selected samples 95–6, 102, 113 Steve Jobs and Apple 89, 90–92, 93, 94, 101–2, 103, 106, 107, 200 checking 7–8, 12, 21, 37, 85, 88, 103, 268–9 interpretation of 24 smarter thinking 285–6 failure parties 250 failures 250–51 fake news 271, 272, 282 Faleye, Olubunmi 4 family businesses 181–2 Fancy, Tariq 83–5, 226 fast-food employment 184–5 Fernbach, Philip 251 ‘Fifty shades of QE’ (Fabo et al.) 225–6 Financial Management Association 270 Financial Reporting Council 74 fintech companies 85–6 Fisher, Matthew 54 Fixit (fictional company) 119, 135–40, 137–40 data mining see data mining see also Xinyi (fictional name) Flammer, Caroline 243 flexibility 108 Flint, Austin 174–5 Floyd, George 75 Fong, Geoffrey 262 Fooled by Randomness (Taleb) 274 football 126–7, 188 decline in stock markets 134–5 Euros (2004) 126–7 mood and emotions 126–7, 128, 129 sentiment 129 World Cup (2014) 133–4 Forbes 219 Forbes 15 Best Business Books (2015) 268–9 Ford, Henry 245 Fortune 60, 219, 223 Fos, Slava 241 frequent trading 97–101 Frontiers in Nutrition study 144, 145 Full Fact 270 Galileo Galilei 226 Gallagher, Liam 44 Gama, Vasco da 171 García, Diego 129 Gavin, Jim 23 gender diversity 243 company performance research 118–24, 135–40 data mining see data mining evidence for fund launch 116–18 geoengineering 268 Getting Things Done (Allen) 229, 270 Gibson, Belle 17–20, 103–4 Gimbel, Sarah 28–9 Gladwell, Malcolm 6, 60, 66 Ericsson study 61, 62–3, 66, 104 magazine interview 60, 61, 63 10,000-hours rule 6, 59–61, 62–6 Global Head of Sustainability Research 85 global warming 265–6 Glossner, Simon 243 Golden Circle Model 92 Google 157, 255 Gore, Al 266 gradients 136–7 Grant Thornton 224 Grant Thornton Corporate Governance Index 225 granular world 45, 51–2, 56, 201 Great North Run 47 Gresham College 62, 264 grit 204–5, 207 group discussions 247–8 grouping 137–40, 140, 141 groupthink 236, 237, 241, 247–8, 257 growth mindset 62 Guardian, The 215 Guriev, Sergei 271–2 Guzey, Alexey 270 Halo Effect, The (Rosenzweig) 111 Harris, Sam 28–9 Harvard Business Review 103, 152, 154, 290–91 Harvard University 228 Heeb, Florian 54 Henry, Emeric 271–2 hierarchies 249–50 high pollution 150–51 Holmes, Elizabeth 20–21, 219 homeopathy 6 honorary doctorates 227 Hoxby, Caroline 169, 177–9, 202, 221 HSBC 256 Hughes, Robert 22 Hung, William 207 hunter gatherers 43–4 hydroxychloroquine 6–7 Hypocritical Oath 230 hypotheses 23–5, 66 average output 99 control samples 99, 102 inputs and outputs 98–9 magnitude of underperformance 100 representative samples 99, 102 reverse engineering 124–5 sample size 100 statistical significance 100–101 test samples 99 identity 266 Imperial Tobacco 152 inclusion 243–8 micro-processes 248–9 An Inconvenient Truth 265, 266 inequality 159–61, 162–3 information gathering 214 InfoWars 231 initial beliefs 216 instruments 177–8, 190 endogenous parts 178–9, 180, 182 exogenous parts 178–9, 179–80, 182, 190 natural experiments and 186 relevance 179, 180, 182, 190 ridiculousness and irrelevance 180–81 interaction effect 207 internal validity 199, 200, 202, 209 intervention studies 173 investors 127 Ioannidis, John 219 iPhone 91, 92 IQ (intelligence quotient) 143–4, 145–7 irrelevance of instruments 180–81 Isaacson, Walter 93, 101–2, 103 James (acrobat) 59–60 Jandali, Abdulfattah 89 Janis, Irving 236 Jensen, Michael 69, 70–71 Jobs, Clara 90 Jobs, Paul 89–90 Jobs, Steve 89, 90–92, 93, 101–2, 103, 106 Johnson, Tim 127–8 Joint Chiefs of Staff (JCS) 236, 237, 239, 240 Journal of Finance 129, 218 Journal of the American Medical Association 219 journal quality 218 journalists 228, 282 checking facts 273 journals impact factor 220 peer-reviews of 217–18 publication bias 220 Joy, Bill 61 Kahan, Dan 263, 266, 268 Kahneman, Daniel 29 Kaplan, Jonas 28–9 Keil, Frank 54, 251 Kempf, Elisabeth 241 Kennedy, General Robert 244, 245 Kennedy, President John F. 244 Bay of Pigs invasion 235–7, 244 Cuban Missile Crisis 235, 237–8, 239–40, 244–5 EXCOMM 238–9, 244–6 Kerry, John 29–30 Khrushchev, Nikita 235, 237, 240 Kirk, Stuart 256–7 knowledge 7–8, 10 biased interpretation 37 biased search 36–7 Krantz, David 262 Krueger, Alan 184–5 Krueger, Joachim 52 Ladder of Misinference 11, 56, 152, 232 Lancet 221 Lancet Public Health study 46 Langley, Samuel Pierpont 200 law of attraction 20 Leavers (Brexit) 214 LeMay, Curtis 239, 240 Lemnitzer, Lyman 239 Lepper, Mark 30–31, 259, 260, 261 Les Décodeurs 270 lies 12 limbic brain 93, 107 Lind, James 172–3, 174 LinkedIn post 153 Lisker, Bruce 21–3, 24 Lisker, Dorka 21–2 Living Wage 76–7 Lodge, Milton 36–7 London Business School 74–5 London Marathon 47 Lord, Charles 30–31, 259, 260, 261 Macintosh 91 marbled world 45, 53–5, 56 Martin, Roger L. 290–92 McDaniel, Mark 48 McGrath Task Circumplex 240 McKinsey 225 report (2020) 78 study (2017) 152, 154, 187, 291–2 McLaughlin, Dan 64–5 McNamara, Robert 239–40, 244 Mearsheimer, John 86 Meckling, William 69, 70–71 Medium 84 Medscape 219 Merton College 213 Merton in the City reunion (2016) 213–14 metal cutting 193–4 micro-processes 248–9, 258, 263 Midvale Steel Works 193 Miliband, Ed 160, 161 minimum wage laws 183–4 misinformation 5–7, 9–10, 67–8, 214, 230, 231, 234 misrepresentation 74–6 MIT 125, 126, 127 moderate world 45–50, 55 moderation 206–7, 209–10 momentum 157 Monsue, Andrew 22–3, 24 Montessori education method 263 Morgan Stanley 125, 130–31, 189, 255–6 ‘balanceworks’ programme 156 motivated reasoning 27–8, 30, 37, 184 Motor Neurone Disease Association 47 Mountain View (later Silicon Valley) 90 Mozart 61 Mullainathan, Sendhil 175–6 Murdoch, Lachlan 181 Murdoch, Rupert 20, 181 my-side reasons 264 naïve acceptance 25–7, 32, 37–8 narrative fallacy 105–8, 109, 113 twin biases 106 National Childbirth Trust (NCT) 143, 144–5 National Geographic 223 National Health and Medical Research Council 222 National Health Service (NHS) website 222 National Security Council (NSC) 237 National Union of Journalists 273 NATO 86 natural experiments 185–6, 187, 190 instruments and 186 Nature 6, 218 neocortex 92, 107 New Scientist 223 News Corporation 181 news feeds 6 Nisbett, Richard 262 No Child Left Behind Act (2001) 196–7 non-pecuniary benefits 70–71 Norli, Øyvind 129 Nyhan, Brendan 270 Obama, Barack 265 Object-Spatial Imagery and Verbal Questionnaire 240, 241 observational studies 173 Odean, Terry 96–8 oil spills 25–8 100 Best Companies to Work for 116–17, 156–7, 189 opinions, articulating in detail 251 Organization Stream Analysis 111 organizations 235–58 Oster, Emily 147, 201, 222 other-side reasons 264 out-of-sample tests 133 Outliers 61, 64, 104, 270 over-extrapolation 206–7, 209–10 Pagella Politica 270 Paige, Rod 196, 199 Paine, Lynn 290–91 Palin, Sarah 81 papers, scientific retractions 221 reviewed by scientists 220–21 submitted for review 217–18 parachutes 208–9 Paris Agreement (2015) 49, 50 pausing before criticizing 232–3 pausing before sharing 230–32 pay gaps 3–4, 5 Peak (Ericsson) 63, 104 peer reviewers 8 peer reviews 217–19, 233 books 223 reliability of 220 Pennycook, Gordon 231, 272 Perkins, David 264 Ph.D.s 227 Phillips et al. 242 Pickett, Kate 160–61, 162–3 The Spirit Level 159–60, 161, 163, 165, 200, 225, 270 pig-iron handling 194–5 Pixar 91, 250–51 placebo effect 174–5 PolitiFact 81, 270, 271 Pollock, Joycelyn 24–5 population density 151 Porras, Jerry 110–12 positive correlation 165 post hoc ergo propter hoc fallacy 164–5 post-mortem 255 poverty 160–61 power distance 249 power posing 221 Power, Thomas 239 PowerPoint 251–2 pre-mortem 255 precision 170–73 predictions 151, 152, 154, 167 Presence (Cuddy) 269, 270, 274 Preston, Elizabeth 259, 260, 261 Principles of Scientific Management, The (Taylor) 195 processing power 248–52 productivity 193–4 professorship 227 proof 198–9 Psychological Science 221, 269, 270 psychometric tests 108–9 publication bias 220 publication process 273–4 endorsements 274–5 quantitative easing 226 Quest, Richard 133–4 Quote Investigator 270 racial discrimination 175–6 Rambotti, Simone 161 random events 107 randomized control trials (RCTs) 173, 174–6, 189–90 instruments 177–8 limitations of 177 parachute experiment 208–9 randomness 170–73 range of values 206, 207–8 Raquel, Ronald 23 Rassemblement National 271–2 Reading Football Club 159 reasoning 264–5 red teams 254–5 reducing hierarchies 249–50 regression 136–7, 139, 140, 158, 161–2 common causes 158–9 regression coefficient 136 regulation 123 Reifler, Jason 270 Reis, Ebru 4 relevance of instruments 179, 180, 182, 190 Remainers (Brexit) 213, 214 replication studies 221 representative samples 96, 99, 102 research 4–5 best practice 273 boardroom diversity 74–5 confirming opinions 5 data mining 119–20 diversity 117–19 gender diversity see gender diversity open access 35 rigour 8, 117–19 sources 5–6 unvetted 218 research qualifications 226–7 resilient companies 78 Responsible Investment Advisory Committee 248–9 Retraction Watch 269, 270 Reuters 79 reverse causation 164–5, 167, 170, 187 reverse engineering 94, 107–8 review papers 222 Reyes the Entrepreneur 95, 97 rhetoric 215 rheumatism experiment 174 Rice-Davies, Mandy 76–7, 226 ridiculousness of instruments 180–81 Rogers, David 47, 207 Rosenzweig, Phil 111 Ross, Lee 30–31, 259 Rossmo, Kim 24–5 Rothschild, Jesse 221–2 Royal London Asset Management 248 Rozenblit, Leonid 251 Rozin, Paul 51–2 rules 66 Rusk, Dean 240, 244 sailors 170–72 Sainsbury’s 76–7 sample mining 131–3, 141 defending against 133–5 sample size 100 San Francisco Business Times 219 Sanders, Bernie 82 scaffolding 264–5, 281 Schieble, Joanne 89 Scholar’s Mate 32–3 school curriculum 196 schools choice of 169 collective learning 169 competition between 168–9 Schultz, George 20 scientific consensus 222, 233 scientific culture 253–5, 258 scientific curiosity 263 scientific intelligence 263 scientific journals 134 debunking studies 221 papers for review 217–18 scientific management in education 195–7 failure of 198–9 in manufacturing 195 scientific method 24, 25, 98–101, 102–3, 124 scientists 220–21 Scott, Willard 53 scurvy 170–72 citrus fruits 173 endogenous remedy 172 exogenous remedy 172, 173 Select Committee on Business 3–5 CEOs’s executive pay report 67–9 selected samples 95, 99, 102, 109–10, 111 self-help books 229 self-interest 215 semiconductors 53–4 ShareAction 76–7 shareholder returns 120–21 shareholder value 69, 70–71, 71, 85, 86 sharing information 230–32 shoulders of giants 217–18 shovelling technique (Taylor) 194 significance level 100 silent majority 247 silent starts 246, 251–2, 257 Silicon Valley Bank 28 Silicon Valley Business Journal 219 Sinek, Simon 69, 71, 93, 94, 107, 200, 229 sleep 71–3 Sloan, Alfred 254 smarter thinking see thinking smarter smoking 163–4, 202 Snowdon, Christopher 161 social distancing 75–6 social diversity 241–2 social media 10, 230–31, 231, 282 Soeters, Joseph 249 soldiering 193 Spirit Level Delusion, The (Snowdon) 161 Spirit Level, The (Pickett and Wilkinson) 159–60, 161, 163, 165, 200, 225, 270 sports impact on stock market 126–9, 134 mood and emotions 128–9 spurious correlations 122, 127, 141 St Paul’s 159 Start with Why (Sinek) 93, 270 statements 13, 59–88 accepted as facts 12 are not facts 87–8 death panel episode 80–81 inaccuracy 59–63 misrepresentation 74–6 choosing words carefully 71–5 lack of sources 81–2 misportrayal 69–71 misrepresentation 74–6 smarter thinking 283–5 that can never be facts 82–8 examining evidence 84–6, 88 exploring alternative explanations 86 twin biases 83–4 verifying as facts 73 statistical literacy 262–3, 264, 281 statistical significance 100–101, 120, 122, 137 statistics 161 Bayesian inference 23–4 Staw, Barry 107–8, 166 stock market 95–7 brokers 96–8 frequent trading 97–101 sentiment 127, 128 sport, impact on 126–9, 134 traders 96–8, 125–6, 128 trading floor 125–6 stories 104–5, 108 Strange, Angela 85–6 striatum 30 Sun Tzu 11 Sunday Times Rich List 108 superlatives 85, 86 survey papers 222 sustainability 8–9, 215, 267 sustainable investments 54, 83–5 System 1 thought process 29 System 2 thought process 29 systematic reviews 222, 233 Taber, Charles 36–7 Taleb, Nassim 106, 274 targets 49–50 Taylor, Frederick Winslow 192–4 Taylor, General Maxwell 237 tech industry 157 TED 9, 205–6 Telegraph, The 215 10,000-hours rule 6, 64, 66, 104 chasing dreams 64–6 claim 59–61 disheartening 66 evidence 62–3 Tesla 152 test groups 139 natural experiments 185–6 randomized control trials (RCTs) 174–5, 177 test samples 99 theory of everything 199, 200, 204 Theranos 20–21, 219, 226 Thinking, Fast and Slow (Kahneman) 29 thinking smarter data 286–8 evidence 288–9 example of 290–92 facts 285–6 individuals 213–34 organizations 235–58 preliminaries 283 shortcuts 289 societies 259–82 statements 283–5 studies 289–90 Thirteen Days: A Memoir of the Cuban Missile Crisis (Kennedy) 244 Thomson Reuters 132 TikTok 20 time-series studies 30, 31 tolerating failure 250–51 Tolstoy, Leo 216–17 Tonight Show, The 40 traders 96–8, 125–6, 128 Trades Union Congress (TUC) 4–5 traits 149–50, 166 Trevithick, Richard 171 Trouble with Europe, The (Bootle) 213–14 Trump, Donald 6–7, 271 trust 153 Trust across America 153 trustworthy companies 153 truth 12, 13, 21–6 Tsoutsoura, Margarita 241 twin biases 56, 66–7, 73, 83–4, 106, 199 Twitter (later X) 230–31 2-4-6 brainteaser 33, 260, 261 UBS 250 unexplained components of instruments 178–9 United States of America (USA) death panels 80–81 healthcare 80–81 universal statements 85 universality 199, 201 unnatural experiments 186–7 US Military Academy 202–3 USSR 235, 244 see also Cuban Missile Crisis vaccination 267–8 Venkateswaran, Anand 4 verification 220 Vigen, Tyler 122 Vioxx 220 Vogue diet 40 Vogue magazine 40 voluntary choice inputs 149, 166 voting 247 Wakefield, Andrew 221 Walker, Matthew 71–3 Wall Street Journal 84, 219 Wason, Peter 33, 260, 261 water intoxication 47 weight loss 40–41 Welch, Jack 71, 85, 86 West Point 202–3, 204, 206 The Whole Pantry app 17–18 Whole Pantry, The 18, 273 Why We Sleep (Walker) 71–3, 270 Wikipedia 200 Wilkinson, Richard 160–61, 162–3 The Spirit Level 159–60, 161, 163, 165, 200, 225, 270 work-life balance 156 Wright Brothers 200 wrongful convictions 24–5 Xinyi (fictional name) 116–19 data mining see data mining see also Fixit (fictional company) Yeh, Robert 208–9 Zhuravskaya, Ekaterina 271–2 Founded in 1893, UNIVERSITY OF CALIFORNIA PRESS publishes bold, progressive books and journals on topics in the arts, humanities, social sciences, and natural sciences—with a focus on social justice issues—that inspire thought and action among readers worldwide.

Applied Text Analysis With Python: Enabling Language-Aware Data Products With Machine Learning
by Benjamin Bengfort , Rebecca Bilbro and Tony Ojeda
Published 10 Jun 2018

The simplest encoding of semantic space is the “bag-of-words” model, whose primary insight is that meaning and similarity is encoded in the specific vocabulary used in each document. For example, a Wikipedia article about baseball and Babe Ruth are probably very similar because the same words will appear in both, whereas they will not share many words in common with an article about quantitative easing. This model, while simple, is extremely effective and is the starting point for more complex models. In order to vectorize a corpus with a bag of words approach, we create a per-document representation as a vector whose length is equal to the vocabulary of the entire corpus from which the document originated as shown in Figure 2-2.

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
by Ruchir Sharma
Published 5 Jun 2016

The rise in inequality had been particularly dramatic for measures of wealth rather than income, and the Fed had been instrumental in fueling wealth on Wall Street not Main Street. To boost growth following the global financial crisis of 2008, the Fed pumped record amounts of money into the U.S. economy through multiple rounds of “quantitative easing,” which involved buying bonds on the public markets. The hope was that this infusion of capital would promote a strong recovery and job growth. Instead, the United States experienced its weakest recovery of the postwar era, coupled with an unprecedented period of financial speculation. Much of the Fed’s easy money was diverted into purchases of stocks, luxury homes, and other financial assets, as well as into financial engineering (like share buybacks) designed to further increase the price of those assets.

…

In a 2014 study of 46 major countries, the research arm of the bank Credit Suisse found that before 2007, wealth inequality was on the rise in only 12 of those countries; after 2007, that number more than doubled to 35, from China and India to Britain and Italy.1 The easy money experiments began in 2008, and by the time quantitative easing ended in 2014, the richest 1 percent of the world’s population had increased its share of global wealth from 44 to 48 percent of the total, which had risen to $263 trillion. A 2014 study by the Pew Research Center found that “the wealth gap between America’s high income group and everyone else has reached record levels since the Great Recession of 2007–2009,” with wealth rising for upper-income families and stagnating for the middle- and lower-income groups.2 The high-income families were 3.4 times wealthier than middle-income families in 1983, and while that gap widened gradually over the next quarter century to 4.5 times wealthier in 2007, it widened rapidly to 6.6 times wealthier in 2013.

…

It’s particularly difficult for a country to devalue its way to prosperity if every other country is trying the same trick. After the crisis of 2008, so many nations tried to improve their competitive position by devaluing their currencies that none managed to gain any lasting advantage. The central banks of the United States, Japan, Britain, and the Eurozone took turns pursuing “quantitative easing” policies that effectively amount to printing more money, in part as a way to devalue their currencies, but each achieved at best a brief gain in export share versus the others. Markets can punish these attempts to manage currency values in many ways. The most important is that if a country has borrowed heavily in dollars or euros or some other foreign currency, then devaluing its own currency by, say, 30 percent is going to raise its payments on those foreign loans by an equal margin.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World
by Sandra Navidi
Published 24 Jan 2017

Asymmetrical or unequal access to information regarding the bailouts during the financial crisis gave rise to the suspicion that Wall Street capitalized on an unfair advantage. Particular attention was paid to the Fed’s 2008 hiring of four private asset management companies—PIMCO, Black-Rock, Goldman Sachs, and Wellington—to help implement its quantitative easing program. Lacking the necessary expertise and infrastructure to implement the enormous program itself, the Fed had to rely on third-party managers and provided the retained firms with nonpublic information so they would understand how to proceed. That posed a potential conflict of interest, because those firms traded in the same securities on behalf of their clients that they bought for the Fed.

…

His students also included former U.S. treasury secretary Larry Summers and Greg Mankiw, who chaired the Council of Economic Advisers during the administration of George W. Bush. Fischer had also been in the running to become IMF chief when Dominique Strauss-Kahn resigned, and Fed chairman after the end of Bernanke’s term. Fischer’s, Bernanke’s, and Draghi’s aligned thinking was reflected in their similar approach to quantitative easing during the financial crisis and in its aftermath. The central bank governor of the Bank of England during the crisis was Mervyn King, who had also once taught in MIT’s economics department. It is quite incredible how much our world has been shaped by the few who attended the same school. The epitome of the old boys’ network is Goldman Sachs.

Beyond Diversification: What Every Investor Needs to Know About Asset Allocation
by Sebastien Page
Published 4 Nov 2020

Yields are especially low outside the United States, due to unprecedented monetary easing in Europe, Japan, China, and the United Kingdom. Globally, not only have many central banks driven rates toward zero, but they’ve also pumped more than USD 20 trillion of liquidity into financial markets, through quantitative easing (QE).13 Meanwhile, the Fed has started normalizing. As an illustration of the impact of QE and divergence in policies, two-year US Treasuries currently yield more than two-year Greek government bonds (2.3% versus 1.3%, as of April 3, 2018). Yet, clearly, Greek bonds are much riskier. The Market Portfolio: It’s Not What It Used to Be Now that we have return forecasts for stocks (6.2%) and bonds (1.9%), we must estimate their relative weights within the market portfolio.

…

Rowe Price, 192 and usefulness of optimizers, 211–212 Portfolio optimization models, 2 Portfolio theory, 85 Power utility, 199 Price-to-book (P/B) ratio, 38 Price-to-cash flow (P/CF) ratio, 38 Price-to-earnings (P/E) ratio: compared to other ratios, 38 Price-to-earnings (P/E) ratio (continued): debate over CAPE vs., 13, 25–26 and global equity markets forecasts, 13–14 and inflation, 13 inverse of, and real return for stocks, 12–13 as relative valuation signal, 58–59 and sector weights, 159 as short term timing signal, 57 and valuation change, 30–31 Principles (Dalio), 85 Private assets, 217–229 biases related to, 220–221, 223 diversification with, 128–130 footnotes and fine-print disclaimers with, 219–224 hype associated with, 224–226 in portfolio construction, 217–229 public equities compared to, 218–224 and public equity fund returns, 226–229 “Private Equity Performance” (Kaplan and Schoar), 221 Probability distributions, 117–118, 147, 152–153 Probability-weighted utility, 201 Prout, William, 218–219 Public equities: fund returns for, 226–229 private equities compared to, 218–224 returns on private equities vs., 226–229 Public market equivalent (PME), 221–223, 229 Public pensions, 219 Publication bias, 91–92 Q Group conferences, 7 Qian, Edward, 213–214 Quantitative analysis, judgment and, 84–85 Quantitative data analysis, 2–3 Quantitative easing (QE), 17 Quantitative investing, momentum in models for, 70 Quantitative value-at-risk models, 165 Random walk model, 91 Real estate: CAPM expected returns for, 20 diversification with, 128–130 private, 129–130 Real estate investment trusts (REITS), 18, 240 Real returns, inflation and, 11, 13 “Regime Shifts” (Kritzman, Turkington, and Page), 156, 157 Regime-switching dynamic correlation (RDSC) model, 140 Relative returns: on dashboards, 64–66 and persistence of higher moments, 112, 117–119 on stocks vs. bonds, 10–11, 17–19, 112, 117–119 Relative valuation: and CAPE, 27–28 macro factors confirming signals, 67–68 shorter-term signals of, 56–59 Resampling, 208 Retirement planning, 187–194, 249–253 Return forecasting, 1–3, 83–87, 267, 272 equilibrium, 5–23 momentum, 69–82 paradox of, 73 rules of thumb for, 86–87 shorter-term macro signals, 61–68 shorter-term valuation signals, 45–59 valuation, 25–42 “Return of the Quants” (Dreyer et al.), 94 “The Revenge of the Stock Pickers” (Lynch et al.), 233 Rich, Don, 168–169 Richardson, Matthew, 115 Ringgenberg, Matthew C., 236 Risk aversion, 189, 204 Risk factor diversification, 130–131, 135, 176–177 Risk factors: asset classes vs., 173–184 crowding of, 184 in portfolio construction, 174 in scenario analysis, 162–165 Risk factors models, 178–179 Risk forecasting, 89–92, 267–268, 272–273 basic parameter choices for, 144–145 CAPM definition of, 10 correlation forecasts, 139–143 correlations, 121–136 exposure to loss in, 143–144 fat tails, 147–157 goal of, 178–179 longer-term, 111–119 models of, 89–92 risk-based investing, 93–109 rules of thumb for, 170–171 scenario analysis, 157–168 within-horizon risk in, 168–170 “Risk Management for Hedge Funds” (Lo), 150 Risk parity: and implicit return assumptions, 2 managed volatility vs., 105–106 in portfolio optimization, 212–215 Risk Parity Fundamentals (Qian), 213–214 Risk predictability tests, 112–119 Risk premiums, 179–184 backtest data for, 182–184 beta, 179–180 for bonds, 40 and currency carry trade, 131 diversification across, 182 low-risk anomaly, 180–181 and risk factors, 179–180 and Sharpe ratios, 150, 151 strategies for, 182–184 volatility, 102–104, 181–182 when rates are low, 12 Risk regimes, 131, 154–157, 168, 204 Risk tolerance, 149–150 Risk-based investing, 93–109 combination of strategies for, 104 covered call writing, 102–104 managed volatility backtests, 95–101 Q&A about, 105–109 (See also Managed volatility) Risk-free rate, 11 Roll, Richard, 62, 67 Roll down, 40–41 Ross, Stephen A., 62, 67 Rossi, Marco, 131 Rules of thumb: for portfolio construction, 243–244 for return forecasting, 86–87 for risk forecasting, 170–171 Samonov, Mikhail, 71–75 Sample bias, 223 Samuelson, Paul A., 186–187, 197–198 Sapra, Steve, 132 Satchell, Stephen, 212 Scenario analysis: in asset allocation, 134 and asset class changes over time, 158–162 defensive use of, 157–167 defining scenarios in, 158 factor-based, 162–165 forward-looking scenarios in, 165–168 offensive use of, 167–168 Scherer, Bernd, 2, 117 Schoar, Antoinette, 221, 222 Seasholes, Mark, 31 Sentiment, 69, 131–132 Sharpe, Bill, 6, 7, 9, 13, 151 Sharpe ratios, 150 Sharps, Rob, 228 Shiller, Robert, 13, 14, 25–26 “The Shiller CAPE Ratio” (Siegel), 26 Shive, Sophie, 235 Shkreli, Martin, 238 Shorter-term investments, macro factors for, 63–66 Shorter-term valuation signals, 45–59 for relative valuation between stocks and bonds and across bond markets, 56–59 for tactical asset allocation, 45–59 Shriver, Charles, 57, 62, 94 Siegel, Jeremy, 12–14, 25, 26 Simonato, Jean-Guy, 143 Single-period portfolio optimization, 194–195, 197–215, 268 issues with concentrated and unstable solutions, 207–210 mean-variance optimization, 198, 203–207 and risk parity, 212–215 and usefulness of optimizers, 211–212 Size of measurement errors, 148 Skewness, 118 of call options, 118 mean reversion of, 118–119 persistence of, 117–119 positive vs. negative, 207 and risk forecasting, 144–145 (See also Negative skewness) “Skulls, Financial Turbulence, and Risk Management” (Kritzman and Li), 205 Smart betas, 179, 235 S.M.O.O.T.H. fund, 224–225 Smoothing bias, 128–130 Sovereign wealth funds, 37, 128–130, 194 S&P 500: in March 2018, 12 P/E ratio of, 30–31 realized one-month volatility on, 103–104 recent earnings on, 27 sector weights in, 159 and tech bubble, 163 Spread duration, 40–42 Stock market: used as market portfolio, 17–18 valuation changes in, 31–34 Stock picking, 233–243 “The Stock-Bond Correlation” (Johnson et al.), 132–133 Stocks: beta and relative returns of bonds and, 10–11 CAPM and returns on, 5–14, 20 correlation of bonds and, 132–134 of emerging markets, 159–160 and human capital, 189–190 international equity diversion, 125–126 in market portfolio, 17–19 P/E ratio and real return for, 12–13 P/E ratio vs.

Corbyn
by Richard Seymour

His first gesture as leader, utterly characteristic of him, was to attend a pro-refugees rally in central London, where he received what the Mirror called a ‘hero’s welcome’.15 The agenda on which Corbyn was elected is not, however, the stuff of which revolutions are made. He has pledged to end austerity, and in its stead implement a People’s Quantitative Easing programme with money invested in infrastructural development, job-creation and high-technology industries. Canadian Prime Minister Justin Trudeau won office on an agenda like this. Even the OECD is anti-austerity these days.16 He promises to address the housing crisis through extensive home-building, to fully nationalise the railways, and to bring all academies back under local democratic control.

…

Is it, in fact, even radical enough, given the huge investment gap that, uncontroversially, has opened up in the British economy in the years since 2010? Not to mention the chronic shortfall of investment in research and development in the UK, as well as a long-term productivity crisis.42 The important thing about the £500bn investment is that it is not free money. Although the idea was initially cast as a People’s Quantitative Easing, an alternative to the current framework wherein the Bank of England just prints money and floods it into the financial system, this is mostly borrowed money. Creating a public promotional bank allows one to borrow money off the balance sheet, but it has to be repaid (even if at very low rates of interest).

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud
by Ben McKenzie and Jacob Silverman
Published 17 Jul 2023

After Lehman Brothers declared bankruptcy in September 2008, equities and commodities prices crashed, and the world economy appeared on the brink of collapse. Coordinating with other countries’ central banks, the US government offered $700 billion in bank bailouts and trillions in loan guarantees, managing to stem the worst of the contagion. Quantitative easing (QE), whereby a central bank purchases financial products on the open market to assure investors, did the rest. By buying longer-dated treasuries and mortgage-backed securities, the Fed encouraged lending and investment. Alongside the bailout and loan guarantees, QE took trillions of dollars of corporate debt off the books of some of the largest (and until recently, most profitable) companies in the country.

…

Open Secrets Other People’s Money (Cressey) over-the-counter trades (OTC) Paradise Papers Peirce, Hester Peña, Victor Peterson, Mike Pham, Caroline Piancey, Cas Pierce, Brock Piper, Kelsey poker, online Ponzi schemes Powell, Jesse Prager Metis private money Professional and Amateur Sports Protection Act proof of reserves proof of stake proof of work Pryor, Mark public key encryption quantitative easing (QE) the rake Ranger, Matt Rauda, Nelson Ray, John J., III Razzlekhan (Heather Morgan) real money remittances Republican Party Reserve Primary Fund Salame, Ryan sale-and-repurchase agreements (repos) Sam’s Bill. See Digital Commodities Consumer Protection Act Satoshi Nakamoto Saylor, Michael Scaramucci, Anthony Schoar, Antoinette Schulp, Jennifer Securities and Exchange Commission (SEC) self-custody Shalem, Yaron Shams, Amin Shiller, Robert Shkreli, Martin Silk Road Silvergate Exchange Network Silverman, Jacob Singh, Nishad smart contracts social psychology Solana Solomon, Ben Sorkin, Andrew Ross Soto, Darren South by Southwest (SXSW) Spaceballs (film) Special Purpose Acquisition Companies (SPACs) Stabenow, Debbie stablecoins Stallion Wings Stark, John Reed Sternlicht, Lin and Aaron Stone, Jason store of value Stornetta, W.

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis
by Kevin Rodgers
Published 13 Jul 2016

Then, after three and a half years of the cap, on 15 January 2015, the SNB simply walked away from their commitment to it, a commitment that had been reaffirmed publicly a few days before. Why? Rumours abounded afterwards about the SNB’s motivation: worries about the imminent imposition of quantitative easing in the eurozone; worries about the upcoming Greek election; worries about the Swiss money supply. Whatever the reason, the result was immediate, dramatic and, for some, catastrophic. The euro collapsed in value against the franc. The FX market, for all its computerised sophistication and split-second response times, ceased to function.

…

(Frankie Valli and the Four Seasons), 3–5, 9 oil, 139, 148, 149–50, 220 Oktoberfest, 144–5 one-stop shop, 145, 160, 168, 230 online banking, 233–4 OPTICS, 101, 103, 131, 153, 170 option-based recapitalisation charge (OBRC), 217–18 options, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 91–114, 121, 128, 134, 137, 140, 141, 149, 150, 218, 222–3 Asian options, 106 barrier products, 104, 107, 108 carry trade, 108–10 commoditisation, 110–11 delta hedging, 97 double knockouts, 107 exotics, 105–11, 127 foreign exchange, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 95–114, 222–3 gamma, 97–8, 100 Greeks, 98, 99, 101, 105, 107, 110, 111, 112, 114, 127, 129, 150, 157, 158, 182, 219 lattice methods, 112 lookbacks, 107 over-the-counter (OTC) market, 96, 209 power options, 107 pricing of, 91–5, 107, 111–14, 128, 133, 150 range trades, 107, 108 rho, 98 risk-weighted assets (RWA), 124–31, 134, 166, 211 spoofing, 99, 192–3 strike price, 94, 95, 104, 113, 218 theta, 98, 140 time decay, 98 tree approach, 112–14 vega, 98 volatility, 94, 98, 128–9 Organisation for Economic Co-operation and Development (OECD), 124–5, 139, 207 over-the-counter (OTC) market, 96, 209 P Panopticon, 199 Patton, George Smith, 84 pay, 43, 161–3, 210, 216 PayPal, 233 peer-to-peer, 234 pension funds, 9, 61, 76, 96 Philippines, 137 ‘pipes’, 71, 72 ‘pips’, 13, 18, 41, 65, 73, 77 Piranha, 48 Pittsburgh, Pennsylvania, 209 Plankton Strategy, 38, 40, 55, 58 Poland, 117, 167 Ponzi schemes, 205–6 Portugal, 173 power options, 107 Prebon Yamane, 28 Precision Pricing, 65 prime brokerage (PB), 61–3, 66, 120, 209 principal model, 7–8 principles-based regulation (PBR), 201–2 Prisoners’ Dilemma, 84, 186, 197, 201 Procter and Gamble, 109, 136, 155 production credits, 49, 50 proprietary trading, 22, 31, 39, 46–7, 125 Prosper, 234 Pushkin, Alexander, 30 Q quadratic equations, 105–6 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 quantitative easing, 82 R Rand, Ayn, 202 range trades, 107 ratings agencies, 155–8, 208, 219 rational markets, 202–6 recapitalisation, 217 recovery value, 151, 157, 160 regulation, 73, 80, 131, 148, 152, 168, 174, 180, 186–7, 191–6, 198–9, 200–18, 229, 231, 232 BaFin, 200, 202 bank tax, 216 Basel Accords, 124, 125, 130, 166, 207–9, 211, 217, 231 Big Bang (1986), 201 Central Counterparties (CCPs), 209, 213–15, 229 Commodity Futures Trading Commission (CFTC), 202 computers, 209, 213 ‘cops on the beat’, 215 Dodd–Frank Act (2010), 209, 230 European Banking Authority (EBA), 211–12 Financial Services (Banking Reform) Act (2013), 210 Financial Stability Board (FSB), 212, 214, 216 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 option-based recapitalisation charge (OBRC), 217–18 principles-based regulation (PBR), 201–2 rational markets, 6, 202–6 Riegle–Neal Act (1994), 168 shadow banking, 214–15 surveillance, 110, 190, 195–9 trade repositories, 209–10 relative value trades, 72–3 repo markets, 171 request for quote (RFQ), 50, 51 retail banking, 169, 229–30, 233 retail FX, retail aggregators, 21, 61, 66, 74, 75, 79, 82–3 Reuters, 9, 22–3, 188 Reuters Dealing machines, 23, 25–8, 31, 32, 50, 59, 73 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 rho, 98 Riegle–Neal Act (1994), 168 risk, risk management, 15, 16, 19, 20–1, 24, 29, 31, 38–9, 40, 44–5, 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 77, 79, 99, 101–8, 110–14, 121–31, 135–6, 139, 142, 144, 150, 152, 157–63, 166– 7, 169–70, 172, 174, 200–1, 206–7, 209, 213, 219, 221, 224–7, 233 agency-like approach, 119, 127 Automated Risk Manager (ARM), 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 79, 101, 129, 169 BTAnalytics, 107, 108, 112, 134, 150 collateralised debt obligations (CDOs), 154, 156, 158–63 complex risk, 159 concentration, 213 counterparty credit risk, 141–2, 172, 201, 202–3, 209 credit default swaps (CDSs), 151–3, 157, 158, 164, 225 credit risk, 7, 8, 62–3, 123, 125–6, 130, 141, 151, 209 DBAnalytics, 150, 153 foreign exchange, 15, 16, 19, 20–1, 24, 29, 31, 38, 39, 40, 44–5, 49, 51, 53, 62, 77, 192 market risk, 7, 62, 123, 126, 130, 167 model dopes, 221–2 OPTICS, 101, 103, 131, 153, 170 perception gap, 220, 224 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 risk-adjusted return on capital (RAROC), 126–7, 131, 144, 219 risk-weighted assets (RWA), 124–31, 134, 166, 208, 211 shares, 92 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 RiskMetrics, 131 rogue systems, 79–80 Rolling Stones, 87, 89, 151, 171, 172 Royal Bank of Scotland (RBS), 48, 217, 233 ‘Rule 575 – Disruptive Practices Prohibited’, 193 Russia, 30, 33, 38, 76, 114–32, 137–42, 146, 148, 150, 151, 152, 163, 172, 175, 199, 202, 204, 207, 221, 224, 228 Financial Crisis (1998), xi–xii, 29, 114, 115–16, 118–22, 124, 137–43, 146, 163, 172, 175, 202, 207, 221, 224, 228 rouble, 115–16, 118–22, 131, 137, 138, 139 rouble-denominated bonds (GKOs), 118–32, 134, 138–43, 149, 152, 158, 159, 173 S sales-traders, 50, 78 salespeople, 8–9, 11, 13–15, 20, 24, 28, 29, 33, 35, 37, 46, 47–52, 68, 96, 120 Salomon Brothers, 122, 133–4 Sanford, Charlie, 35, 126 Sarao, Navinder Singh, 193 Scholes, Myron, 94–5, 97 screen scraping, 32–3, 50, 59 Securities and Exchange Commission, 215 securities, 91, 145, 155 September 11 attacks (2001), 52, 146, 147 settlements, 5, 24, 40, 44, 51, 61, 101, 209 shadow banking, 214–15 shareholders, 25, 35, 47, 73, 84, 90, 124, 169, 172, 205 shares, 50, 60, 91, 113, 128, 212, 217 forward trades, 91–4, 133, 152 recapitalisation, 217 tree approach, 113 volatility, 94, 128–9 short-dated deposits, 8 Silicon Valley, 234 Singapore, 37, 137, 211 skewed prices, 18, 19, 73, 96, 98 slippage, 188–9 smartphones, 233 Soros, George, 24 South Africa, xvi Soviet Union (1922–91), 22, 64, 199, 204 Spain 87–9, 151, 159, 171, 172 ‘special purpose vehicle’, 154 spoofing, 99, 192–3 spot, 3–28, 33–4, 42–4, 46, 48–55, 67, 76, 77, 91, 96, 97, 98–9, 108, 111, 118, 122, 159, 165, 169, 188, 189, 199, 201, 222 automation, 23–8, 31–3, 42, 48–55, 56–84, 111, 199, 201 brokers, 3–28, 33, 43, 63, 192 traders, 3–31, 33, 35, 38, 41, 43, 46, 50, 52–4, 67–8, 73, 76, 78, 96, 99, 122, 189 voice traders, 54, 67, 76, 122 spread, 12, 14–15, 16, 18, 19, 31, 41–2, 44, 45, 53, 55, 61, 64, 68, 69, 75, 80, 96, 225 spread crossing, 18, 19 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 spreadsheets, 33, 38, 40, 107, 111, 219 Standard and Poor’s (S&P), 155, 157, 160 Stanford University, 211 stocks, 50, 60, 79, 89, 117, 129, 133, 136, 138, 147–8, 203–4 indexes, 147–8 streamlining, 230–2 Stress VaR, 207, 211 strike price, 94, 95, 104, 113, 218 structured products, 44 structuring, 153, 219 student loans, 155, 231 sub-prime mortgages, 74, 88–90, 159–61, 170–2, 207, 227 suits, 132, 140–1, 149 surveillance, 110, 190, 195–9 swaps, 8, 92, 119–20, 121, 125, 126, 132, 134, 136, 141, 148, 149, 152, 173 Sweden, 148, 167 SWIFT, 23 Switzerland, 10, 81–3, 120, 211 franc, 9, 20, 31, 81–3 Swiss National Bank, 81–3 T Telerate, 9 ‘ten sigma event’, 135 Thailand, 135, 136, 139 theta, 98 ‘Things Can Only Get Better’ (D:Ream), 120, 121 time decay, 98 Tobin Tax, 216 Tokyo, Japan, 72 Tolstoy, Leo, 30 ‘too big to fail’, 90, 217 total return swaps (TRSs), 119–20, 136, 152 tracker funds, 147–8 trade repositories, 209–10 tranches, 154–9, 161, 174, 208 transparency, 141, 143, 151, 170, 212, 219 ‘tree approach’, 112–14 ‘trial by meeting’, 45, 52 triangle arbitrage, 31–2, 42, 54, 91, 122 Triangle Man, 31–2, 42, 54, 91, 122 Triple I High Risk Opportunities Fund, 116, 141 Troubled Asset Relief Program (TARP), 174, 175 Truth and Reconciliation, xvi Turkey, 231 Tuscany, Italy, 78, 115–16, 141 two-way pricing, 11–21, 23, 99 U UBS, 48, 52, 55, 59, 65, 68, 167, 197, 227 Ulster Bank, 233 United Kingdom, 22, 48, 89, 117, 120, 145, 163, 190, 200, 201–2, 203, 210, 233–4 Big Bang (1986), 201 Exchange Rate Mechanism Crisis (1992), xi, 22, 102–3 Financial Services Act (2013), 210 Flash Crash (2010), 79–80, 193 FX-fixing scandal (2013), 190 general election (1997), 120 LIBOR scandal (2012), 181–7, 188, 189, 190, 197, 198 London, England, vii–x, xi, 3, 9, 15, 35, 69, 72, 76, 79, 91, 120, 121, 137, 140, 193, 199, 202, 209 Northern Rock crisis (2007), 89, 163 pound, 9, 13, 28, 53, 184 principles-based regulation (PBR), 201–2 RBS recapitalisation (2008), 217 RBS/Ulster Bank system failure (2012), 233 Vickers Report (2013), 211, 230 United States, vii, xi, 9, 52, 56, 64, 69, 72, 74, 88–90, 108, 120, 143, 159–60, 168, 170–2, 196, 200, 203–6, 207, 209, 210, 212 Black Monday (1987), 108, 138, 204, 207 Comprehensive Capital Analysis and Review (CCAR), 212 Congress, 202, 205 Dodd–Frank Act (2010), 209, 230 dollar, 9, 12, 14, 17–18, 23, 28, 31, 53, 69, 71–2, 73, 79, 88, 96, 97, 99, 100, 104, 118, 119, 135, 136, 140, 184–6, 189 Federal Reserve, xii, 90, 109, 143, 187, 202–6, 212 Flash Crash (2010), 79–80, 193 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 Lehman Brothers bankruptcy (2008), 75, 89, 172–4, 179, 180, 217, 226, 230, 232 New York, 9, 35, 71, 72, 79, 88, 109, 169, 202 Riegle–Neal Act (1994), 168 September 11 attacks (2001), 52, 146, 147 Subprime Crisis (2007), 74, 88–90, 160–1, 170–2, 207, 227 Treasury bills, 119, 129, 133, 147 Vietnam War (1955–75), 181 Wall Street Crash (1929), 168 universal banking model, 230 V Valli, Frankie, 3–5, 9 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 Stress VaR, 207, 211 variation margin, 120, 141 vega, 98 Vickers Report (2013), 211, 230 voice traders, 54, 67, 76, 122 volatility, 14, 26, 46–7, 74–5, 80, 94, 98, 128–9, 137 Volker, Paul, 230 W Wall Street Crash (1929), 168 ‘Watanabe, Mrs’, 61, 75, 79, 82 weather derivatives, 144–5, 146 Wendt, Froukelien, 214 West Texas Intermediate, 139 Wheatley Report (2012), 184, 188 ‘window, the’ 118, 137, 188 ‘wisdom of crowds’, 204 WM/R, 187–8 World Cup 1998 France, 140 2014 Brazil, 195 World War I (1914–18), 207 X XTX, 233 Y Yale University, 110 ‘yours-and-mine’, 15–16, 18, 19, 192 Z zero coupon bonds, 118–32, 134, 138–43, 149, 152, 158, 159, 173 Zombanakis, Minos, 181–2 Zopa, 234 This ebook is copyright material and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased or as strictly permitted by applicable copyright law.

Beyond the 4% Rule: The Science of Retirement Portfolios That Last a Lifetime
by Abraham Okusanya
Published 5 Mar 2018

In effect, those who don’t live very long subsidise those who do. Plus insurers get a tidy profit. The financial crisis of 2008/09 marked a major turning point for the future of annuities in the UK. Like other central banks across the world, the Bank of England started money-printing programmes (also known as quantitative easing). This was an attempt to stabilise the financial system by purchasing gilts from the government. This drove up prices on government bonds, and consequently yields were pushed to historical lows. Annuity rates took a beating. This led to a lot of bickering between financial commentators about whether annuities were good value for money.

Mindware: Tools for Smart Thinking
by Richard E. Nisbett
Published 17 Aug 2015

Bamboozl goes bust, but I’m going to be able to come up with any number of reasons for its failure. Management was not as talented as I had thought. The competition moved much faster than could have been predicted. I believe that announcement of a cutback of “quantitative easing” by the Federal Reserve will result in fear in the equity markets, causing a drop in stock values. The Fed announces a slowdown of quantitative easing and the markets go up. Because of … you name it. Jennifer, disorganized in her private life, would never make a good newspaper editor, a job that requires meeting deadlines and simultaneously juggling information obtained from Internet sources, assigning tasks to copy editors, and so on.

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry
by Helaine Olen
Published 27 Dec 2012

She offered counsel on household budgets and college savings, and both scolded and advised presidents. She eschewed what she called “bafflegab,” the sorts of terms people who like to sound smart use even though they obscure the facts. (If you are looking for a modern day example of bafflegab, think of the currently popular term “quantitative easing.” Porter probably would have referred to it as “printing money.”*) “Why can’t [my] economists talk straight like Sylvia,” President Lyndon Johnson once said in exasperation. Porter was not without critics. “Economics by eye-dropper,” carped one anonymous New York University professor to Time, decrying her simplification of complex topics.

…

When the floor opened for audience participation, I realized women are asking the same questions I hear at almost every financial seminar I attended, either in person or via webinar, the seminars where the vast majority of attendees are almost always male. “How would you recommend the average investor prepare for the end of quantitative easing?” asked one. Another inquired how asset allocation fit in with risk management since pretty much all categories of investment had fallen significantly during the 2008 economic crash. About the only thing female-specific about this session is that the vast majority of the attendees and all of those asking questions were women.

The Sense of Style: The Thinking Person's Guide to Writing in the 21st Century
by Steven Pinker
Published 1 Jan 2014

One kind of monetary policy, which involves the central bank buying private assets, is chunked as quantitative easing. And so on. As we read and learn, we master a vast number of these abstractions, and each becomes a mental unit which we can bring to mind in an instant and share with others by uttering its name. An adult mind that is brimming with chunks is a powerful engine of reason, but it comes with a cost: a failure to communicate with other minds that have not mastered the same chunks. Many educated adults would be left out of a discussion that criticized the president for not engaging in more “quantitative easing,” though they would understand the process if it were spelled out.

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance
by Eswar S. Prasad
Published 27 Sep 2021

The Lehman bankruptcy triggered financial chaos, and the meltdown of the US financial system seemed imminent, threatening to take down both the US economy and the international financial system with it. By December 2008, the Fed had slashed its main policy interest rate, the discount rate, to just above 0 percent. With the economy in dire straits and unable to cut interest rates much further, the Fed commenced its quantitative easing operations—essentially printing money to buy government bonds—at the end of 2008, with many rounds of such operations to follow. A central bank’s printing money to finance runaway government expenditures is a classic recipe for debasement of that money through inflation—at least in normal times.

…

See also credit and debit cards majority (51 percent) attacks, 135–136, 153 Malaysia, 54, 337, 342 Marshall Islands, 262–264 Mauritania, 54 meme crypto-coins, 187–188 Merkle tree, 112, 115–117, 116f, 123, 127, 386n Mexico, 16, 78, 174, 215, 344, 345 mobile phones: banking and financial transactions via, 5, 12, 64–68; e-money on, 196, 197, 351; mobile money and, 64–68, 346, 370–371n; mobile wallet payments via, 46, 74, 92; payment apps on, 16, 64–68, 87, 196, 246, 256; technology disruptions by, 62; text messages via, 65, 83 Monero, 158–159 monetary aggregates, 24, 27–31, 30f–31f monetary policy: banking channel transmission of, 322–325; CBDCs and, 13, 201–209, 236, 318–321, 325, 444n; deflation and, 203–205; emerging market economy, 236, 343–344; global currency limiting, 303; global financial crisis effects on, 202, 203, 204, 313, 317, 410n; in good times, 206; helicopter drops as, 207–209, 223, 262, 319; implementation of, 318–321; inflation and, 13, 25, 108, 202–206, 313, 316–318; informal or nonbank financial institution transmission of, 325–326; interest rate changes with, 13, 17, 108, 202–206, 236, 278, 291, 313, 318–326, 410n, 444n; Libra / Diem effects on, 169, 170, 172; monetary aggregates and, 24; operation of, 202–203; in perilous times, 203–204 (see also global financial crisis); quantitative easing as, 108, 313; spillover effects of, 278–279, 291, 343; tools for, 317; transmission of, 321–326; unemployment and, 13, 202–203, 313, 316–317 monetary sovereignty, 201, 325 money: basics of, 23–34; broad, 28, 31f–32f (see also monetary aggregates); changes in forms of, 31–34, 32f–33f; e-money, 196, 197, 245, 351; Fintech for management of, 94–96, 103; functions and forms of, 24–34, 193; future of, 354–360; global distribution of, 29–31, 30f–31f; helicopter drops of, 207–209, 223, 262, 319; inside, 26–27, 365n; legal tender, 240–245, 253, 254, 260, 263, 419n; measures of in economy, 27–29; mobile, 64–68, 346, 370–371n; outside or fiat, 24–27 (see also fiat currencies); paper and coin (see cash); in practice, 24–26; smart, 223–224, 238; specialization of, 354–355 Mongolia, 54 Nepal, 16 Netherlands, 54, 71 Nigeria, 37, 78 nonbank financial institutions, 98, 100, 250, 325–326, 331, 352 Norway, 240–241, 419n outside money, 24–27.

…

See cash Paraguay, 344, 345 payment and settlement systems: back end of, 88–89; backup, CBDCs for, 198–199; Bitcoin in (see Bitcoin); cash in (see cash); CBDCs in, 12–13, 194–201, 205, 226, 229, 243, 246–257, 261–262, 265, 266–273 (see also central bank digital currencies); central bank management of, 47, 324–325, 328–329; characteristics of efficient, 109–118; counterparty risk in, 9, 199, 328; credit and debit card (see credit and debit cards); cross-border or international (see international payments and settlements); cryptocurrencies in (see cryptocurrencies); decentralization of, 8–9, 11, 56, 90, 267–268, 324–325, 334–335; in developing economies, 15–16, 64–68, 84–88, 344–346, 348–349, 351–352; financial system role of, 45–49; Fintech effects on, 63–68, 83–94, 102, 103–104, 280–285, 289, 327–329, 356–357; fraud in, 86, 102, 379n; legal tender in, 240–245, 253, 254, 260, 263, 419n; mobile money in, 64–68, 346, 370–371n; net deferred, 46, 195; real-time gross, 46–47, 48, 195, 269–270, 271, 283, 351; regulations on, 15–16, 88, 89, 327–329, 331–332, 334–335; remittances via, 16, 67–68, 91–92, 174, 311, 343, 371n; retail, 12–13, 45–46, 83–87, 195, 196–201, 205, 229, 234–235, 265, 284, 327–329, 351; transaction costs in, 8, 15, 48, 69, 85–86, 91, 92–93, 382n; trust and confidence in, 11, 18–21, 46–47, 56, 84, 86–87, 88, 107, 112, 119–120, 127–129, 136, 271–272, 324, 358–359; US dollar dominance in, 278; wholesale, 12, 46–47, 194–196, 266–268, 270–273, 324–325, 351 peer-to-peer (P2P) lending, 69–72, 78–79, 98–99, 372–373n peer-to-peer network, 120, 128, 283 Peru, 244, 344, 345, 347, 419n Philippines, 16, 174 Portugal, 215, 295 privacy: cash and, 229, 239; CBDC effects on, 22, 228–230, 237–238, 240, 252–253, 266, 358; cryptocurrencies and, 158, 358; digital payment systems and, 88, 229; Fintech implications for, 88, 103–105. See also anonymity private equity investments, 50–52. See also venture capital Proof of Stake protocol, 152–155, 197 Proof of Work protocol, 120–122, 124–125, 128, 129, 134, 135, 138–142, 152–155 QR code-based payment technology, 84, 85f, 88 quantitative easing, 108, 313 real-time gross settlement system (RTGS), 46–47, 48, 195, 269–270, 271, 283, 351 regulations: blind spots in, 327–329; cash acceptance, 232, 239, 241–245; cash undermining adherence to, 230–231; central bank implementation of, 317–318, 326–342; cryptocurrency, 151, 156–157, 165, 168, 170–171, 175–182, 185–186, 257, 405–406n; in developing economies, 15–16, 17, 78–79, 88, 352; digital lending, 78–79; financial system oversight and, 6–7, 45, 49, 102–103, 185–186, 318, 326–342, 352; Libra, 170, 171; microinsurance, 82; payment and settlement system, 15–16, 88, 89, 327–329, 331–332, 334–335; regulatory sandboxes of, 336–342, 352, 448–449n; risk-innovation balance with, 335–342; securities, 165, 168, 179, 257, 289, 368n; shadow finance, 49–50, 52–53, 368n; technology effects on, 332–335 remittances, 16, 67–68, 91–92, 174, 311, 343, 371n Ripple or XRP, 90–91, 135 risk: CBDC benefits weighed against, 235–238, 349–353; central banks balancing innovation with, 14, 335–342, 352; counterparty, 9, 199, 328; credit default, 271; default, 70, 75, 183; diversification mitigating, 36–37; financial system, 6–7, 35–38, 42–44, 184–186, 355; Fintech benefit trade-offs with, 17, 56–57, 78–79, 100–105, 335, 355; insurance assessing, 36, 80; interest rates reflecting, 56; Libra benefit trade-offs with, 174–175; at macro level, 37–38; of mobile money, 67–68; of peer-to-peer lending, 70–71, 78–79; settlement, 271, 273; in shadow financial system, 53; SWIFT, 281–282 Russia: cash in, 31, 32f–33f, 33, 218; cryptocurrencies in, 140–142, 141f, 257–258; economic reliance on oil, 37, 282; global distribution of money, 30f; payment systems in, 281, 282, 284–285, 298, 309; US sanctions on, 257, 258, 282, 284, 309 Saudi Arabia, 37–38, 272–273, 298 savings: deposit insurance for, 18, 100, 227–228; deposits into, 26, 28, 52; Fintech changes to, 8, 16; global capital markets and, 6, 287–288; interest rates on, 35, 202, 204, 206, 322–323; maturity transformation of, 39, 98; in shadow financial institutions, 52; transformation into investments, 34–35 securitization, 43–44, 367n Security Token Offerings (STOs), 167–168 seed capital, 50–52, 368–369n, 400n seigniorage, 219–220, 222, 414n SHA-256 hash function, 113, 115, 121, 386n shadow economy, 214–217, 347, 412–413n shadow finance, 49–53, 326, 367n, 368–369n Singapore, 11, 164, 195, 265–268, 270–272, 283, 336–337, 341, 350, 449n smart contracts, 159–162, 161f, 173, 182–187, 253, 398n smart money, 223–224, 238 Somalia, 67–68, 371n South Africa, 54 South Korea, 30f–31f, 177, 341 Spain, 91, 92, 93–94, 215, 295 Special Drawing Rights (SDRs), 304–307, 308, 441n stablecoins, 10, 155–157, 169, 173, 201, 287, 296, 300–301, 311–312, 351 Sweden: cash in, 3, 4f, 11, 31, 32f–33f, 46, 210–211, 218, 221f, 233, 244, 254–255; CBDCs in, 4, 12–13, 196, 198–199, 216–217, 229, 243, 246, 254–257, 321, 350; finance changes in, 5; interest rates in, 320–321; legal tender in, 242–243, 244; monetary policy in, 320–321; payment systems in, 46 SWIFT (Society for Worldwide Interbank Financial Telecommunication), 48, 280–285, 308, 433n, 435n Switzerland, 30, 30f–31f, 164, 239–240 synthetic hegemonic currency (SHC), 301–302 System for Transfer of Financial Messages (SPFS), 284 Taiwan, 31f Tanzania, 78 taxes: cash to evade, 13, 214–217, 230, 345, 412–413n; CBDCs and, 198, 216–217, 262; cryptocurrencies and, 175, 178, 180, 262; in developing economies, 345, 346, 348; fiat currencies for, 25 technology: blockchain (see blockchain technology); distributed ledger (see distributed ledger technology); environmental effects of, 138–142; financial (see Fintech); historical revolutions of, 61–62; international monetary system effects of, 279–280; network effects of, 21, 64, 102, 311, 335, 354–355; neutrality and interoperability of, 252, 283; payment system, 48–49, 280–285; regulatory effects of, 332–335; SWIFT, 283 Tether, 155–157, 175, 351 text messages, 65, 83 Thailand, 273, 283 traveler’s checks, 28–29 trust and confidence: in banks and financial institutions, 18, 40, 56, 97, 106, 108, 227–228, 324, 327; in Bitcoin, 20, 56, 107, 112, 119–120, 127–129, 136; in cash, 19, 127–128, 320; in CBDCs, 228, 246–247, 271–272, 320; in central banks, 11, 17–18, 19, 347, 348, 356; in cryptocurrencies, 20, 56, 173, 358–359; in fiat currencies, 25, 227; in financial system, 17–21, 55–56, 108; in inside money, 27; in Libra, 173; in payment and settlement systems, 11, 18–21, 46–47, 56, 84, 86–87, 88, 107, 112, 119–120, 127–129, 136, 271–272, 324, 358–359; without trusted authority, 19–21, 55–56, 106–107, 119–120, 271 Tunisia, 245 Turkey, 284 Ukraine, 245 unemployment, 13, 37, 202–203, 313, 316–317 Unified Payments Interface (UPI), 87–88, 335, 380n United Arab Emirates, 272–273 United Kingdom: cash in, 32f–33f, 218–219, 222; CBDCs in, 14, 266, 270, 350; cryptocurrencies in, 162, 164, 264–265; digital banks in, 69; global distribution of money, 30, 30f–31f; legal tender in, 241–242; payment systems in, 91–92, 270, 285; peer-to-peer lending in, 71; pound as vehicle currency, 286; regulatory sandbox in, 336–337, 341, 449n; smart contract legislation in, 162; trade deficit of, 7 United States: banks and financial institutions in, 45, 62, 69, 97, 100, 330–331, 384n; cash in, 12, 32, 32f–33f, 219, 221f, 222, 223, 225, 231–234, 239, 241, 412n, 414n; CBDCs in, 14, 222, 274; credit and debit cards in, 86; crisis management in, 330–331; crowdfunding in, 72–73; cryptocurrencies in, 156–157, 162–165, 168, 170, 173, 176–182, 405–406n; deposit insurance in, 100, 227–228; dollar as vehicle currency, 286–287; dollar dominance and challenges in international monetary system, 277–280, 296–311, 312, 357, 440n, 442n; dollar valuation in, 131; finance changes in, 5; financial inclusion in, 54, 236, 416–417n; financial system regulation in, 102, 338–340; Food Stamp Program in, 223; global distribution of money, 29–30, 30f–31f; gold standard in, 25, 193; insurance in, 80–82; interest rates in, 13, 17, 108, 202, 278, 291, 323, 330, 410n; legal tender in, 241; loans / lending systems in, 69–73, 78, 377n; monetary aggregates in, 28–29; monetary policy in, 13, 16–17, 108, 202, 278–279, 291, 313, 316, 323, 410n; payment systems in, 47, 83–84, 88–89, 92–94, 103–104, 351, 379n; regulatory sandboxes in, 338–340, 448n; sanctions by, 257, 258, 260, 262, 279, 282–285, 295, 296–297, 309, 433n; SDR opposition by, 306–307; shadow economy in, 215, 216; shadow financial system in, 326; smart contract legislation in, 162; spillover effects from, 278–279, 291, 343; SWIFT influence of, 281–285, 433n; trade deficit of, 7, 279, 303 Uruguay: cash in, 244–245; CBDCs in, 4, 12, 200, 245, 247–249, 344, 347, 351, 422–423n; dollarization of, 344; financial inclusion in, 200, 244; legal tender in, 244–245; payment systems in, 345, 422–423n vehicle currencies, 285–287 Venezuela, 257, 259–262, 309, 344, 345, 346 Venmo, 83–84, 103–104, 196, 217 venture capital, 50–52, 368–369n, 400n wealth management, 94–96, 103 WeChat Pay, 13, 84–87, 199, 251, 253 XRP or Ripple, 90–91, 135 Yemen, 16 Zcash, 158–159, 397n Zimbabwe, 17, 371n

Basic Income: A Radical Proposal for a Free Society and a Sane Economy
by Philippe van Parijs and Yannick Vanderborght
Published 20 Mar 2017

Yet, this argument makes room for a sensible monetary funding at a level that would need to fluctuate and could not exceed by much the rate of real growth.44 The second rationale requires a far less radical reform of the banking system. It received fresh attention as a result of the 2008 financial crisis and the prolonged stagnation that followed in EuÂ�rope, despite extremely low, sometimes even negative rates of interest. “Quantitative easing for the Â�people,” a direct lump-sum payment to all residents of the Eurozone, has been proposed by mainstream economists as a way of stimulating the economy by boosting consumer demand that could work more quickly and more effectively than the usual technique operating through interest rates and private banks.45 As a tool for kickstarting the economy, however, this egalitarian “heÂ�liÂ�copÂ�ter money” can only be of limited duration.

…

For example, Mark Walker (2016: 142) claims that a basic income “Â�will increase aggregate utility” and should be defended on the basis of a version of utilitarianism “that says the right course of action for individuals and socieÂ�ties is the one that maximizes aggregate happiness” (2016: 119). 73. Pigou 1920/1932: 761. 74. Pigou 1920/1932: 730. 75. Mirrlees 1971. 76. Most explicÂ�itly, see William Jackson 1999 and the argument Â�behind a sporadic basic income as “quantitative easing for the Â�people” (to be discussed in chapter 6). 77. See, for example, Johnson 1973, Arnsperger 2011, Arnsperger and Johnson 2011, or Mylondo 2010, 2012. 78. Easterlin 1974, 2010. 79. Durkheim 1893/2007: 247. 80. Durkheim 1893/2007: 250–251. 6. EcoÂ�nomÂ�ically Sustainable? Funding, Experiments, and Transitions 1.

…

In Andrea Fumagalli and Maurizio Lazzarotto, eds., Tute bianche. Disoccupazione di massa e reddito di cittadinanza, 45–54. Rome: Derive Approdi. Moynihan, Daniel Patrick. 1973. The Politics of a Guaranteed Income: The Nixon Administration and the Â�Family Assistance Plan. New York: Random House. Muellbauer, John. 2014. “Quantitative Easing for the Â�People.” ProjÂ�ect Syndicate blog post, November 5. https://Â�w ww╉.Â�project╉-Â�syndicate╉.Â�org╉/Â�commentary╉/ Â�helicopter╉-Â�drops╉ -Â�eurozone╉-Â�deflation╉-Â�by╉-Â�john╉-Â�muellbauer╉-Â�2014╉-Â�11╉?Â�barrier​=Â�true. Müller, Christian, and Daniel Straub. 2016.

Slouching Towards Utopia: An Economic History of the Twentieth Century
by J. Bradford Delong
Published 6 Apr 2020

The “penalty rate” part means to discourage opportunistic financiers from exploiting the situation. A number of the things that could be done were tried over 2007–2009. Central banks took risk off of the private sector’s balance sheet and put it onto their own by buying up long-term risky assets for cash, and so increasing the supply of safe assets. This quantitative easing was a good idea, but central banks suffered from sticker shock. They balked at spending what was needed, and so this effort was only marginally effective. Governments also increased the supply of safe assets by running bigger deficits, issuing bonds, and using the resulting purchasing power to put people to work directly.

…

And so many governments, instead of taking drastic and immediate action, decided simply to wait and see what would happen. In Blinder and Zandi’s judgment—and mine—the alphabet soup of interventions by the Federal Reserve to guarantee loans, expand the money supply, and take risk off of the private sector’s balance sheet was quite effective. The TARP and the TALF and the HAMP and the Federal Reserve’s quantitative-easing policies and extra deficit spending via the ARRA—and all the other government interventions—together accomplished 6 of the 10 percentage-point reduction-in-unemployment-relative-to-where-it-would-otherwise-have-been job that the government should have carried out when the crisis hit.25 That is three-fifths of the job—and a glass three-fifths full is not empty.

…

Reinhart and Kenneth Rogoff, saw the dangers of the financial crisis but greatly exaggerated the risks of public spending to boost employment in its aftermath.32 Other highly capable and competent economists, including Federal Reserve chair Bernanke, understood the importance of keeping interest rates low but overestimated the effectiveness of additional monetary-policy tools such as quantitative easing.33 Still others, perhaps less capable and competent, like me, understood that expansionary monetary policies would not be enough but, because we had looked at global imbalances the wrong way, missed the principal source of risk—US financial misregulation—and found ourselves still trying to catch up to the situation in order to give accurate policy advice in real time.34 In hindsight, technocrats’ errors of judgment and failures of communication seem to me a large part of how events unfolded so disastrously—if we economists had spoken up sooner about what we knew about depressions and their cure, had been more convincing on the issues where we were right, and had been better at recognizing where we were wrong, the situation today might be considerably better.

Why Wall Street Matters
by William D. Cohan
Published 27 Feb 2017

The new law was designed to allow bank regulators to figure out which banks were solvent and could reopen, with the help of an injection of liquidity from the Fed, and which were not and would need to remain closed. Just as Bernanke would do after the 2008 financial crisis—in the form of the so-called Quantitative Easing program—the Fed injected capital into struggling banks by buying assets from them. The Fed paid full price for Treasury securities held by the banks and less than full price for other assets, such as the bonds of railroad companies and retailers, giving the solvent banks the much-needed cash to meet the demands of their depositors.

Financing Basic Income: Addressing the Cost Objection
by Richard Pereira
Published 5 Jul 2017

Another approach is to enforce 100% reserve requirements on banks, which would prevent them from creating credit and would restrict them to only loaning out deposits on hand, serving as intermediaries between depositors (savers) and borrowers. If there is any doubt that banks create money, consider that private central banks in the US, EU and Japan have created trillions of dollars in “quantitative easing” a euphemism for (electronic) money printing. This money was then given to banks in exchange for their non-performing assets. Profits for the big four Australian banks (National Australia Bank [NAB], Commonwealth Bank [CBA], Australia and New Zealand Banking Group [ANZ] and Westpac [WBC]) totalled $27 billion (cash basis, 2011–2012), with dividends of $16 billion.

The Land Grabbers: The New Fight Over Who Owns the Earth
by Fred Pearce
Published 28 May 2012

As the prices of shares, real estate, and other former wealth generators fell during the credit crunch of 2008, the prices of commodities index funds continued to rise, as investors poured in. This accelerated as governments in the United States and Europe tried to save the world banking system by pumping in new money—quantitative easing. Much of this new money, we now know, went straight into commodities. In 2003, there had been $13 billion in agricultural commodity funds. But by 2008, many commentators put the figure at over $300 billion. In his Senate testimony that year, Michael Masters reported that financial speculators accounted for two-thirds of the futures market, and they were crashing the system.

…

Heat waves and fires across Russia’s grain belt cut the wheat harvest by 40 percent. Rain and tornadoes put wheat crops in jeopardy in the U.S. and Canadian prairies, and La Niña messed with the harvests in Argentina and Brazil. But a bad situation was again made worse by rampant speculation. After federal reserve chairman Ben Bernanke pumped another $600 billion of “quantitative easing” into the U.S. economy in November 2010, Barclays Capital said speculators were pushing record amounts into index funds, in the hope of tapping more profits as prices rose. Investment in commodity index funds in the United States alone was reported at above $400 billion. The bubble inflated.

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

In other words, we should be honest about the dishonesty that pervades political debate. Often, the mendacity is the message. Which brings me to my final rule. Don’t be afraid to talk about motives: I wish we lived in a world in which one could normally assume that policy arguments are made in good faith. And some are. For example, there is a real debate about how effective “quantitative easing”—bond purchases by the Fed—actually is in boosting the economy. I’m on the skeptical side, but I can respect the optimists, and both sides, I believe, are open to persuasion. But in most of the important policy debates in 21st-century America, one side consistently argues in bad faith. I’ve already made the point that this needs to be pointed out, that you should tell readers not just that extravagant claims about the power of tax cuts are false, but that those making such claims are knowingly being dishonest.

…

Even as the real business cycle people took over the professional journals, to the point where it became very hard to publish models in which monetary policy, let alone fiscal policy, matters, the research departments of the Fed system continued to study counter-cyclical policy in a relatively realistic way. But this, too, was unstable. For one thing, there was bound to be a shock, sooner or later, too big for the central bankers to handle without help from broader fiscal policy. Also, sooner or later the barbarians were going to go after the monasteries too; and as the current furor over quantitative easing shows, the invading hordes have arrived. FINANCIAL INSTABILITY Last but not least, the very success of central-bank-led stabilization, combined with financial deregulation—itself a by-product of the revival of free-market fundamentalism—set the stage for a crisis too big for the central bankers to handle.

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

Financial bubbles can be seen as the result of value being extracted; during financial crises value is actually destroyed. The fallout can be measured not only in output and job losses but also by the amount of money that governments had to pour into private banks because they were ‘too big to fail': the quantitative easing (QE) schemes that followed the crisis might have been used to help sustain the economy, but ended up further propping up the banks. The figures involved were enormous. In the US, the Federal Reserve embarked on three different QE schemes, totalling $4.2 trillion over the period 200814. In the UK, the Bank of England undertook £375 billion of QE between 2009 and 2012, and in Europe, the ECB committed € 60 billion per month from January 2015 to March 2017.27 Back in the mid-1980s, to try to prevent the banking system from moving to speculative finance, Hyman Minsky formulated an economic recipe that can be summarized as ‘big government, big bank'.

…

After the Great Depression, he claimed that even paying men simply to dig ditches and fill them up again could revive the economy - but his work inspired Roosevelt to be more ambitious than just advocating what today would be called ‘shovel-ready projects' (easy infrastructure). The New Deal included creative activities under the Works Progress Administration, the Civilian Conservation Corps and the National Youth Administration. Equally, it is not enough to create money in the economy through quantitative easing; what is needed is the creation of new opportunities for investment and growth - infrastructure and finance must be embedded within the greater systemic plans for change. President John F. Kennedy, who hoped to send the first US astronaut to the moon, used bold language when talking about the need for government to be mission-oriented.

New York 2140
by Kim Stanley Robinson
Published 14 Mar 2017

My IPPI’s New York number had indeed dipped briefly at the news of this building collapse in Chelsea, but now it had stabilized and was even inching back up. A sensitive instrument indeed. The index, and the derivatives we had concocted at WaterPrice to play on it, were all booming in a most gratifying way. Helping our success was the fact that the continuous panicked quantitative easing since the Second Pulse had put more money out there than there was good paper to buy, which in effect meant that investors were, not to put too fine a point on it, too rich. That meant new opportunities to invest needed to be invented, and so they were. Demand gets supplied. And it wasn’t that hard to invent new derivatives, as we had found out, because the floods had indeed been a case of creative destruction, which of course is capitalism’s middle name.

…

You can print money, restore confidence, crank the handle and get things going again, and after that, the ridiculous profits from finance will belong to the people. Also you can aim finance at solving people’s real problems. Congress can reform the financial system based on laws you write for them to pass, and you can quantitatively ease the American taxpayer instead of the banks. Print money and give it out to the bank of Mr. and Miz Taxpayer. It will be the biggest judo flip of power since the French Revolution!” Larry shook his head, trying for one of his old expressions, this one meant to express faked admiration for Charlotte, an expression she remembered very well.

…

If they don’t accept, you blow the worst one up and go to the next one in line on the gangplank and say, Do you want to go down like Citibank or do you want to live?” He laughed. “It would get their attention.” “Of course! And you print the fucking money you’re bailing them out with anyway, so why should you worry? To you it’s just quantitative easing!” “Inflation,” he said. “Sure to happen.” “Except when it doesn’t. Come on, don’t pretend theory works here. Besides you want a little inflation, that’s economic health, right?” “But it can so quickly get out of hand.” “When you own the banks, you can definitely deal with it. You’ll have your foot on the gas and the brakes.”

This Is Not a Drill: An Extinction Rebellion Handbook
by Extinction Rebellion
Published 12 Jun 2019

We need programmes to deliver massive investment in clean energy and affordable public transport, to insulate every home and to bring hope and meaningful work to communities hollowed out by deindustrialization. This Green New Deal can be paid for by measures like wealth taxes, and some initiatives will pay for themselves through the increased tax returns of those in work. Green quantitative easing is also likely to have a role to play, with banks investing directly in green projects, rather than the government handing cash to the banks. Meanwhile, global leaders need to recognize that we live on a planet with finite resources. Investment on this scale will allow us to explore a new economic model, designed to improve life for everyone while protecting the natural environment we depend on, and measuring our success by people’s well-being, instead of company profits.

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World
by Don Tapscott and Alex Tapscott
Published 9 May 2016

In a 2013 survey, over 44 percent of bitcoin users professed to be “libertarian or anarcho-capitalists who favor elimination of the state.”11 Libertarians of all stripes tend to support bitcoin. It’s decentralized and free from government control. It’s anonymous and difficult to tax. It resembles gold in its scarcity, and libertarians favor the gold standard. It’s a pure market, driven by supply and demand rather than quantitative easing. Not surprising, the first 2016 presidential candidate to endorse bitcoin for campaign payment was Rand Paul. The libertarian bent has given opponents of digital currencies fodder for dismissing blockchain technologies outright. Jim Edwards, founding editor of Business Insider UK, wrote of the libertarian paradise he called Bitcoinistan, a country like Somalia “with as little government interference as possible, in a market free of burdensome laws and taxes.”

…

The Fed pioneered electronic clearing of funds by championing the Automated Clearing House (ACH) system when all checks were settled and cleared manually. Like central banks elsewhere, the Fed has savored experimentation. It has embraced unorthodox and untested policies, most famously (or infamously) the quantitative easing program in the wake of the 2008 financial crisis, when it used newly minted money to buy financial assets such as government bonds at an unprecedented scale. Not surprisingly, central bankers have been forward thinking in understanding blockchain technology’s importance to their respective economies.

America's Bank: The Epic Struggle to Create the Federal Reserve
by Roger Lowenstein
Published 19 Oct 2015

To Lindbergh, the Fed’s bailouts of banks and of AIG in 2008, as well as the New York Fed’s general coziness with Wall Street, would confirm his fears about the Money Trust. Just as surely, Warburg would applaud that, when the Great Recession came, the United States had a lender of last resort that could provide elasticity (all that “quantitative easing”) so that banks were not forced to desperately hoard their reserves, and so that the meltdown did not become pandemic. In this sense, the debates that shroud the contemporary Fed are a replay of those of 1913. America’s abandonment of the gold standard would have shocked the founders, who took for granted that money had to be more than mere paper.

…

P., 26, 30n, 42, 58, 59, 61, 78, 80, 82, 85, 95n, 99, 104, 115–16, 135, 165, 169, 190, 192, 198, 219, 299 death of, 197 Jekyl Island Club and, 108, 110 in Money Trust hearings, 175–76, 197 and Panic of 1907, 61, 62–66, 70–73, 133 stability as goal of, 73 Treasury bailout by, 20 trusts sponsored by, 139, 288, 305 on Wilson, 143 Morgenthau, Henry, 27, 170, 174, 177, 187, 308, 310 Morse, Charles W., 62, 283 mortgage-backed securities, 226, 258 mortgages, 1 farm, 237, 329 liquidity of, 238 Mullins, Eustace, 117 Napoleon I, emperor of France, 86 Napoleonic wars, 70 Narragansett Bay, 35, 75 Nation, 53 National Association of Manufacturers, 94 National Banking Act, 13–16, 28, 39, 41, 48n, 49, 220, 251 loans based on real estate prohibited by, 17 mediums of exchange under, 15 National Banking system, 30, 33, 47, 59, 60, 61–62 National Bank Notes, 13–15, 41, 75, 79, 113, 181, 212, 249n National Bank of Commerce, 299 national banks, 13–15, 30, 52, 122, 129, 134, 242 Federal Reserve membership sought by, 253 overseas business and, 48, 114, 183, 245, 296, 329 real estate loans not issued by, 199 regulations of, 136 reserves at, 186 National Biscuit Company, 93 National Board of Trade, 121, 123 National Citizens’ League, 131–33, 135, 144, 269, 305 Laughlin at, 131–36, 139, 153, 159–61, 171, 299 New York chapter of, 133 in 1912 election, 159–60 National City Bank of New York, 27, 32–33, 47–48, 108, 109, 196, 199, 233, 237–39, 253, 270 investment affiliate of, 134–36, 299 overseas expansion of, 118, 264–65 in Panic of 1893, 57 in Panic of 1907, 57, 65 reserves of, 109 in wake of San Francisco earthquake, 51, 52 National City Co., 134–37 National Monetary Commission, 79, 88, 94, 97, 104, 106, 120, 134, 141, 144, 287, 302, 305 Aldrich Plan as report of, 147–48, 269 National Reserve Association, 113–15, 118, 122–23, 140 banking industry and, 130–31 governor and directors of, 114, 130–31, 140, 141, 188–89, 199 location of, 114 notes of, 133 political influence avoided by, 115 public accountability of, 141 state banks, 129 nativism, 22, 230 natural law, 25 Nebraska, 22, 81, 157, 165, 170, 231, 236 New Deal, 264, 266 New England, 98 textile industry in, 93 “New Nationalism” speech (Roosevelt), 293 New Orleans, La., 53, 131, 139–40 Newport, R.I., 37, 78, 199 New York, N.Y., 47, 63, 82, 85, 88, 98, 132, 144, 201, 216, 236, 299, 304 banking dominated by, 314 banking reform in, 60 banks and bankers in, 5, 7, 12, 49–50, 54–56, 68, 113, 135, 141, 186, 193, 220, 229, 252 banks vs. trusts in, 61–62, 69 cash shortage in, 65 as central reserve city, 14, 39n, 69, 231 city banks in, 26, 30, 39 corporate headquarters in, 50 Federal Reserve Bank of, 257, 258–59, 260–61 financiers in, 17 money market in, 60–61 National Banking Act and, 14–15 Panic of 1907 and, 99 run on safe-deposit boxes in, 68 subways in, 62 suffragettes in, 156 Warburg in, 31 New York Chamber of Commerce, 46–51, 121n, 123, 281 monetary committee of, 119–20 New York Clearing House, 61, 62–63, 193–94, 283 loan certificates from, 66–67 New York State, 95, 166, 231, 245 New York Stock Exchange, 65, 193, 198, 260 New York Sun, 214 New York Superintendant of Banking, 284 New York Times, 42n, 56, 58, 62, 63, 66, 73, 120, 122–23, 133, 143, 156, 198, 214, 219, 222, 252–53, 266, 286, 323, 332 New York Tribune, 36, 252, 332 Nixon, Richard, 257, 259 North, 17 central bank supported in, 4 tariff supported in, 37 North Carolina, 229 Northeast: capital in, 242 Roosevelt’s support in, 168 strong dollar and, 18 Northern Pacific Railway, 28 Norway, 93 notes: Bank of England, 83, 84, 86–87 credit and, 200 federal government, 205 issuing of, 83 Reichsbank, 87 Reserve Banks’, 205 Noyes, Alexander D., 29 O’Gorman, James, 231, 236, 238–39, 242, 327, 328 Ohio, 162 Oklahoma, 81–82, 200, 204 Oklahoma Territory, 19, 203–4 Omaha World-Herald, 236 Open Market Investment Committee, 264 Other People’s Money and How the Bankers Use It (Brandeis), 193n Owen, Robert Latham, 19, 200, 263, 319, 323, 328 background of, 203–4 banking bill and, 203, 205, 207–9, 212–13, 217–18, 227, 241 as Bryan disciple, 200, 204, 205 European study tour of, 204 Glass’s feud with, 266–67, 268 as progressive, 205 Warburg and, 243, 248, 334 Owen bill, 205 Page, Walter Hines, 197 Palmer, James E., Jr., 335 Panama Canal, 47, 234 Panic of 1893, 19–21, 57, 60, 204 Panic of 1907, 57–58, 59–76, 77–79, 81, 99, 101, 133, 139, 150–51, 269, 319 paper money, 11–13, 16, 114 see also specific types Paris, 31, 49, 51, 78, 86, 140, 209, 265 Parliament, British, 84, 166, 168, 241 Paul, Ron, 296 Payne-Aldrich tariff, 95, 103 Peary, Robert, 93 Peck, Mary Allen Hulbert, 163, 166, 214, 233, 246, 325 Peel, Sir Robert, 85–86 Pennsylvania, 158 pensions, 100, 199 Perkins, George W., 58, 60–61, 64, 73, 78, 80, 104 in Roosevelt’s 1912 campaign, 169, 305, 308 Perry, Marsden J., 42 personal checks, 49 Philadelphia, Pa., 5n, 49, 120 Bank of the United States in, 2–4 banks in, 12, 68 Federal Reserve Bank in, 260n Philippines, 91 Phillips, David Graham, 43–44 “Plan for a Modified Central Bank, A” (Warburg), 75–76, 286 populism, populists, 21, 44, 71, 128, 137, 143, 185, 205, 221, 232 monetary, 230 Portland, Oreg., 67, 69 pound, British: as international currency, 49 strength of, 85 Pound, Ezra, 117 press: on Aldrich, 33–34, 44, 120, 122–23, 133, 134, 140 on Aldrich Plan, 134 Citizens’ League and, 160 on Federal Reserve System, 252–53 on Glass bill, 214 muckraking, 43–44 progressivism and, 100 Untermyer and, 310 Wilson’s campaign and, 157 prices: falling, 18, 246 wholesale, 330 primary elections, 100, 138, 143 in 1912, 157 Princeton, N.J., 145, 170, 181, 184, 252 Princeton University, 23, 45, 83, 142, 143, 166, 250–51 profits, Reserve Association and, 115 Progressive Party, 167 progressives, 6–7, 41, 44–45, 205, 237 accountability to public of, 140–41 Aldrich disliked by, 89, 140 on banking, 71 banking reform and, 45, 138, 147 in Democratic Party, 99, 132, 133, 148, 156–57, 165, 191, 204 gathering strength of, 90 growing prominence of, 127 income tax and, 234 La Follette as member of, 72, 140 in 1912 election, 156 public control of financial institutions and, 115, 128 rejection of central bank by, 104, 123, 238 Republican, 92–93, 95, 96, 99–100, 103, 104, 105, 138 Wilson and, 307 promissory notes, 39 Providence, R.I., 34, 35, 42n, 68 Pujo, Arsène, 152, 155, 172, 302 Pujo hearings, see Money Trust inquiry Pujo Report, 314 Pulitzer, Joseph, 110 Pullman strike of 1894, 21 quantitative easing, 259 racial segregation, 22, 153, 156, 204 Ragsdale, James, 222 railroads, 40, 67, 70, 81, 211 bonds for, 15, 41, 78 consolidation of, 73, 176 failure of, 20 financing of, 32, 33 public resentment toward, 78 rate fixing by, 288 regulation of, 21, 34, 38, 74, 100 stocks in, 58 railways, street, 42n, 190 Raleigh News and Observer, 157 Ravenscroft, D.

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined
by Lasse Heje Pedersen
Published 12 Apr 2015

If the central bank is about to lower rates, how large will the rate cut be: 25 basis points (bps), 50 bps, or more? Will the central bank signal a hawkish or dovish stance that will change the market’s expectations about future rate changes? Will it implement unconventional monetary policies, such as lending facilities or quantitative easing (i.e., buying long-term bonds) or increase the strength of such programs (e.g., buying more bonds per month or “tapering” such a purchase program)? To answer these questions, macro traders seek to understand each central bank’s objectives and policy constraints and to analyze the same economic data as the central bank.

…

See also leveraged buyout (LBO) investors private investments in public equity (PIPEs), 291, 313 production function, 192 profitability: measures of, 101; quality investing and, 100, 101–2, 104 profits and losses (P&L): mark to market, 78; time horizon for observing, 33t, 34–35 profit sources, from trading strategies, 39–46, 40f proportional transaction costs, 65 “pump and dump” schemes, 107–8, 123 purchasing power parity (PPP), 182–83; trading based on, 197, 197n put-call parity, 236, 236n2 put options, 235–36; demand pressure for, 46, 240; implied volatilities of, 239. See also options qualified institutional buyers (QIBs), 270 quality at a reasonable price (QARP) investing, 100, 104, 140 quality investing, ix, 16, 100–104; Ainslie on, 108–9; value investing combined with, 16, 100, 103–5, 139–40 quant event of 2007, xii–xiii, 144, 145–49, 146f quantitative easing, 189 quantitative equity investing, viii, 10–11, 88, 133–35; advantages and disadvantages of, 133–34; Ainslie on incorporation of approaches from, 11, 110; Asness on, 162–64; types of, 134–35, 134t. See also fundamental quantitative investing; high-frequency trading; statistical arbitrage quantitative global macro investing, 185 random walk hypothesis, 173 RAROC (risk-adjusted return on capital), 31–32 reactive risk management.

Super Continent: The Logic of Eurasian Integration
by Kent E. Calder
Published 28 Apr 2019

Chinese SOEs, collective enterprises, and private firms are also expanding rapidly abroad, supported in many cases by BRI initiatives. They have lent heavily to local enterprises, in such nations as Pakistan, Sri Lanka, and Malaysia, with the debt burden becoming a widespread issue, aggravated in 2018 by rising global interest rates, as the United States withdrew from quantitative easing. How debt problems in the developing world might affect China 188 chapter 9 at home, as its overseas economic stakes expand, is a deepening issue for both China and the broader world. As China’s economy has grown and begun to globalize, it has acquired rapidly growing assets and human entanglements abroad.

…

Conversely, if commodity demand slacks and supply is ample, Sino-Indian growth and savings rates will likely be higher, and trade balances of these Asian giants more positive. Fragile States in the Developing World Prospects for global exchange rates and interest rates, like commodity prices, are intrinsically uncertain. As the world retreats from quantitative easing, however, after a full decade of relaxation, interest-rate pressures on heavily indebted developing nations will likely increase. “Distributive globalism” has compounded the impulse of less developed countries to borrow when interest rates are low, as have domestic pressures, leading to serious, destabilizing debt problems in many nations.

Hand to Mouth: Living in Bootstrap America
by Linda Tirado
Published 1 Oct 2014

That person hasn’t been given a whole lot of proof that her vote will matter anyway; voting hasn’t resulted in policy shifts toward a more equitable distribution of government services. Our schools are still worse, our roads less maintained, our police less friendly. And we simply don’t give a fuck about quantitative easing or who might manage the prime index, because we do not have money and so those concerns are entirely irrelevant to us. Poor people have gotten the message loud and clear: The powers that be are not concerned about us. Meanwhile, wealthier people get all exercised about a poor person dropping a cigarette butt on a city sidewalk, as if this is proof that poor people just don’t care.

Power Systems: Conversations on Global Democratic Uprisings and the New Challenges to U.S. Empire
by Noam Chomsky and David Barsamian
Published 1 Nov 2012

The European Central Bank has only one objective, to control inflation. It’s a bankers’ bank, nothing to do with the population. They have an inflation target of 2 percent, and you’re not allowed to threaten that.1 In fact, there is no threat of inflation in Europe. But they insist on not carrying out any stimulus or anything like quantitative easing or other measures that might increase growth. The effect is that the weaker countries in the European Union are never going to be able to get out of their debt under these policies. In fact, debt levels are getting worse. As you cut down growth, you cut down the possibility of debt repayment.

Democracy at Work: A Cure for Capitalism
by Richard D. Wolff
Published 1 Oct 2012

In the United States for the past century, that has meant the Federal Reserve system. Indeed, since 2007, the Federal Reserve has driven interest rates down and kept them down to an unprecedented degree. It has likewise dramatically increased the money supply (commonly described in the financial press as “quantitative easing”). Because of the political conditions I discussed above, when the 2007 crisis hit, politicians remained hesitant about expanding deficits and the debt. The limits they observed meant that fiscal policy could not end or overcome the crisis. As leading Keynesian economists kept lamenting, expansionary deficits were too little and too late.

The End of Loser Liberalism: Making Markets Progressive
by Dean Baker
Published 1 Jan 2011

For practical purposes, the federal funds rate was pretty much at its lower bound, since the marginal impact of going all the way down to zero from 1.0 percent is likely to be minimal. The European Central Bank has never lowered its overnight rate below 1.0 percent in the post-2007 downturn even though it engaged in quantitative easing and other extraordinary measures to boost the economy. The Fed’s response to the 2001 downturn belies the notion that the recession was short and mild. Though that may have been the case officially, and the unemployment rate did not rise strongly, the consequences for the economy and especially the labor market were severe.

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts
by David Gerard
Published 23 Jul 2017

(Mullins was also famous for his anti-Semitism; every time Mullins said “banker” he meant “Jew,” but this mostly isn’t consciously the case amongst Bitcoiners, who only occasionally rant about Zionists.) These ideas had also been propagated in the mainstream by Ron Paul in the wake of the 2008 credit crunch and the quantitative easing (just printing money, to kick-start the economy) that followed. Though Paul isn’t a fan of Bitcoin – he wants a return to actual gold after he abolishes the Fed.19 Old ideologies come back when they fill a present desire and there’s an opening for them. So these claims, somewhere between incorrect and nonsensical, showed up full-blown in Bitcoin discussion, proponents straight-facedly repeating earlier conspiracy theories as if this was all actually proper economics.

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness
by Morgan Housel
Published 7 Sep 2020

Once a paradigm is in place it is very hard to turn it around. A lot of debt was shed after 2008. And then interest rates plunged. Household debt payments as a percentage of income are now at the lowest levels in 35 years. But the response to 2008, necessary as it may have been, perpetuated some of the trends that got us here. Quantitative easing both prevented economic collapse and boosted asset prices, a boon for those who owned them—mostly rich people. The Fed backstopped corporate debt in 2008. That helped those who owned that debt—mostly rich people. Tax cuts over the last 20 years have predominantly gone to those with higher incomes.

Inflated: How Money and Debt Built the American Dream
by R. Christopher Whalen
Published 7 Dec 2010

The trend in the amount of global trade priced in dollars has been going down for decades. This brings us today to the key question, which is what is the U.S. plan? Fed Chairman Bernanke wakes up every morning and tries to trash the dollar with quantitative easing, zero interest rates and swaps lines with the central banks. But it has not been working. The Fed has never taken it to the next step and asked what happens when quantitative easing does not work.15 Americans face a decision as we approach an inevitability: One day the other nations such as China and the EU will want an equal share of the global monetary franchise that has belonged solely to the United States since WWII.

Civilization: The West and the Rest
by Niall Ferguson
Published 28 Feb 2011

‘Because the United States’ issuance of dollars is out of control and international commodity prices are continuing to rise,’ declared the Chinese Commerce Minister Chen Deming in October 2010, ‘China is being attacked by imported inflation.’31 The United States is engaged in ‘uncontrolled’ and ‘irresponsible’ money printing, according to Xia Bin, an economic adviser to the People’s Bank of China: ‘As long as the world exercises no restraint in issuing global currencies such as the dollar … then the occurrence of another crisis is inevitable.’32 Quantitative easing (purchases of Treasury securities by the Federal Reserve) was a form of ‘financial protectionism’, declared Su Jingxiang, a researcher with the China Institute of Contemporary International Relations.33 In November 2010 the Dagong credit rating agency downgraded the US to A+ from AA, with a negative outlook.

…

As for the work ethic, that was spread to the East not by the sword but by the word – above all, by the major improvement in public health and education achieved from the mid-twentieth century onwards. It is in this light that we should understand the rise of China in our time. Despite the oft-stated Chinese preference for a ‘quiet rise’, some commentators already detect the first signs of Huntington’s civilizational clash. In late 2010 the resumption of quantitative easing by the Federal Reserve appeared to spark a currency war between the US and China. If ‘the Chinese don’t take actions’ to end the manipulation of their currency, President Obama declared in New York in September of that year, ‘we have other means of protecting U.S. interests’.43 The Chinese Premier Wen Jiabao was not slow to respond: ‘Do not work to pressure us on the renminbi rate … Many of our exporting companies would have to close down, migrant workers would have to return to their villages.

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right
by Philippe Legrain
Published 22 Apr 2014

Weak spending in post-bubble economies in turn has knock-on effects for countries that export a lot to them, not least Germany. So the way to promote a rapid recovery is to accelerate this balance-sheet repair. One way is to try to make households feel wealthier by inflating the prices of their assets, such as shares, bonds and property. That is the purpose of quantitative easing (QE), whereby the US Federal Reserve and the Bank of England have “printed” money to buy assets, mostly government bonds. But while QE may have limited the downturn in Britain, it did not spark a recovery – and relying too much on overzealous monetary policy risks reviving the bubble economy rather than encouraging a shift to more sustainable and balanced growth.

…

Britain narrowly escaped Ireland’s fate. It also avoided a eurozone-style doom loop. UK banks owned few British government bonds. More importantly, the Bank of England stood ready to act as lender of last resort to the government and was already buying large amounts of government bonds through its quantitative easing (QE) programme from 2009 on. Thus a run on UK government bonds was never likely – and could have been checked in any case. Unfortunately, Britain’s banking crisis continues to hold the economy back. The narrow debate about whether the government sells its stakes in Lloyds and Royal Bank of Scotland at a profit or a loss misses the wider point.

Why We Can't Afford the Rich
by Andrew Sayer
Published 6 Nov 2014

Governments raided the public purse to lend money at rock-bottom rates of interest to banks, which then used it to lend back at higher interest, through buying government bonds paying 4% or 5% or consumer credit paying 12–18%.134 Governments took toxic assets off banks and insured them, and created money to buy other financial assets from them (‘quantitative easing’). The banks used the opportunity to ‘deleverage’, that is, pay off debts and build up reserves, while of course keeping themselves in the manner to which they were accustomed as regards pay and bonuses. They failed to increase their already low level of lending for productive investment by businesses.

…

But it has been innocent bystanders, the 99%, but especially those on low to middling incomes, who have been told that ‘we’ must reduce ‘our debt’ and tighten our belts. Not only have real wages dropped but public sector cuts have led to job losses, particularly affecting women, while benefits for the unemployed, the disabled and people on low incomes have been drastically cut. Austerity for the masses and ultra-cheap bailout loans and quantitative easing for the banks mean another massive dollop of unearned income for the rentiers. As Adair Turner – again, a more candid member of the financial establishment – put it: British citizens will be burdened for many years with either higher taxes or cuts in public services – because of an economic crisis whose origins lay in the financial system, a crisis cooked up in trading rooms where not just a few but many people earned annual bonuses equal to a lifetime’s earnings of some of those now suffering the consequences.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

Goldman needed to turn itself into a bank to gain access to the Federal Reserve’s discount window and secure vital liquidity, received $5 billion of otherwise valueless credit default swaps owed to it by AIG because the latter was bailed out, received billions of dollars from the TARP and sold $21 billion of bonds to raise funds guaranteed by the US government. Similarly, if the British government had not bailed out RBS and Lloyds, Barclays would surely have fallen too; and the government guarantees in the interbank markets, along with £200 billion of quantitative easing, have been central to its ongoing viability. Yet the bankers don’t get it. They really believe that they deserve their astonishing pay packages. It is part of their DNA, the culmination of decades in which big finance has made the rules, created its own mores and bent regulation and politics to its will.

…

INDEX Aberdeen University, 263 ABN AMRO, 150 Abramovitch, Roman, 64, 65, 67 accountancy firms, 296 Acemoglu, Daron, 299 aerospace, 136, 219, 268 Afghanistan, 13, 102, 144, 322 Africa, 71–2, 322, 383, 385 AIG, 152, 175, 176 airline industry, 30, 91, 109, 134, 143 Akerlof, George, 43 Alcoa, 133 alcohol policy, 335 Alessandri, Piergiorgio, 151, 153 Amazon, 253 Anderson, Elizabeth, 79 angels, business, 244, 252 Anglo Irish Bank, 181 Apple Inc., 29–30, 65–6, 71, 253 apprenticeships, 10, 295 Arculus, Sir David, 180 Argentina, 368 Aristotle, 39, 274 ‘arms race’ effects, 105 Arup Group, 66, 67, 93 Asda, 93 Ashcroft, Lord, 344 Ashdown, Paddy, 141 Asian Tiger exports, 149, 208, 355 AT & T, 133–4 Atari, 30 BAA, 8, 257–8 baby boomer generation, 34, 372–3 ‘Baby P’ case, 10, 325–6 Bagehot, Walter, 156–7 Bailey, Bob, 16, 25 Baker, Kenneth, 276 Baldacci, Emanuele, 367 Baldwin, Stanley, 315 Balls, Ed, 138, 147, 338 Bank of America, 152, 158, 175, 192 Bank of England, 4, 7–8, 129, 148, 180, 208, 250, 339, 359; lender-of-last-resort function, 157, 158, 160; Monetary Policy Committee, 185, 186, 264; reserve requirements scrapped (1979), 161, 208 Bank of International Settlements (BIS), 169, 182 Bank of Scotland, 186, 251 bankers, 4–5, 25–6, 62, 63–4, 180, 188; errors that caused the crash, 188–96, 197–204; gambling culture, 7, 8; pay see pay of executives and bankers Bankers Trust (New York), 140, 167 banking and banks: see also under entries for individual organisations; bail-out of, 3, 7–8, 19, 24, 138, 152–3, 172, 175, 176, 181, 204–5, 210, 389, 392; balance sheets, 7, 160, 164, 165, 191, 208, 210; bank runs, 9, 156–7, 158, 175–6, 202; borrow short and lend long principle, 154, 155–6, 157, 158–9; capital ratios, 151, 158, 162–3, 169, 170, 207, 208; credit-rating agencies and, 151, 196, 207; deposit insurance and, 158, 160; diversification, 154–5, 157, 165, 199, 354; fairness/desert and, 64, 206–7; interbank money markets, 164, 170, 176, 187–8, 202, 204; investment banks, 6, 28, 42, 101, 103, 150–1, 158, 165, 166, 170, 172–6, 195–6, 207; maturity transformation, 155–6, 157, 158–9; need for network of specialist banks, 251–2, 265, 371; nineteenth-century collapses, 156–7; post-crunch deleverage pressures, 359; principles and strategies, 154–6, 157; regulation of see regulation; relationship finance, 244, 251–2, 256–7; remoteness of management, 173–4; required reforms of, 205–10, 251–2, 371; short-term structure of lending, 33; banking and banks – continued socially vital role of, 155, 157; subsidiaries and special purpose vehicles, 181; unproductive entrepreneurship and, 28, 101, 103; vast assets/loans/profits, 32, 138, 147, 170, 172, 201; zero loyalty of front-line staff, 174 Barclay brothers, 327 Barclays, 24, 176, 177–8, 181, 215, 296, 363 Barker, Kate, 185 Basel system, 158, 160, 163, 169, 170–1, 196, 385 Baumol, William, 101, 111, 116, 253, 256 Bayerische Landesbank, 196 Bear Stearns, 150, 152, 158–9, 166, 173–4, 187 Bebchuk, Lucian, 198 Becht, Bart, 82–3 Beckwith, John Lionel, 179 behavioural psychology, 44, 47–50, 59–61 Bekar, Clifford, 108, 263 Bell, Alexander Graham, 221 Ben & Jerry’s, 266 Benz, Matthias, 86 Berlusconi, Silvio, 317, 328 Bettelheim, Bruno, 86 Better Government Initiative, 313, 336–7 Better Regulation Task Force, 180 Bhagwati, Jagwad, 163 Big Bang (1986), 90, 162 bin Mahfouz, Khalid Salim, 333 biotechnology, 109, 229, 240, 263, 268 Birt, John, 324 Bischoff Inquiry, 178 BISTRO (broad index secured trust offering), 169, 170, 196 Black, Fisher, 191 Blair, Tony, 5, 17, 138, 141–3, 144, 148–9, 276–7, 313, 328, 342; centralisation of power, 14–15, 313, 334, 337, 341; Iraq War and, 14, 36, 144; Rupert Murdoch and, 318; neo-conservative economics and, 388; ‘third-way’ as enthronement of resignation, 389–90; welfare reforms, 81 Blanchflower, Danny, 264–5 Blanden, Jo, 283–4 Blankfein, Lloyd, 42, 63, 168 BMW, 91 Boeing, 136, 256 Bologna University, 261 Born, Brooksley, 182–3 Bowen, Jeremy, 323 Boyle, Susan, 314 BP, 216–17, 392 Branson, Richard, 30 Brazil, 354–5, 385 Bretton Woods system, 159 Brinkley, Ian, 233 Briscoe, Simon, 294 Bristol University, 263 British Airways (BA), 30, 91 British Broadcasting Company (BBC), 321, 322, 323, 329, 330–1, 350, 389 British National Party (BNP), 16, 24–5, 82 Britishness, 15–16, 124, 392–3, 395 Brompton folding bicycle, 103, 105 Brooks, Clem, 281, 282 Brown, Gordon, 5, 12, 141, 178, 302, 314, 328; centralisation of power, 14, 334, 337, 341; as Chancellor, 138, 143, 145–8, 215, 245; deal with Blair (1994), 148; Gillian Duffy blunder by, 394; general election (2010) and, 20, 378, 394; neo-conservative economics and, 144–8, 388; as visionless, 391; Where There is Greed: Margaret Thatcher and the Betrayal of Britain’s Future (1989), 144 Browne, John, 216 Brunel, Isambard Kingdom, 126 Buffett, Warren, 116, 173, 222 Building Schools for the Future programme, 371 building societies, demutualisation of, 156, 186 Buiter, Wilhelm, 172 Burrows, Paul, 59 Buscombe, Baroness, 332 Bush, George W., 17, 36, 135, 177 Cabinet Office, 218–19, 336, 337 Cable, Vincent, 220 Cambridge University, 9, 363 Cameron, David, 20, 179, 233–4, 235, 318, 338, 342; ‘Big Society’ policy, 19–20, 234, 271, 280 Campbell, Alastair, 141, 142, 224, 312 Canada, 121, 354, 358–9, 383 capital controls, abolition of, 32, 161 capitalism: see also entrepreneurs; innovation; amorality of, 16–19; ‘arms race’ effects, 105; boom and bust cycle, 181–7, 392; deregulation (from 1970s), 159–63, 388; fairness and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; as immutable force of nature, ix, 23, 40–2; incumbent firms, 29–30, 31, 105, 106, 110, 111–12, 253–5, 257, 297; interconnectedness of markets, 200–2, 204; knowledge-entrepreneurship dynamic, 27–8, 31, 103, 110–11, 112–13; liquidity as totemic, 199, 200, 202, 240, 243; need for ‘circuit breakers’, 197, 199, 202, 203; network theory and, 199–204, 206; required reforms of, 205–9, 215–16; stakeholder, x, 148–9; undue influence of, 32–3 Carlaw, Kenneth, 108, 263 Carnegie, Andrew, 195, 303 cars, motor, 91, 108, 109, 134, 269 Castells, Manuel, 317 Cayne, Jimmy, 173–4 CCTV cameras, 10 celebrity culture, 282, 314 central banks, 154, 157, 158, 160, 182, 185, 187, 208; see also Bank of England; Federal Reserve, 169–70, 176, 177, 183 Cerberus Capital Management, 177 Cervantes, Miguel de, 274 Channel 4, 330, 350 Charles I, King of England, 124–5 Charter One Financial, 150 chavs, mockery of, 25, 83, 272, 286–8 child poverty, 12, 21, 74–5, 83, 278, 279, 288–90, 291 China, x, 101, 112, 140, 144, 160, 226, 230, 354–5, 385; consumption levels, 375–6, 379, 380, 381; economic conflict with USA, 376–7, 378–80, 381, 382, 383; export led growth, 36, 169, 208, 226, 355–6, 375–7, 379–81, 382–3; rigged exchange rates, 36, 169, 355, 377, 378–9; surpluses of capital and, 149, 154, 169, 171, 208, 226, 375; unfairness of world system and, 383, 385 Christianity, 53, 54, 352, 353 Church of England, 128 Churchill, Winston, 138, 273, 313 Churchill Insurance, 150 Cisco, 253 Citigroup, 152, 158, 172, 177, 184, 202, 203, 242, 247 city academies, 278, 307 City of London, 34, 137, 138, 178–9, 252, 359; as incumbent elite, 14, 26, 31, 32–3, 210, 249, 355; in late nineteenth-century, 128–30; light-touch regulation of, 5, 32, 138, 145, 146–7, 151, 162, 187, 198–9; New Labour and, x–xi, 5, 19, 22, 142, 144–5, 355; remuneration levels see pay of executives and bankers civic engagement, 86, 313 civil service, 13, 221, 273, 312, 343 Clasper, Mike, 178 Clayton Act (USA, 1914), 133 Clegg, Nick, 22, 218, 318, 327–8, 342, 391 Clifton, Pete, 321 Clinton, Bill, 140, 177, 183 coalition government (from May 2010), 14, 20, 22, 37, 307, 311, 343, 346, 390–2; abolition of child trust fund, 302; capital spending cuts, 370–1; deficit reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2; emergency budget (June 2010), 369–70; market fundamentalism and, 370; political reform commitment, 35, 341, 343–4, 346, 350, 390, 391; proposed financial reforms, 208, 209, 245, 252, 371; repudiation of Keynesian economics, xi, 390–1 Cohan, William, 158–9 Cohen, Ronald, 12, 245 collapse/crash of financial system, x, xi, 4, 9, 41, 144, 146, 152–4, 158–9, 168; costs of, 7, 19, 138, 152–3, 172, 214–15; errors responsible for, 136, 187–96, 197–204; global interconnectedness, 375, 382–3; lessening of internationalism following, 376–83; need to learn from/understand, 36–7; predictions/warnings of, 148, 153, 180, 182–5; recommended policy responses, 215–16; results of previous credit crunches, 358, 359–60, 361–2 collateralised debt obligations (CDOs), 155, 167–8, 174 colonialism, 109, 124 Commodity Future Trading Commission, 182–3 communism, collapse of in Eastern Europe, 16, 19, 135, 140, 163 competition, 29, 30, 33, 51, 156, 185, 186, 207–8, 251; see also ‘open-access societies’; City of London and, 160, 178, 179, 198–9; deregulated banking and, 160, 161, 163, 164, 178, 179, 181; European Union and, 251, 258, 259; fairness and, 89–90, 99, 272; incumbent elites/oligarchs and, 104, 114, 129–30, 131–4, 257; innovation and, 40, 114, 257–60; national authorities/regimes, 201–2, 257–60, 316, 318; state facilitation of, 31 Competition Commission, 257–8 computer games, 233 Confederation of British Industry (CBI), 4, 6–7 Conservative Party, xi, 5, 11, 14, 97–8, 220, 343, 378; broken Britain claims, 16, 227, 271; budget deficit and, 19, 224, 357, 360–1, 368, 379; City/private sector funding of, 179, 257, 344; decline of class-based politics, 341; deregulation and, 32, 160, 161; fairness and, 83, 302, 374, 390; general election (1992) and, 140–1; general election (2010) and, 20, 97, 227, 234, 271, 357, 374, 379, 390; Conservative Party – continued government policies (1979-97), 32, 81, 275–6, 290; inheritance/wealth taxes and, 74, 302–3; market fundamentalism and, 5, 17, 138, 147, 160, 161; poverty and, 21, 279; reduced/small state policy, 20, 22, 233–4, 235 construction industry, 5, 33, 268 consumer goods, types of, 266–7 Continental Illinois collapse, 152, 162 Convention on Modern Liberty, 340 Cook, Robin, 142 Cootner, Paul, 194–5 Copenhagen climate change talks (2009), 226, 231, 385 Corporate Leadership Council, US, 93 Corzine, Jon, 177 county markets, pre-twentieth-century, 90 Coutts, Ken, 363 Cowell, Simon, 314, 315 ‘creative destruction’ process, 111, 112, 134 creative industries, 11, 71, 355 credit cards, 64, 354 credit crunch: see collapse/crash of financial system credit default swaps, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207 Crédit Lyonnais collapse, 152 credit-rating agencies, 151, 165, 175, 196, 197, 248, 269, 362, 388; funding of, 151, 196, 207 criminal activity/allegations, 7, 101, 103, 104–5, 138, 167–8 Crosby, James, 178 Cuba, 61 culture, British, 12, 187, 282, 314 Dacre, Paul, 324, 326, 329 Daily Mail, 218, 286, 288, 315, 324, 325–7, 339, 342 Daily Telegraph, 288, 317, 319, 327 Darling, Alistair, 149, 204, 252 Darwin, Charles, 31 Data Monitor, 186 Davies, Howard, 198 Davies, Nick, Flat Earth News, 319, 321, 323–4, 326, 331–2 de Gaulle, Charles, 65 debt, 33, 155, 209, 351–63; corporate/commercial, 8, 29, 181, 245, 248, 352, 354, 359, 363, 374; moral attitudes towards, 351–4, 357, 360–1; necessity of, 155, 351, 353, 354; private, 5, 186, 187, 210, 226, 279–80, 354–7, 359, 363, 373; public, 9, 34, 164, 166, 167, 182, 203, 214, 224–6, 356–7, 362–3, 375, 388, 393; sustainable level of, 356–7, 368–9 Defence Advanced Research Projects Agency (DARPA), 265 defence and armed forces, 34, 372 deficit, public, 4, 34, 213, 224–6, 335, 364–74; coalition’s reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2, 393; need for fiscal policy, 224–5, 226, 357–8, 364, 365–9, 370, 374; speed of reduction of, 213, 224–5, 360–1, 368, 371 Delingpole, James, 287 Delong, Brad, 27, 106 democracy, 13–15, 235, 310–16, 333–48; centralisation of power and, 14–15, 35, 217, 313, 334, 337, 342; fair process and, 86, 89, 96–9; incumbent elites and, 35, 99; industrial revolution and, 128; media undermining of, 315–16, 317–18, 321–9, 333, 350; ‘open-access societies’ and, 136, 314 Democratic Party, US, 18, 140, 183, 379 Demos, 289 Deng Xiao Ping, 140 Denham, John, 21 deprivation and disadvantage, 10, 34, 288–93, 307–8, 393; low-earning households, 11–12, 13, 291, 361; weight of babies and, 13; young children and, 74–5, 83, 288–90 derivatives, 140, 145, 150–1, 164–8, 171, 175, 188, 207, 209; City of London and, 32, 137, 150–1, 157, 199; mathematical models (‘quants’) and, 188, 191; regulation and, 183, 197–8, 199 desert, due, concept of, 4, 24, 38–43, 45–7, 50–63, 64–8, 73–7, 80–2, 223, 395; see also effort, discretionary; proportionality; big finance and, 40–2, 82, 167, 174, 176, 210; debt and, 351–2; diplomacy/international relations and, 385–6; Enlightenment notions of, 53–6, 58–9, 112; luck and, 70, 73–7, 273; poverty relief systems and, 80–2, 277–8; productive entrepreneurship and, 102–3, 105–6, 112, 222, 392–3; taxation and, 40, 220, 266 Deutsche Bank, 170 developing countries, 71–2, 160, 354–5, 375, 376, 385 Diamond, Bob, 24 Dickens, Charles, 353 digitalisation, 34, 231, 320, 349, 350 Doepke, Matthias, 115–16 dot.com bubble, 9, 193 Drugs Advisory Panel, 11 Duffy, Gillian, 394 Durham University, 263 Dworkin, Ronald, 70 Dyson, James, 28, 33 East India Company, 130 Easyjet, 28, 233 eBay, 136 economic theory, 43–4, 188–9, 366; see also Keynesian economics; market fundamentalism economies of scale, 130–1, 254–5, 258 The Economist, 326, 330, 349 economy, British: see also capitalism; financial system, British; annual consumption levels, 375; balance of payments, 363–4; as ‘big firm’ economy, 254; change in landscape of trading partners, 230–1; coalition capital spending cuts, 370–1; collapse of tax base, 224, 368; cumulative loss of output caused by crash, 138, 153, 172, 214–15; desired level of state involvement, 234–5; domination of market fundamentalism, 16–17; economic boom, 3–4, 5–6, 12, 143, 173, 181–7, 244–5; fall in volatility, 365; fiscal deficit, 368; fiscal policy, 208, 224–5, 226, 357–8, 364–9, 370, 374; growth and, 9–10, 214–15, 218–19, 224, 359, 363; inefficient public spending, 335; investment in ‘intangibles’, 232–3; in late nineteenth-century, 128–30; ‘leading-edge’ sectors, 218–19; need for engaged long term ownership, 240–4, 249–51; as non-saver, 36, 354; potential new markets/opportunities, 231–3; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; required reforms of, 20, 239–44, 249–52, 264–6, 371–4 see also national ecosystem of innovation; ‘specialising sectors’, 219; urgent need for reform, 36–7; volatility of, 297–8; vulnerability of after credit crunch, 358–64 economy, world: acute shortfall of demand, 375–6; Asian and/or OPEC capital surpluses and, 149, 153–4, 169, 171, 208, 226, 354, 375; conflicts of interest and, 137, 138; deregulation (from 1970s), 159–63; emerging powers’ attitudes to, 226; entrenched elites and, 137–8, 210; fall in volatility, 365; international institutions as unfair, 383, 385; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; need for international cooperation, 357–8, 379–80, 381–3, 384, 385–6; post-crunch deleverage pressures, 359–60, 374–5; protectionism dangers, 36, 358, 376–7, 378, 379, 382, 386; savers/non-savers imbalance, 36, 169, 208, 222, 355, 356, 375–6, 378–83; shift of wealth from West to East, 36, 383–4; sovereign debt crises, 167, 203, 214; unheeded warnings, 182–5; wrecking of European ERM, 140, 144 Edinburgh University, 145 education, 10, 20–1, 128, 131, 272–4, 276, 278, 292–5, 304–8, 343; Building Schools for the Future programme, 371; cognitive and mental skills, 288–90, 304–6; private, 13, 114, 264–5, 272–3, 276, 283–4, 293–5, 304, 306 effort, discretionary, 50, 53, 54–5, 58–60, 80, 90–1, 114, 134; see also desert, due, concept of; fair process and, 91–4; indispensability and, 65–7; innovation and invention, 62, 65, 102–3, 105–6, 112, 117, 131, 223, 262–3, 392–3; luck and, 26–7, 65, 67, 70, 71, 73–4, 75–7; productive/unproductive, 43, 46–7, 51–2, 62, 64–5, 102–3, 392–3; proportionate reward for, 26, 39–40, 44, 47, 61, 74, 76–7, 84, 122, 272, 273, 2 84 egalitarianism, 27, 53–4, 55–6, 61, 75, 78–80, 144, 341, 343; Enlightenment equal worth concept, 53, 55, 59–60 Ehrenfeld, Rachel, 333 Eisman, Steve, 207 electoral politics: see also general election (6 May 2010); general elections, 97, 138, 277, 315; fair process and, 96–9; franchise, 128; general election (1992), x, 138, 140–1, 144, 148, 277; general election (1997), x, 138, 141 electricity, 134, 228, 256 electronic trading, 105 elites, incumbent, 23, 31–3, 99, 131; City of London, 14, 26, 31, 32–3, 210, 249, 355; competition and, 104, 113, 114, 129–30, 131–4, 257; democracy and, 35, 99; Enlightenment and, 122; history of (from 1880s), 131–4; history of in Britain (to 1900), 124–30; innovation and, 29–30, 110, 111–12, 113, 114, 115, 116; modern big finance and, 135, 137–8, 180, 210, 387–9; in ‘natural states’, 111, 113, 114–15, 116, 123–4, 127; New Labour’s failure to challenge, x–xi, 14, 22, 388, 389–90; world economy and, 137–8, 210 EMI, 28, 247, 248 employment and unemployment, 6, 75, 291–3, 295, 300, 373, 393; employment insurance concept, 298–9, 301, 374; lifelong learning schemes, 300, 301; lifelong savings plans, 300; unemployment benefit, 81, 281 Engels, Friedrich, 121–2 English language as lingua franca, 124 Enlightenment, European, 22, 30–1, 146, 261, 314–15; economics and, 104, 108–9, 116–17, 121–3; notions of fairness/desert, 53–6, 58–9, 112, 122–3, 394; science and technology and, 31, 108–9, 112–13, 116–17, 121, 126–7 Enron affair, 147 entrepreneurs: see also innovation; productive entrepreneurship; capitalist knowledge dynamic, 27–8, 31, 110–11, 112–13; challenges of the status quo, 29–30; Conservative reforms (1979-97) and, 275; private capital and, 241; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; rent-seeking and, 61–2, 63, 78, 84, 101, 105, 112, 113–14, 116, 129, 135, 180; unproductive, 28–9, 33, 61–2, 63, 78, 84, 101–2, 103–5, 180 environmental issues, 35–6, 71–2, 102, 226, 228, 231, 236, 385, 390, 394; due desert and, 68; German Greens and, 269 Erie Railroad Company, 133 Essex County Council, 325, 332 European Commission, 298 European Exchange Rate Mechanism (ERM), 140, 144, 166 European Union (EU), 11, 82, 179, 379–80, 383–4, 385; British media and, 15, 328, 378; Competition Commissioner, 251, 258, 259; scepticism towards, 15, 36, 328, 377, 378, 386 eurozone, 377 Fabian Society, 302–3 factory system, 126 fairness: see also desert, due, concept of; proportionality; abuse/playing of system and, 24–5, 27; asset fairness proposals, 301–3, 304; behavioural psychology and, 44, 47–50, 59–61; Blair’s conservative view of, 143; Britishness and, 15–16, 392–3, 395; capitalism and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; challenges to political left, 78–83; coalition government (from May 2010) and, 22, 37; commonly held attitudes, 44, 45–7; deficit reduction and, 226, 227, 374; economic and social determinism and, 56–8; Enlightenment notions of, 53–6, 58–9, 112, 122–3, 394; fair process, 84–94, 96, 98–9, 272; as foundation of morality, 24, 26, 45, 50; individual responsibility and, 39, 78–9; inequality in Britain, 78, 80, 275–6, 277–8, 342; international relations and, 226, 385–6; ‘Just World Delusion’, 83; luck and, 72–7; management-employee relationships, 90–2; models/frameworks of, 43–58; need for shared understanding of, 25, 37, 43; partisanship about, 42–3; politicians/political parties and, 22, 83, 271–2, 302–3, 374, 391–2; popular support for NHS and, 75, 77, 283; pre-Enlightenment notions, 52–3; shared capitalism and, 66, 92–3; state facilitation of, ix–x, 391–2, 394–5; welfare benefits to migrants and, 81–2, 282, 283, 284 Farnborough Sixth Form College, 294 Federal Reserve, 169–70, 176, 177, 183 Fees Act (1891), 128 Fertile Crescent, 106 feudalism, European, 53–4, 74, 104, 105 financial instruments, 103, 148, 157, 167–8 Financial Services and Markets Act (2001), 198 Financial Services Authority (FSA), 24, 147, 162, 178, 198–9, 208 financial system, British: see also capitalism; economy, British; Asian and/or OPEC capital surpluses and, 149, 154, 354; big finance as entrenched elite, 136, 137–8, 176, 178–80, 210, 387–9; declining support for entrepreneurship, 241; deregulation (1971), 161; fees and commissions, 33; importance of liquidity, 240, 243; lack of data on, 241; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; massive growth of, 137, 138, 209, 219; need for tax reform, 209–10; regulation and see regulation; required reforms to companies, 249–50; savings institutions’ share holdings, 240–1; short termism of markets, 241, 242–3; unfairness of, 138, 210 Financial Times, 12, 149, 294, 330, 349, 361 Fink, Stanley, 179 fiscal policy, 208, 224–5, 226, 357–8, 364–9, 374; coalition rejection of, 370 fish stocks, conservation of, 394 Fitch (credit-rating agencies), 248 flexicurity social system, 299–301, 304, 374 Forbes’ annual list, 30 Ford, Henry, 195, 302 foreign exchange markets, 32, 161, 164, 165, 168, 363, 367; China’s rigged exchange rate, 36, 169, 355, 377, 378–9; currency options, 166, 191; eurozone, 377 foreign takeovers of British firms, 8, 388 Fortune magazine, 94 Foster, Sir Christopher, 313 foundation schools, 307 France, 51–2, 123–4, 163, 372, 375, 377 free trade, 163, 334, 379 Frey, Bruno, 60, 86 Friedman, Benjamin, 282–3 Fukuyama, Francis, 140 Fuld, Dick, 192 Future Jobs Fund, 373 G20 countries, 209, 358, 368, 374 Galliano, John, 143 Gardner, Howard, 274, 305–6 gated communities, 13 Gates, Bill, 71 Gates, Bill (Senior), 222 Gaussian distribution, 190–1, 194 ‘gearing’, 6 general election (6 May 2010), 97, 142, 179, 214, 217, 227, 234, 271, 314, 318, 327–8, 334, 378; Gillian Duffy incident, 394; result of, xi, 20, 345–6, 390 ‘generalised autoregressive conditional heteroskedasicity’ (GARCH), 194 genetically modified crops, 232 Germany, 36, 63, 244, 262, 269, 375–6, 379, 380; export led growth, 355–6, 375, 381–2; Fraunhofer Institutes, 252, 264; Greek bail-out and, 377; pre-1945 period, 128, 129, 134, 382, 383 Gieve, Sir John, 339–40 Gilligan, Andrew, 329 Gladwell, Malcolm, 76–7 Glasgow University, 323 Glass-Steagall Act, 162, 170, 202–3 Glastonbury festival, 143 globalisation, 32, 98, 140, 143, 144, 153–4, 163, 182, 297, 363, 366, 380 Goldman Sachs, 42, 63, 103, 150, 167–8, 174, 176, 177, 205 Goodwin, Sir Fred, 7, 150, 176, 340 Google, 131, 136, 253, 255, 258, 262 Goolsbee, Austin, 52 Gorbachev, Mikhail, 140 Gough, Ian, 79 Gould, Jay, 133 Gould, Philip, 142 government: see also democracy; political system, British; cabinet government, 312, 334, 337; centralisation of power, 14–15, 35, 217, 313, 334, 337, 341, 342; control of news agenda, 14, 224, 313; disregard of House of Commons, 14–15, 223, 339, 345; Number 10 Downing Street as new royal court, 14, 337, 338, 346, 347; press officers/secretaries, 14, 180, 224, 312; Prime Ministerial power, 337, 344, 345, 346 GPS navigation systems, 233, 265 Gray, Elisha, 221 Great Depression, 159, 162, 205, 362 Greece: classical, 25, 26, 38, 39, 44–5, 52–3, 59, 96, 107, 108; crisis and bail-out (2010), 167, 371, 377, 378 Green, Sir Philip, 12, 29, 33 Green Investment Bank, proposed, 252, 371 Greenhead College, Huddersfield, 294 Greenspan, Alan, 145–6, 165, 177, 183, 184, 197–8 Gregory, James, 277 growth, economic: Britain and, 9–10, 214–15, 219, 221, 359, 364; education and, 305–6; export led growth, 36, 169, 208, 226, 355–6, 375–7, 378–83; social investment and, 280–1 GSK, 219, 254 the Guardian, 319, 330, 349 Gupta, Sanjeev, 367 Gutenberg, Johannes, 110–11 Habsburg Empire, 127 Haines, Joe, 312 Haji-Ioannous, Stelios, 28 Haldane, Andrew, 8, 151, 153, 193, 214, 215 the Halifax, 186, 251 Hamilton, Lewis, 64, 65 Hammersmith and Fulham, Borough of, 167 Hampton, Sir Philip, 173 Hands, Guy, 28, 178, 246–8 Hanley, Lynsey, 291, 293, 302 Hanushek, Eric, 305–6 Hart, Betty, 289 Harvard University, 47, 62, 198 Hashimoto administration in Japan, 362 Hastings, Max, 217–18 Hauser, Marc, 47–50 Hawley, Michael, 65–6 Hayward, Tony, 216–17 HBOS, 157, 158, 178, 251 health and well-being, 9, 75, 77, 106, 232, 233, 290–1; see also National Health Service (NHS) Heckman, James, 290 hedge funds, 6, 21, 103, 157–8, 167–8, 172, 203, 205, 206, 240; collapses of, 152, 173–4, 187, 202; as destabilisers, 166–7, 168; destruction of ERM, 140, 144, 166; near collapse of LTCM, 169–70, 183, 193, 200–1 hedging, 164, 165–6 Heinz, Henry John, 302 Hermes fund management company, 242 Herrman, Edwina, 179 Herstatt Bank collapse, 152 Hetherington, Mark, 84 Hewitt, Patricia, 180 Hewlett-Packard, 30 Hills Report on social housing, 290 Hilton, Paris, 304 Himmelfarb, Gertrude, 146 Hirst, Damien, 12 history, economic, 121–36, 166, 285–6, 353–4 Hobhouse, Leonard, 220, 222, 234, 235, 261, 266 Hobsbawm, Eric, 100 Hoffman, Elizabeth, 60 Holland, 113, 124, 230 Honda, 91, 269 Hong Kong, 168 Hopkins, Harry, 300 Horton, Tim, 277 House of Commons, 14–15, 223, 312–13, 337–9, 345 House of Lords, 15, 128, 129, 312, 334, 344, 346–7 housing, social, 10, 289, 290–1, 292, 308–9 housing cost credits, 308–9 HSBC, 181, 251 Huhne, Chris, 346 Hunt family, sale of cattle herds, 201 Hurka, Thomas, 45–6 Hutton, Will, works of, x; The State We’re In, x, 148–9 IBM, 29, 164, 254 Iceland, 7, 138 ICT industry, 9, 29–30, 109, 134, 135–6, 182, 229 immigration, 11, 143, 326, 328, 342, 343, 386, 394; from Eastern Europe, 82, 281–2, 283; welfare state and, 81–2, 281–2, 283, 284 incapacity benefit, 27 the Independent, 93, 330 Independent Safeguarding Authority, 339 India, 144, 226, 230, 254, 354–5 individual responsibility, 17, 38, 39, 78–9 individualism, 54, 57, 66, 111, 221, 281, 341, 366; capitalism/free market theories and, ix, 17, 19, 27, 40, 145, 221, 234–5 Indonesia, 168 Industrial and Commercial Finance Corporation (now 3i), 250 industrial revolution, 28, 112, 115, 121–3, 124, 126–8, 130, 315 inflation, 6, 32, 355, 364, 365; targets, 163, 165, 208, 359 Ingham, Bernard, 312 innovation: see also entrepreneurs; national ecosystem of innovation; as collective and social, 40, 131, 219–22, 261, 265–6, 388; comparisons between countries, 67; competition and, 40, 114, 257–60; development times, 240, 243; discretionary effort and, 62, 65, 102–3, 105–6, 131, 222, 392–3; dissemination of knowledge and, 110–11, 112–13, 219–22, 265–6; due desert and, 40, 62, 67, 112, 117; ‘financial innovation’, 63–4, 138, 147, 149, 153–4, 182; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; high taxation as deterrent, 104, 105; history of, 107–17, 121–7, 131–4, 221; increased pace of advance, 228–9, 230, 266–7; incremental, 108, 254, 256; incumbent elites and, 29–30, 104, 106, 109, 111–12, 113, 114, 115, 116, 257; large firms and, 251–2, 254–5; as natural to humans, 106–7, 274; need for network of specialist banks, 251–2, 265, 371; in ‘open-access societies’, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; patents and copyright, 102, 103, 105, 110, 260–1, 263; private enterprise and, 100–1; regulation and, 268–70; risk-taking and, 6, 103, 111, 189; short term investment culture and, 33, 242–3, 244; small firms and, 252, 253–4, 255–6; universities and, 261–5 Innovation Fund, 21, 251, 252 Institute of Fiscal Studies, 275–6, 363, 368–9, 372 Institute of Government, 334, 335, 337, 343 insurance, 165–6, 187, 240, 242 Intel, 255, 256 intellectual property, 260–1 interest rates, 164, 191, 352–3, 354, 357, 359, 360, 361, 362, 367, 380 internal combustion engine, 28, 109, 134 International Monetary Fund (IMF), 9, 152–3, 177–8, 187, 207, 226, 383, 384; Asian currency crisis (1997) and, 168–9; proposed bank levy and financial activities tax, 209; support for fiscal policy, 367 internet, 11, 28, 52, 109, 134, 227, 256, 265; news and politics on, 316–17, 321, 349; pay-walls, 316, 349; as threat to print media, 324, 331, 349 iPods, 105, 143 Iraq War, 14–15, 18, 36, 144, 329 Ireland, 138 iron steamships, 126 Islam, 352, 353 Islamic fundamentalism, 283, 384 Israel, 251, 322–3 Italy, 101, 103, 317, 328 ITN, 330, 331 James, Howell, 180 Japan, 36, 67, 140, 163, 168, 244, 369, 375, 376, 385, 386; credit crunch (1989-92), 359–60, 361–2, 382; debt levels, 356, 362, 363; incumbent elites in early twentieth-century, 134; Tokyo Bay, 254; Top Runner programme, 269 Jenkins, Roger, 296 Jobcentre Plus, 300 Jobs, Steve, 29–30, 65–6, 71 John Lewis Group, 66, 67, 93, 246 Johnson, Boris, 179 Johnson, Simon, 177 Jones, Tom, 242 Joseph Rowntree Foundation, 21, 278–9 journalism, 318–21, 323–4, 326–7 Jovanovic, Boyan, 256 JP Morgan, 169, 191–2, 195–6 judges, 15 justice systems, 30–1, 44–5, 49; symbolised by pair of scales, 4, 40 Kahneman, Daniel, 94–5 Kant, Immanuel, 73, 112, 274 Kay, John, 175 Kennedy, Helena, 340 Keynesian economics, x, xi, 184, 190, 196–7, 354, 362, 390–1 Kindleberger, Charles, 184 King, Mervyn, 213 Kinnock, Neil, 142 kitemarking, need for, 267 Klenow, Peter, 52 Knetsch, Jack, 94–5 Knight, Frank, Risk, Uncertainty and Profit (1921), 189, 191, 196–7 knowledge: capitalist advance of, 27–8, 31, 110–11, 112–13; public investment in learning, 28, 31, 40, 131, 220, 235, 261, 265 knowledge economy, 8, 11–12, 34, 135–6, 229–33, 258, 273–4, 341, 366; credit growth and, 355; graduate entry to, 295; large firms and, 251–2, 254–5; small firms and, 252, 253–4, 255–6, 261; state facilitation of, 219–22, 229–30 Koizumi administration in Japan, 362 Koo, Richard, 360, 361–2 Kuper, Simon, 352 Kwak, James, 64, 177 labour market, 52, 62, 83, 95; flexibility, 5, 275, 276, 299, 364–5, 387 laissez-faire ideology, 153, 198–9, 259 Laker, Freddie, 30 Lambert, Richard, 6–7 language acquisition and cognitive development, 288, 289 Large Hadron Collider, 263 Latin American debt crisis, 164 Lavoisier, Antoine, 31 Lazarus, Edmund, 179 Leahy, Sir Terry, 295 Learning and Skills Council, 282, 300 left wing politics, modern, 17, 38, 78–83 Lehman Brothers, 150, 152, 165, 170, 181, 192, 204 lender-of-last-resort function, 155, 158, 160, 187 Lerner, Melvin, 83 leverage, 6, 29, 154–6, 157, 158, 172, 179, 180, 198, 204, 209–10, 254, 363; disguised on balance sheet, 181, 195; effect on of credit crunches, 358, 359, 360, 361, 374–5; excess/massive levels, 7, 147–8, 149, 150–1, 158, 168, 170, 187, 192, 197, 203; need for reform of, 206, 207, 208; private equity and, 245–6, 247 Lewis, Jemima, 282, 287 Lewis, Joe, 12 libel laws, 332–3, 348–9 Liberal Democrats, xi, 11, 98, 141, 343, 360–1, 368; general election (2010) and, 97, 142, 179, 271, 390 libertarianism, 234 Likierman, Sir Andrew, 180 limited liability (introduced 1855), 353–4, 363 Lind, Allan, 85 Lindert, Peter, 280–1 Lipsey, Richard, 108, 263 Lisbon earthquake (1755), 54 Lisbon Treaty Constitution, 328 literacy and numeracy, 20–1 livestock fairs, pre-twentieth-century, 90 Lloyds Bank, 176, 178, 186, 202, 204, 251, 259 Lo, Andrew, 195 loan sharks, illegal, 291 local government, 307, 347–8 Locke, John, 54–5, 59 London School of Economics (LSE), 246 London Stock Exchange, 90, 162 London Underground, financing of, 336, 389 lone parent families, 292 Long Term Capital Management (LTCM), 169–70, 183, 193, 194, 200–1 long-term incentive plans (LTIPs), 6 Loomes, Graham, 59 luck, 23, 26–7, 38, 39, 40, 41, 67, 68, 69–77, 222, 273, 393–4; diplomacy/international relations and, 385–6; disadvantaged children and, 74–5, 83, 288–90; executive pay and, 138; taxation and, 73–4, 75, 78, 303 Luxembourg, 138 MacDonald, Ramsey, 315 Machiavelli, Niccolo, 62 Machin, Steve, 283–4 Macmillan Committee into City (1931), 179 Madoff, Bernie, 7 mafia, Italian, 101, 104–5 Major, John, 138, 180, 279, 334 Malaysia, 168 malls, out-of-town, 143 Mandelbrot, Benoit, 194, 195 Mandelson, Peter, 21, 24, 142, 148, 220 manufacturing sector, decline of, 5, 8, 219, 272, 292, 341, 363 Manza, Jeff, 281, 282 Marconi, 142–3 market fundamentalism, 9–19, 32–3, 40–2, 366; belief in efficiency of markets, 188–9, 190, 193, 194, 235–9, 366; coalition government (from May 2010) and, 370; collapse of, 3–4, 7–9, 19, 20, 219–20, 235, 392; Conservative Party and, 5, 17, 138, 147, 160, 161; domination of, 5–6, 14, 16–17, 163, 364–5, 387–90; likely resurgence of, 5, 8; New Labour and, x–xi, 5, 19, 144–9, 388, 389–90; post-communist fiasco in Russia, 135; rejection of fiscal policy, 224–5, 364–5, 367 mark-to-market accounting convention, 175 Marland, Lord Jonathan, 179 Marquand, David, 328 Marsh, Jodie, 64, 65 Marx, Karl, 56–8, 121–2 Maslow’s hierarchy of needs, 232, 274–5 mass production, 109, 134, 182 Masters, Blythe, 196 mathematical models (‘quants’), 105, 149, 151, 152, 165, 169, 188, 190–6, 203; extensions and elaborations, 194; Gaussian distribution, 190–1, 194; JP Morgan and, 195–6 Matthewson, Sir George (former chair of RBS), 25 Maude, Francis, 180 Mayhew, Henry, 285–6 McCartney, Paul, 247 McGoldrick, Mark, 174 McKinsey Global Institute, 253, 358–9, 360, 363 McQueen, Alexander, 143 media, mainstream, 6, 35, 312, 315–20, 321–32, 348–50; commoditisation of information, 318–20, 321; communications technology and, 316, 320, 349; domination of state by, 14, 16, 223–4, 338, 339, 343; fanatical anti-Europeanism, 15, 328, 378; foreign/tax exile ownership of, 218; hysterical tabloid campaigns, 10–11, 298, 319–20; ‘info-capitalism’, 317–18, 327, 328, 342; lauding of celebrity, 281, 314; modern 24/7 news agenda, 13, 224, 321, 343; regional newspapers, 331; as setter of agenda/narrative, 327–31, 342; television news, 330–1; undermining of democracy, 315–16, 317–18, 321–9, 333, 350; urgent need for reform, 35, 218, 344, 348–50, 391; view of poverty as deserved, 25, 53, 83, 281, 286; weakness of foreign coverage, 322, 323, 330 Mencken, H.L., 311 mergers and takeovers, 8, 21, 33, 92, 245, 251, 258, 259, 388 Merkel, Angela, 381–2 Merrill Lynch, 150, 170, 175, 192 Merton, Robert, 169, 191 Meucci, Antonnio, 221 Mexico, 30, 385 Meyer, Christopher, 332 Michalek, Richard, 175 Microsoft, 71, 114, 136, 253, 254, 258–9 Milburn, Alan, 273 Miles, David, 186–7 Milgram, Stanley, 200 millennium bug, 319 Miller, David, 70, 76, 77 minimum wage, 142, 278 Minsky, Hyman, 183, 185 Mirror newspapers, 319, 329 Mlodinow, Leonard, 72–3 MMR vaccine, 327 mobile phones, 30, 134, 143, 229, 349 modernity, 54–5, 104 Mokyr, Joel, 112 monarchy, 15, 312, 336 Mondragon, 94 monetary policy, 154, 182, 184, 185, 208, 362, 367 monopolies, 74, 102, 103, 160, 314; history of, 104, 113, 124, 125–6, 130–4; in the media, 30, 317, 318, 331, 350; modern new wave of, 35, 135–6, 137–8, 201–2, 258–9; ‘oligarchs’, 30, 65, 104 Monopolies and Mergers Commission, 258, 318 Moody’s (credit-ratings agency), 151, 175 morality, 16–27, 37, 44–54, 70, 73; see also desert, due, concept of; fairness; proportionality; debt and, 351–4, 357, 360–1 Morgan, JP, 67 Morgan, Piers, 329 Morgan Stanley, 150 Mulas-Granados, Carlos, 367 Murdoch, James, 389 Murdoch, Rupert, 317–18, 320, 327 Murphy, Kevin, 62, 63 Murray, Jim ‘Mad Dog’, 321 Myners, Paul, 340 Nash bargaining solution, 60 National Audit Office, 340 National Child Development Study, 289–90 national ecosystem of innovation, 33–4, 65, 103, 206, 218, 221, 239–44, 255–9, 374; state facilitation of, 102, 219–22, 229–30, 233, 251–2, 258–66, 269–70, 392 National Health Service (NHS), 21, 27, 34, 92, 265, 277, 336, 371–2; popular support for, 75, 77, 283 national insurance system, 81, 277, 302 national strategy for neighbourhood renewal, 278 Navigation Acts, abolition of, 126 Neiman, Susan, 18–19 neo-conservatism, 17–18, 144–9, 387–90 network theory, 199–201, 202–4, 206; Pareto curve and, 201–2 New Economics Foundation, 62 New Industry New Jobs strategy, 21 New Labour: budget deficit and, 224, 335, 360, 368, 369; business friendly/promarket policies, x–xi, 139–40, 142, 145, 146–7, 162, 198–9, 382; City of London and, x–xi, 5, 19, 22, 142–3, 144–5, 355; decline of class-based politics, 341; failure to challenge elites, x–xi, 14, 22, 388, 389–90; general election (1992) and, 138, 140–1, 144, 148, 277; general election (2005) and, 97; general election (2010) and, 20, 271, 334, 374, 378; light-touch regulation and, 138, 145, 146–7, 162, 198–9; New Industry New Jobs strategy, 21; one-off tax on bank bonuses, 26, 179, 249; record in government, 10–11, 19, 20–2, 220, 276–80, 302, 306, 334–6, 366–7, 389–90; reforms to by ‘modernisers’, 141; responses to newspaper campaigns, 11 New York markets, 140, 152, 162; Asian and/or OPEC capital surpluses and, 169, 171, 354; London/New York axis, 149, 150–1, 157–8, 160, 188, 202 Newsweek, 174 Newton, Isaac, 31, 127, 190 NHS Direct, 372 Nicoli, Eric, 13 non-executive directors (NEDs), 249–50 Nordhaus, William, 260 Nordic countries, 262; Iceland, 7, 138; Norway, 281; Sweden, 264, 281 North, Douglas, 113, 116, 129–30 Northern Rock, 9, 156, 157, 158, 186, 187–8, 202, 204, 251, 340–1 Norton Publishing, 93 Nozick, Robert, 234, 235 nuclear non-proliferation, 226, 384, 394 Nussbaum, Martha, 79 Obama, Barack, 18, 183, 380, 382–3, 394–5 the Observer, 141, 294, 327 Office for Budget Responsibility, 360 Office of Fair Trading (OFT), 257, 258 OFSTED, 276 oil production, 322; BP Gulf of Mexico disaster (2010), 216–17, 392; finite stocks and, 230, 384; OPEC, 149, 161, 171; price increase (early 1970s), 161; in USA, 130, 131, 132 Olsen, Ken, 29 Olympics (2012), 114 open markets, 29, 30, 31, 40, 89, 92, 100–1, 366, 377, 379, 382, 384; see also ‘open-access societies’; as determinants of value, 51–2, 62; fairness and, 60–1, 89–91, 94–6; ‘reference prices’ and, 94–6 ‘open-access societies’, 134, 135, 258, 272, 273, 275, 276, 280–1, 394; Britain as ‘open-access society’ (to 1850), 124, 126–7; democracy and, 136, 314; Enlightenment and, 30–1, 314–15, 394; innovation and invention in, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; partial political opening in, 129–30; US New Freedom programme, 132–3 opium production, 102 options, 166, 188, 191 Orange County derivatives losses, 167 Organisation for Economic Co-operation and Development (OECD), 180, 337, 373 Orwell, George, 37 Osborne, George, 147, 208, 224, 245, 302, 338 Overend, Gurney and Co., 156–7 Oxbridge/top university entry, 293–4, 306 Oxford University, 261 Page, Scott, 204 Paine, Tom, 347 Pareto, Vilfredo, 201–2 Paribas, 152, 187 Parkinson, Lance-Bombardier Ben, 13 participation, political, 35, 86, 96, 99 Paulson, Henry, 177 Paulson, John, 103, 167–8 pay of executives and bankers, 3–4, 5, 6–7, 22, 66–7, 138, 387; bonuses, 6, 25–6, 41, 174–5, 176, 179, 208, 242, 249, 388; high levels/rises of, 6–7, 13, 25, 82–3, 94, 172–6, 216, 296, 387, 393; Peter Mandelson on, 24; post-crash/bail-outs, 176, 216; in private equity houses, 248; remuneration committees, 6, 82, 83, 176; shared capitalism and, 66, 93; spurious justifications for, 42, 78, 82–3, 94, 176, 216 pension, state, 81, 372, 373 pension funds, 240, 242 Pettis, Michael, 379–80 pharmaceutical industry, 219, 255, 263, 265, 267–8 Phelps, Edmund, 275 philanthropy and charitable giving, 13, 25, 280 Philippines, 168 Philippon, Thomas, 172–3 Philips Electronics, Royal, 256 Pimco, 177 piracy, 101–2 Plato, 39, 44 Player, Gary, 76 pluralist state/society, x, 35, 99, 113, 233, 331, 350, 394 Poland, 67, 254 political parties, 13–14, 340, 341, 345, 390; see also under entries for individual parties political system, British: see also democracy; centralised constitution, 14–15, 35, 217, 334; coalitions as a good thing, 345–6; decline of class-based politics, 341; devolving of power to Cardiff and Edinburgh, 15, 334; expenses scandal, 3, 14, 217, 313, 341; history of (to late nineteenth-century), 124–30; lack of departmental coordination, 335, 336, 337; long-term policy making and, 217; monarchy and, 15, 312, 336; politicians’ lack of experience outside politics, 338; required reforms of, 344–8; select committee system, 339–40; settlement (of 1689), 125; sovereignty and, 223, 346, 347, 378; urgent need for reform, 35, 36–7, 218, 344; voter-politician disengagement, 217–18, 310, 311, 313–14, 340 Pommerehne, Werner, 60 population levels, world, 36 Portsmouth Football Club, 352 Portugal, 108, 109, 121, 377 poverty, 278–9; child development and, 288–90; circumstantial causes of, 26, 283–4; Conservative Party and, 279; ‘deserving’/’undeserving’ poor, 276, 277–8, 280, 284, 297, 301; Enlightenment views on, 53, 55–6; need for asset ownership, 301–3, 304; political left and, 78–83; the poor viewed as a race apart, 285–7; as relative not absolute, 55, 84; Adam Smith on, 55, 84; structure of market economy and, 78–9, 83; view that the poor deserve to be poor, 25, 52–3, 80, 83, 281, 285–8, 297, 301, 387; worldwide, 383, 384 Power2010 website, 340–1 PR companies and media, 322, 323 Press Complaints Commission (PCC), 325, 327, 331–2, 348 preventative medicine, 371 Price, Lance, 328, 340 Price, Mark, 93 Prince, Chuck, 184 printing press, 109, 110–11 prisoners, early release of, 11 private-equity firms, 6, 28–9, 158, 172, 177, 179, 205, 244–9, 374 Procter & Gamble, 167, 255 productive entrepreneurship, 6, 22–3, 28, 29–30, 33, 61–2, 63, 78, 84, 136, 298; in British history (to 1850), 28, 124, 126–7, 129; due desert/fairness and, 102–3, 105–6, 112, 223, 272, 393; general-purpose technologies (GPTs) and, 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384 property market: baby boomer generation and, 372–3; Barker Review, 185; boom in, 5, 143, 161, 183–4, 185–7, 221; bust (1989-91), 161, 163; buy-to-let market, 186; commercial property, 7, 356, 359, 363; demutualisation of building societies, 156, 186; deregulation (1971) and, 161; Japanese crunch (1989-92) and, 361–2; need for tax on profits from home ownership, 308–9, 373–4; property as national obsession, 187; residential mortgages, 7, 183–4, 186, 356, 359, 363; securitised loans based mortgages, 171, 186, 188; shadow banking system and, 171, 172; ‘subprime’ mortgages, 64, 152, 161, 186, 203 proportionality, 4, 24, 26, 35, 38, 39–40, 44–6, 51, 84, 218; see also desert, due, concept of; contributory/discretionary benefits and, 63; diplomacy/ international relations and, 385–6; job seeker’s allowance as transgression of, 81; left wing politics and, 80; luck and, 73–7, 273; policy responses to crash and, 215–16; poverty relief systems and, 80–1; profit and, 40, 388; types of entrepreneurship and, 61–2, 63 protectionism, 36, 358, 376–7, 378, 379, 382, 386 Prussia, 128 Public Accounts Committee, 340 Purnell, James, 338 quantitative easing, 176 Quayle, Dan, 177 race, disadvantage and, 290 railways, 9, 28, 105, 109–10, 126 Rand, Ayn, 145, 234 Rawls, John, 57, 58, 63, 73, 78 Reagan, Ronald, 135, 163 recession, xi, 3, 8, 9, 138, 153, 210, 223, 335; of 1979-81 period, 161; efficacy of fiscal policy, 367–8; VAT decrease (2009) and, 366–7 reciprocity, 43, 45, 82, 86, 90, 143, 271, 304, 382; see also desert, due, concept of; proportionality Reckitt Benckiser, 82–3 Regional Development Agencies, 21 regulation: see also Bank of England; Financial Services Authority (FSA); Bank of International Settlements (BIS), 169, 182; Basel system, 158, 160, 163, 169, 170–1, 196, 385; big as beautiful in global banking, 201–2; Big Bang (1986), 90, 162; by-passing of, 137, 187; capital requirements/ratios, 162–3, 170–1, 208; dismantling of post-war system, 149, 158, 159–63; economists’ doubts over deregulation, 163; example of China, 160; failure to prevent crash, 154, 197, 198–9; Glass-Steagall abolition (1999), 170, 202–3; light-touch, 5, 32, 138, 151, 162, 198–9; New Deal rules (1930s), 159, 162; in pharmaceutical industry, 267–8; as pro-business tool, 268–70; proposed Financial Policy Committee, 208; required reforms of, 267, 269–70, 376, 377, 384, 392; reserve requirements scrapped (1979), 208; task of banking authorities, 157; Top Runner programme in Japan, 269 Reinhart, Carmen, 214, 356 Repo 105 technique, 181 Reshef, Ariell, 172–3 Reuters, 322, 331 riches and wealth, 11–13, 272–3, 283–4, 387–8; see also pay of executives and bankers; the rich as deserving of their wealth, 25–6, 52, 278, 296–7 Rickards, James, 194 risk, 149, 158, 165, 298–302, 352–3; credit default swaps and, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207; derivatives and see derivatives; distinction between uncertainty and, 189–90, 191, 192–3, 196–7; employment insurance concept, 298–9, 301, 374; management, 165, 170, 171, 189, 191–2, 193–4, 195–6, 202, 203, 210, 354; securitisation and, 32, 147, 165, 169, 171, 186, 188, 196; structured investment vehicles and, 151, 165, 169, 171, 188; value at risk (VaR), 171, 192, 195, 196 Risley, Todd, 289 Ritchie, Andrew, 103 Ritter, Scott, 329 Robinson, Sir Gerry, 295 Rogoff, Ken, 214, 356 rogue states, 36 Rolling Stones, 247 Rolls-Royce, 219, 231 Rome, classical, 45, 74, 108, 116 Roosevelt, Franklin D., 133, 300 Rothermere, Viscount, 327 Rousseau, Jean-Jacques, 56, 58, 112 Rousseau, Peter, 256 Rowling, J.K., 64, 65 Rowthorn, Robert, 292, 363 Royal Bank of Scotland (RBS), 25, 150, 152, 157, 173, 181, 199, 251, 259; collapse of, 7, 137, 150, 158, 175–6, 202, 203, 204; Sir Fred Goodwin and, 7, 150, 176, 340 Rubin, Robert, 174, 177, 183 rule of law, x, 4, 220, 235 Russell, Bertrand, 189 Russia, 127, 134–5, 169, 201, 354–5, 385; fall of communism, 135, 140; oligarchs, 30, 65, 135 Rwandan genocide, 71 Ryanair, 233 sailing ships, three-masted, 108 Sandbrook, Dominic, 22 Sands, Peter (CEO of Standard Chartered Bank), 26 Sarkozy, Nicolas, 51, 377 Sassoon, Sir James, 178 Scholes, Myron, 169, 191, 193 Schumpeter, Joseph, 62, 67, 111 science and technology: capitalist dynamism and, 27–8, 31, 112–13; digitalisation, 34, 231, 320, 349, 350; the Enlightenment and, 31, 108–9, 112–13, 116–17, 121, 126–7; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; increased pace of advance, 228–9, 253, 297; nanotechnology, 232; New Labour improvements, 21; new opportunities and, 33–4, 228–9, 231–3; new technologies, 232, 233, 240; universities and, 261–5 Scotland, devolving of power to, 15, 334 Scott, James, 114–15 Scott Bader, 93 Scott Trust, 327 Second World War, 134, 313 Securities and Exchanges Commission, 151, 167–8 securitisation, 32, 147, 165, 169, 171, 186, 187, 196 self-determination, 85–6 self-employment, 86 self-interest, 59, 60, 78 Sen, Amartya, 51, 232, 275 service sector, 8, 291, 341, 355 shadow banking system, 148, 153, 157–8, 170, 171, 172, 187 Shakespeare, William, 39, 274, 351 shareholders, 156, 197, 216–17, 240–4, 250 Sher, George, 46, 50, 51 Sherman Act (USA, 1890), 133 Sherraden, Michael, 301 Shiller, Robert, 43, 298, 299 Shimer, Robert, 299 Shleifer, Andrei, 62, 63, 92 short selling, 103 Sicilian mafia, 101, 105 Simon, Herbert, 222 Simpson, George, 142–3 single mothers, 17, 53, 287 sixth form education, 306 Sky (broadcasting company), 30, 318, 330, 389 Skype, 253 Slim, Carlos, 30 Sloan School of Management, 195 Slumdog Millionaire, 283 Smith, Adam, 55, 84, 104, 112, 121, 122, 126, 145–6 Smith, John, 148 Snoddy, Ray, 322 Snow, John, 177 social capital, 88–9, 92 social class, 78, 130, 230, 304, 343, 388; childcare and, 278, 288–90; continued importance of, 271, 283–96; decline of class-based politics, 341; education and, 13, 17, 223, 264–5, 272–3, 274, 276, 292–5, 304, 308; historical development of, 56–8, 109, 115–16, 122, 123–5, 127–8, 199; New Labour and, 271, 277–9; working-class opinion, 16, 143 social investment, 10, 19, 20–1, 279, 280–1 social polarisation, 9–16, 34–5, 223, 271–4, 282–5, 286–97, 342; Conservative reforms (1979-97) and, 275–6; New Labour and, 277–9; private education and, 13, 223, 264–5, 272–3, 276, 283–4, 293–5, 304; required reforms for reduction of, 297–309 social security benefits, 277, 278, 299–301, 328; contributory, 63, 81, 283; flexicurity social system, 299–301, 304, 374; to immigrants, 81–2, 282, 283, 284; job seeker’s allowance, 81, 281, 298, 301; New Labour and ‘undeserving’ claimants, 143, 277–8; non-contributory, 63, 79, 81, 82; targeting of/two-tier system, 277, 281 socialism, 22, 32, 38, 75, 138, 144, 145, 394 Soham murder case, 10, 339 Solomon Brothers, 173 Sony, 254–5 Soros, George, 166 Sorrell, Martin, 349 Soskice, David, 342–3 South Korea, 168, 358–9 South Sea Bubble, 125–6 Spain, 123–4, 207, 358–9, 371, 377 Spamann, Holger, 198 special purpose vehicles, 181 Spitzer, Matthew, 60 sport, cheating in, 23 stakeholder capitalism, x, 148–9 Standard Oil, 130–1, 132 state, British: anti-statism, 20, 22, 233–4, 235, 311; big finance’s penetration of, 176, 178–80; ‘choice architecture’ and, 238, 252; desired level of involvement, 234–5; domination of by media, 14, 16, 221, 338, 339, 343; facilitation of fairness, ix–x, 391–2, 394–5; investment in knowledge, 28, 31, 40, 220, 235, 261, 265; need for government as employer of last resort, 300; need for hybrid financial system, 244, 249–52; need for intervention in markets, 219–22, 229–30, 235–9, 252, 392; need for reshaping of, 34; pluralism, x, 35, 99, 113, 233, 331, 350, 394; public ownership, 32, 240; target-setting in, 91–2; threats to civil liberty and, 340 steam engine, 110, 126 Steinmueller, W.

More: The 10,000-Year Rise of the World Economy
by Philip Coggan
Published 6 Feb 2020

When the credit bubble finally burst in 2007 and 2008, central banks faced the same dilemmas that have occurred down the centuries. Worries about moral hazard quickly evaporated in the face of the implosion of the banking system. Central banks lent money freely and also pushed interest rates down to historic lows, and even to negative levels. They unveiled a programme of quantitative easing (QE), in which they created money and used it to buy bonds and other assets (see Chapter 18). But these actions aroused criticism. QE pushed up the value of financial assets, which are disproportionately owned by the better-off. A paper from the Bank for International Settlements, the central bankers’ club, concluded that QE had increased inequality by boosting share prices.11 Many elderly savers complained that low rates had cut their retirement income.

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Collectively, the leaders of the G20 nations agreed at a summit in London to pump $1.1trn into the global economy, by extending the ability of the IMF and World Bank to make loans. In addition, central banks kept cutting rates to stimulate borrowing. By the end of 2008, the Federal Reserve’s main rate was 0.25%; just 15 months previously it had been 5.25%. Quantitative easing (QE) also began that year. This involved central banks creating money and using it to buy government bonds. The aim was twofold. First, it prevented the kind of shrinkage in the money supply that occurred in the 1930s. When the central banks bought bonds, the sellers ended up with more money in their accounts.

The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World
by Shaun Rein
Published 27 Mar 2012

Homeowners were putting off buying new furniture, and in all his decades doing business, he had never seen American consumer confidence so low. It is an understatement to say he was angry at the calls of U.S. government officials (like New York Senator Chuck Schumer) for China to let its currency appreciate, or that he was frustrated with Federal Reserve chief Ben Bernanke’s decision to increase the money supply through quantitative easing. These wrongheaded policies, he said, just caused more investors to flee the greenback and switch their investment portfolios to commodities or foreign markets, where there were greater possibilities to receive higher returns, and which further increased Bob’s input prices. He did not see commodity prices stabilizing in the near future until the greenback regained its strength and the debt situation in the eurozone stabilized.

Shadows of Empire: The Anglosphere in British Politics
by Michael Kenny and Nick Pearce
Published 5 Jun 2018

Arguments that would subsequently be played out during the Brexit referendum were first rehearsed in these quarters. At the core of these arguments was a very distinctive economic vision. The financial crisis of 2008–9 had blown a large hole in the intellectual edifice of Anglo-American capitalism. But, in its immediate aftermath, a combination of quantitative easing, the judicious application of Keynesian fiscal prescriptions and massive Chinese credit creation helped pull the US, UK and Asian economies out of recession. In contrast, structural imbalances and the bursting of property bubbles in the eurozone triggered sovereign debt crises that exposed the deep flaws in the architecture of the single currency.

A Generation of Sociopaths: How the Baby Boomers Betrayed America
by Bruce Cannon Gibney
Published 7 Mar 2017

Some argue that the bank is a perpetual bind, trapped between rapacious private enterprise and a slothful Congress, an apologia that manages to be neither compelling nor wholly factual. The Fed can be endlessly inventive when it wants to be, as its responses to the permanent emergency show: quantitative easing and the unprecedented $3.5 trillion expansion of its balance sheet, its recent consideration of negative interest rates, and so on.26 Though Boomer candidate Sanders, who crusaded on the subject of bank risk, apparently had no idea how a “moral economy” might be achieved, the process is simple enough.27 The Fed has long held the tools to restrain the banks, both indirectly, by adjusting interest rates, and directly, through adjustment of reserve requirements, restrictive rule making, and limits on leverage.

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A final note on monetary policy: In many ways, the Fed’s arsenal of recession-combating tools, including its credibility as an institution, represents an asset. Since 2008, the Fed has been spending down this asset to prop up the economy, especially stocks and houses owned by Boomers. The Fed exhausted its conventional arsenal (interest rate cuts) fairly quickly, forcing it to experiment from 2008 with quantitative easing, purchasing vast amounts of risk assets like mortgage paper for its own account. The risks of inaction were certainly real, though the benefits, while also meaningful, remain hard to quantify and really evaluate. Regardless, the Fed has now used all of its good tools, leaving less to fight whatever comes next.

Freedom Without Borders
by Hoyt L. Barber
Published 23 Feb 2012

From that moment forward, the government and the Fed stepped up countermeasures, believing we were heading for a slowdown and that, if the “great recession” continued, we might find ourselves in the “greatest depression” ever. At least that was their justification for declaring that they were going to stimulate the economy again through a massive increase in the money supply, billed “QE2” for “Quantitative Easing II.” In other words, this meant churning the printing presses and producing fiat money backed by nothing of real value, only the good faith and credit of the country, which is quickly vaporizing. They landed on the figure $600 billion, which would be dispersed in 2010–2011 at the rate of $75 billion a month for eight months—or until June 2011.

Puzzling People: The Labyrinth of the Psychopath
by Thomas Sheridan
Published 1 Mar 2011

They are entitled to a twenty-million dollar bonus and can’t understand your issue with this. Their cronies in government drafted the legislation to bail them out and pay their bonus packages … “Take it up with the politicians,” they say, “You elected them, didn’t you?” You hear terms such as Quantitative Easing – classic psychopath word salad in the context of political/business lingo for We are going to use public money to bail out the bankers and you the taxpayers will fund this through your increased personal taxation. Suckers. The unfortunate reality is you are never going to get even with a psychopath.

Extreme Money: Masters of the Universe and the Cult of Risk
by Satyajit Das
Published 14 Oct 2011

An alphabet soup of facilities was hastily assembled, desperately pumping money into the economy—PCF (primary credit facility); TAF (term auction facility); TSLP (term securities lending facility); and PDCF (primary dealer credit facility). Ultimately, the Fed resorted to printing money, known as quantitative easing. Wanting to hug the Fed chairman, Jim Cramer thought that Bernanke “got it.” Bernanke once boasted that dropping money from a helicopter would stop such a crisis. Central banks assumed that price falls reflected a temporary shortage of cash and confidence. Elizabeth Warren, chair of the Troubled Asset Relief Program (TARP), Oversight Panel Report, questioned the approach: One key assumption...is [US Treasury’s] belief that...the decline in asset values...is in large part the product of temporary liquidity constraints...it is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.6 Figure 22.1 shows how falling prices affect values of assets financed with debt.

…

See also mortgages Prince, Chuck, 201, 315, 319, 329 princes of industry, 54 Principal Finance Group, 154 prisons, 158 private banks, 73 private equity, 155, 164 failures, 162-163 infrastructure, 158 public sector services, 161 returns, 162 Private Equity Council, 167 Private Equity Growth Capital Council, 167 private equity managers, compensation, 314 privatization of government-owned banks, 66 to pay off government debt, 158 Proctor & Gamble, 56 Product Disclosure Statements, 219 productivity General Electric (GE), 60 improvements in the 1960s, 47 miracle of 1996, 41 Profit from Property, 96 profits, 20, 231 General Electric (GE), 61 insurance, 121 property rights, protection of, 41 prosperity in Ireland, 83 trading, 352 protection of property rights, 41 rackets, 73, 282-285 Protégé Partners, 261 Proust, Marcel, 335 Prudential Insurance Company, 134 Ptolemaic systems, 129 Ptolemy, 129 public private partnerships (PPP), 158 public sector services, 161 Publishers Weekly, 97 Pudd’nhead Wilson, 123. See also Mark Twain purchases by bankers, 322-323 pure plays, 60, 139 put options, 120, 209 Pynchon, Thomas, 352 pyramid schemes, 34 Q Qantas, 156, 162 Qing dynasty, 84 Qishan, Wang, 346 QSPEs (qualified special purpose entities), 288 quantification of risk, 130 quantitative easing, 340 equity market neutral, 254 funds, 242 Quantos, 211 Quantum Fund, 240 quantum theory, 126 quasi-currency, 24. See also currency Quayle, Dan, 95 Queen, 157 Queen Elizabeth, 278 R Rabbit Is Rich, 363 Racketeer Influenced and Corrupt Organizations (RICO) Act, 150 Radaker, Byron, 134 Rain Man, 153, 166 rainbows, 211 Raines, Sylvain, 309 Rains, Claude, 77 Rajaratnam, Raj, 244 Ralphie’s Funds, 191, 204 Ramones, The, 79 RAND Corporation, 35 Rand, Ayn, 294, 296 random walks, 118 rands, 21 Range Rover, 346 Ranieri, Lewis, 170 Rapid American, 143 Rappaport, Alfred, 124 Raskob, John, 97 Ratergate (2008), 285 ratings agencies, 141 bonds, 282-285 CDOs, 285 credit, 282 Rational Man, 119 Rattner, Steven, 274 Raynes, Sylvain R., 196 re-re-securitizations, 191 re-securitizations, 191 Reagan, Ronald, 65-66, 97, 101, 298, 364 real estate, 179-182 adjusted rate mortgages (ARMs), 183-184 reals, 21 recessions, 350 recovery, 359-360 rates, 171 recruitment of finance candidates, 310 recycling in Japan, 39 Red Force, 264 Redline, 186 Reed, John, 71, 75 reflexivity, 327 Regnault, Jules, 118 regulations, 81 banks, 65-67 Basel 1, 74 Basel 2, 200 central banks, 279-281 self-regulating markets, 102 synthetic securitization, 176 regulators preparation for financial crises, 264-278 understanding of securitization, 282 regulatory arbitrage, 75 Reid, Harry, 299 relative value funds arb (arbitrage) market inefficiencies, 242 religious prohibitions on usuries, 32 remote risk of loss, 220 renminbi, 21 rentiers, 33 repackaging corporate debt, 173 repos (repurchase agreements), 288 reserves banking, 32 gold, 30 resources, financial news, 89-99 restructures, corporations, 57 retirement, 20, 46, 48 Japan, 49-50 pension plans, 50 self-funded savings, 180 returns benchmarking, 123 on capital, 57 hedge funds, 243-244 private equity, 162 Revco drug stores, 150 Reykjavík, Iceland, 275 as a financial center, 84 Reynolds, Glenn, 283 Reynolds/Tube, 58 Rhodesia.

Owning the Earth: The Transforming History of Land Ownership
by Andro Linklater
Published 12 Nov 2013

But when the banks lost confidence following the stock market crash, the engine went into reverse, sucking so much credit out of the system that the human owner of the industrial home, hit by a perfect storm of unemployment, high interest rates, and foreclosure, could not buy anything at all, leaving industry with a pile of goods it could not sell. The solution, according to Ben Bernanke, the twenty-first century’s acknowledged expert on the depression, was for government to generate its own credit—quantitative easing as it became known following the 2008 crash—that could be channelled through the banks and finance houses restoring their readiness to lend once more, especially to the industrial home owner. In the 1930s, governments groped blindly for a way out of the nightmare until in 1931 Britain decided to let the value of its currency fall by unpegging it from the gold standard.

…

Fear halted lending and brought the entire mercantile capitalist system close to gridlock. In every country, the rescue plan involved government intervention on a massive scale. In the United States alone, government guaranteed more than one trillion dollars in direct rescue funds, followed by trillions more in federally invented money, the so-called quantitative easing, designed to take the place of traders’ invented money and persuade the banks to start lending again. The Austrian experiment had failed. Chapter Twenty-Two Undoing the Damage On October 1, 2008, ninety-year-old Mrs. Addie Polk, living in a white clapboard house in southwest Akron, Ohio, shot herself with a handgun when the sheriff arrived to serve a foreclosure writ on her.

I.O.U.: Why Everyone Owes Everyone and No One Can Pay
by John Lanchester
Published 14 Dec 2009

In their book Animal Spirits, George Akerlof and Robert Shiller appropriated the term to apply to the whole area of emotion and confidence in economics, and it’s in that spirit that I’m using the term here. *This is an oversimplification, because, as the current crisis has shown, central banks can also print money and do so via a number of mechanisms such as the new favorite, “quantitative easing.” This is essentially buying its own debt instruments without issuing anything to back it up; it’s not literally the same thing as printing money but it’s as good as. It is a measure that’s resorted to when interest rates have been cut so much or so fast that there’s nowhere else to go with them.

The Bend of the World: A Novel
by Jacob Bacharach
Published 13 Apr 2014

I saw one of my Uncle Bill’s cars, a little red chip like a Satanist’s pinkie nail among the grimy grays of the neighborhood cars. Oh, hey, Morrison, Johnny said, can you lend me a few bucks? I need to have a beer with these guys and my sovereign debt sitch is a little precarious at the moment. Quantitatively ease a brother’s burden. I’m not a bank, I said, but I handed him one of the twenties Mark had handed to me the night before. Maybe so, but I’m too big to fail, Johnny said, and he cackled on his way down the stairs. I texted Lauren Sara and asked her if she was letting someone else drive my car.

The Money Machine: How the City Works
by Philip Coggan
Published 1 Jul 2009

Eventually the Bank was forced to extend its help to other banks via a special liquidity scheme, under which banks who owned certain types of securities could exchange them for government debt. This involved the bank taking a certain amount of credit risk in an attempt to shore up the system. In 2009, the Bank also introduced a process known as quantitative easing. The aim was to expand the money supply via a less blatant route than printing more notes. The Bank will intervene to buy government and corporate bonds in the market. The money it uses to do so will come out of thin air. The hope is that the banks that receive this money will lend it to companies and individuals, easing the credit crunch and expanding the economy.

The Smartphone Society
by Nicole Aschoff

The 2008 crisis changed all this. When the financial sector melted down, a space opened up for popular critique—for people to question the rules of the game and to take a hard look at who benefited and who seemed destined to lose. Elites tried to paper over the disquiet, declaring the recovery, fueled by quantitative easing, on track. But the crisis opened people’s eyes to neoliberalism’s broken promises. Criticism of the bailout morphed into a broader anger. People no longer kept quiet about the fact that they were financially worse off than their parents’ generation; they opened up about their fears that their children would likely be even less secure.

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future
by Andrew Yang
Published 2 Apr 2018

The single mom will pay about $2,500 and receive $12,000, and will also have the peace of mind that her child will start receiving $1,000 a month when he or she graduates from high school. For people who consider this farcical, consider the bailouts that took place during the financial crisis. You may not recall that the U.S. government printed over $4 trillion in new money for its quantitative easing program following the 2008 financial collapse. This money went to the balance sheets of the banks and depressed interest rates. It punished savers and retirees. There was little to no inflation. We did this nominally so that the banks would lend money to businesses, who would then create jobs and shore up the economy.

5 Day Weekend: Freedom to Make Your Life and Work Rich With Purpose
by Nik Halik and Garrett B. Gunderson
Published 5 Mar 2018

Indecision Governs Between 6:00 and 8:00 Here, the economic recovery is slow to start. As an investor, I eagerly await 7:00. This is when banks and lenders start to free up liquidity. They need to increase profits. Most people are still licking their financial wounds and are hesitant and indecisive. Quantitative easing is in full force and central banks are attempting to resuscitate the economy with the printing press. Wall Street commences a bullish run, in anticipation of more buoyant economic conditions, and acts as a leading indicator. The media will provide the bright spark consumers are longing to hear.

How Democracy Ends
by David Runciman
Published 9 May 2018

Risks were allowed to build up in the system because no one was thinking hard enough about the wider picture. Too many of the leading players behaved like glassy-eyed gamblers, unable to see beyond the next bet. Not any more. Since the crash, the behaviour of those charged with running the system has been more like tightrope walkers. The programme of quantitative easing and cheap money on which they have embarked is very risky – no one knows what its long-term consequences might be. There are no historical precedents. But neither the bankers nor the politicians are blind to the risks. They know it is hazardous. That is why they are so sensitive to the dangers of a false step.

I Hate the Internet: A Novel
by Jarett Kobek
Published 3 Nov 2016

People who get in at the beginning of a bubble and then get out before the bubble pops make a ton of money. Everyone else gets screwed. When the economy imploded, the response of the Federal government was to institute a series of half-assed reforms which kept the status at quo. Part of keeping the status at quo was lowering short term interest rates to near zero and instituting a series of quantitative easing programs which pumped billions of dollars, monthly, into the economy. The latter had the effect of lowering long term interest rates to almost zero. If interest rates were near zero, traditional outlets—savings accounts, treasury bonds—would no longer offer returns on investment. This would force people with capital to move that capital into other parts of the economy.

Fed Up!: Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader
by Colin Lancaster
Published 3 May 2021

My first was Long-Term Capital Management (LTCM) and the Asian crisis in ‘98. My second was the tech meltdown in 2000. But I can’t look at the markets now without thinking about 2008. It was a game changer. It was all about greed, capitalism run amok. It ended with massive bailouts and something called quantitative easing (QE). We will get to QE. That’s the biggest thing going. The bubble all started in the late 1980s but really ramped in the 2000s, when the world moved away from rational thinking, away from Markowitz and modern portfolio theory to Pets.com. Alan Greenspan, the top guy at the Fed in those days, was there to drive the bubble even bigger.

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Published 11 Jun 2012

Blinder and Zandi may well have understated the consequences. Given the federal government’s future guarantees, the costs in higher federal budget deficits will be substantial. Moreover, economic growth will likely continue to be slow. Nevertheless, TARP, the fiscal stimulus, and the Federal Reserve’s aggressive loans and guarantees, known as quantitative easing, it should be reemphasized, did stop the collapse and shorten the recession. The Keynesian response did work. By 2009, Wall Street was back and operating, and the recession was declared ended by the summer of that year, having formally started in late 2007. As 2010 came to a close, the question was whether the lesson of government stimulus was learned well enough.

…

Boone, 4.1, 13.1, 13.2, 13.3, 13.4, 15.1 piggy-back loans Pirie, Robert Plaza Accord (1985), 11.1, 15.1 Polanyi, Michael polychlorinated biphenyls (PCBs) Popper, Karl, 2.1, 15.1 Posner, Richard Posner, Victor Potoma, Peter pounds sterling, 15.1, 15.2, 15.3, 15.4, 15.5 poverty, itr.1, prl.1, prl.2, prl.3, 1.1, 2.1, 2.2, 2.3, 3.1, 3.2, 3.3, 7.1, 7.2, 7.3, 7.4, 8.1, 10.1, 11.1 prepayments, mortgage prepay swaps Preston, Lewis price controls, 2.1, 2.2, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 9.1, 9.2, 14.1, 19.1 price-earnings (P-E) multiples, 1.1, 1.2, 4.1, 4.2, 12.1, 16.1, 17.1 price levels, prl.1, 1.1, 2.1, 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 3.3, 3.4, 6.1, 6.2, 6.3, 6.4, 8.1, 8.2, 8.3, 9.1, 9.2, 9.3, 9.4, 10.1, 11.1, 11.2, 12.1, 14.1, 14.2, 14.3, 14.4, 14.5, 16.1, 19.1 prime lending rate, 6.1, 9.1, 11.1 Primerica, 16.1, 16.2, 16.3 Prince, Chuck, 17.1, 17.2, 19.1, 19.2, 19.3, 19.4, 19.5 Principles of Economics (Marshall), 2.1 Principles of Scientific Management, The (Taylor), 12.1 product development, 2.1, 4.1, 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.8, 12.9, 13.1, 16.1, 19.1 “Production Trends in the United States” (Burns) productivity, 2.1, 2.2, 8.1, 9.1, 9.2, 11.1, 12.1, 13.1, 14.1, 17.1, 19.1 profits, x, 1.1, 1.2, 2.1, 2.2, 3.1, 3.2, 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 5.4, 5.5, 8.1, 8.2, 8.3, 12.1, 14.1, 15.1, 15.2, 15.3, 15.4, 17.1, 17.2, 17.3, 17.4, 18.1, 18.2, 18.3, 18.4, 19.1, 19.2, 19.3, 19.4, 19.5 Proposition 1, prl.1, 7.1, 10.1 Proposition 4 Proposition 13, 9.1, 9.2, 10.1 Proxmire, William Prudential Insurance, 16.1, 16.2 “puts,” 244 quantitative easing “quants” (analytical models), 15.1, 15.2, 15.3, 15.4, 15.5, 18.1 Quantum Fund, 15.1, 15.2 quarterly earnings, 12.1, 16.1 Quattrone, Frank, 17.1, 17.2, 17.3, 17.4 railroads, prl.1, 1.1, 1.2, 2.1, 3.1, 5.1, 8.1, 9.1 Raines, Franklin, 18.1, 19.1 Rand, Ayn, prl.1, 2.1, 3.1, 3.2, 14.1, 14.2 Ranieri, Lewis, 18.1, 18.2, 18.3, 19.1, 19.2 RCA, 8.1, 8.2, 12.1, 12.2 Reagan, Jack, 7.1, 7.2, 7.3 Reagan, Nancy, 7.1, 7.2, 7.3, 7.4 Reagan, Ronald, 6.1, 7.1, 7.2; anticommunism of, prl.1, 7.3, 7.4, 7.5, 7.6, 7.7; background of, prl.1, 7.8, 7.9, 7.10, 8.1; as conservative, prl.1, prl.2, 7.11, 7.12; as Democrat, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18; deregulation supported by, 11.1, 12.1, 12.2, 14.1, 16.1, 16.2, 18.1; economic policies of, 5.1, 6.2, 6.3, 7.19, 7.20, 7.21, 8.2, 8.3, 8.4, 8.5, 8.6, 9.1, 10.1, 10.2, 11.2, 11.3, 11.4, 13.1, 13.2, 14.2, 14.3, 14.4, 14.5, 14.6, 14.7; “evil empire” speech of, 7.22; as FBI informant, 7.23; Friedman’s influence on, 7.24, 7.25, 7.26; as GE spokesman, 7.27, 11.5, 12.3; as governor of California, prl.1, 7.28, 7.29, 7.30, 7.31, 10.3, 10.4; gubernatorial campaign of (1966), 3.1, 7.32, 7.33; individualism supported by, 7.34, 7.35; marriages of, 7.36, 7.37, 7.38; memoirs of, 7.39, 7.40, 7.41, 7.42, 7.43, 7.44; Nixon compared with, 7.45, 7.46, 7.47, 7.48; personality of, prl.1, 7.49, 7.50, 7.51; as political leader, prl.1, prl.2, 7.52, 7.53, 11.6, 11.7; as president, 3.2, 7.54, 11.8, 11.9; presidential campaign of (1976), 7.55; presidential campaign of (1980), 7.56, 11.10; religious convictions of, 7.57, 7.58, 7.59, 7.60, 7.61, 7.62; as Republican, 7.63, 7.64, 7.65, 11.11; as SAG president, 7.66, 7.67; The Speech (“A Time for Choosing”) delivered by, 7.68, 11.12; speeches by, 7.69, 7.70, 11.13; tax policies of, ix–x, 2.1, 7.71, 7.72, 7.73, 7.74, 7.75, 7.76, 7.77, 10.5, 11.14, 11.15, 11.16, 11.17, 14.8; as television host, 7.78, 7.79; Uhler and, prl.1, 7.80, 7.81; welfare programs opposed by, 7.82, 7.83, 7.84, 7.85, 7.86; working class support for, 7.87, 7.88, 7.89, 7.90, 7.91 real estate, 1.1, 1.2, 3.1, 4.1, 5.1, 6.1, 6.2, 6.3, 6.4, 6.5, 9.1, 11.1, 12.1, 12.2, 12.3, 13.1, 14.1, 14.2, 15.1, 15.2, 15.3, 16.1, 16.2, 18.1 real estate investment trusts (REITs), 6.1, 15.1, 16.1 recessions, 1.1, 2.1, 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 6.1, 6.2, 6.3, 6.4, 6.5, 8.1, 9.1, 11.1, 11.2, 11.3, 11.4, 11.5, 11.6, 11.7, 13.1, 13.2, 14.1, 14.2, 15.1, 15.2, 15.3, 15.4, 15.5, 16.1, 16.2, 17.1, 18.1, 18.2, 18.3, 18.4, 19.1, 19.2, 19.3, 19.4 Recovery Ahead!

The Power Law: Venture Capital and the Making of the New Future
by Sebastian Mallaby
Published 1 Feb 2022

Sequoia’s success was emblematic of a wider shift in finance in this period: from the East Coast to the West Coast, from public capital markets to private ones, from financial engineering to technology. In the wake of the 2008 financial crisis, regulators forced the famous banks on Wall Street to take less risk; their lucrative proprietary trading desks were more or less shuttered. The Fed’s policy of quantitative easing added to the banks’ woes: their core business of borrowing cheap short-term money and lending it out long term ceased to earn much of a “spread,” because long-term interest rates were held down by central bankers. Other East Coast money shops were similarly constrained. Hedge funds that had thrived on assessing financial risks entered a dull stretch: risk was being dampened by the central bank, so risk analysis ceased to be as profitable.

…

See also Accel Capital background of, 128–29 confidentiality and venture capital, 433n Efrusy and, 249–50, 449n Facebook investment, 255–56 founding of Accel, 128–29 Google investment, 174 specialist approach of, 129–31, 435n, 436n telecom investments, 129–31 UUNET investment, 138, 139, 141 PayPal, 211 eBay acquisition of, 206–8, 248, 292 Stripe and, 317, 319, 320 viral marketing, 443n X.com and Musk, 201–7, 214, 328 PCs (personal computers), 82–92, 106–7 pension funds, 40–41, 61, 81, 274 people-led investing, 48, 51 Perella, Joseph, 178 Perelman, Ronald, 287 Perkins, Tom, 60, 67–72, 74–80, 264, 378 Apple investment, 82, 83 founding of Kleiner Perkins, 67–70 Genentech investment, 74–79, 80 GO Corp. investment, 122–23 investing strategy of, 60, 69–70, 72, 75, 128, 266 Silicon Compilers and Ungermann-Bass, 108, 202–3 Tandem Computers investment, 70–72, 80 white-hot risks, 70, 75, 76, 80, 128, 266 Perkins’s law, 72, 75 Perot, Ross, 441n Pincus, Mark, 198, 213, 443n Pinduoduo, 402 Pinterest, 298, 302 Pioneer, 221 Pishevar, Shervin, 354, 355–57, 368 Plaxo, 196–98, 207 Players Technology Summit, 302 Pong, 58–59, 63, 425n Portal Software, 174, 436n, 440n Postmates, 302 Powell, Colin, 265 power law, 6–9, 10, 31, 79, 132, 147, 178, 210–11, 376–77 normal distribution, 6 power law distribution, 7 Powerset, 211 preferred stock, 231, 275–77 “prepared mind,” 122, 128, 250–51, 252, 308–9 price-earnings ratio, 47 Price Waterhouse, 235 private limited partnerships, 41, 43–46, 92, 397–98 Prodigy, 137 Project Maven, 394–95 proxy caches, 187 Prudential Financial, Inc., 24 “prudent-man rule,” 61, 91, 92, 129 Q Qiming, 223–25, 234–35, 400, 446n Qualtrics, 451n quantitative analysis, 14, 47 quantitative easing, 336, 337, 338 QuantumScape, 263 Quartermaster Corps, 28 Quist, George, 51 Qume, 101, 190, 208, 426n Sutter Hill deal, 66–67, 98, 102, 103, 115, 184, 187–88, 290 R Rachleff, Andrew, 161–62, 167, 171–72, 416n, 439–40n racial diversity, 14–15, 384–85, 412 Radar Partners, 265 Rambler, 287 Ramsey Beirne, 168 Rand, Ayn, 61 randomness thesis, 376–77 “ratchet-down” clauses, 105 Raytheon Technologies, 18, 395 Reagan, Ronald, 92 recombinant DNA, 72–78 Reddit, 218 Red Hat, 170 Research in Motion, 331 Reynolds, Ryan, 368 Rickey’s Hyatt House, 67–68 Rieschel, Gary, 222–25, 234–35, 248, 445n, 446n RingCentral, 333 risk management, 12, 40, 46–47 Roberts, Sheldon, 34, 54 Robertson, Julian, 8, 278, 281, 282, 283, 337 Robertson, Michael, 458n Robertson, Sandy, 426n Rock, Arthur, 43–57, 79–80, 209, 220, 378–79, 382, 390, 422–23n Apple, 86–91, 229, 377 background of, 31–32 at Davis & Rock, 44–51, 382 Fairchild Semiconductor, 31–39, 52–55, 225 financial model of, 40, 46–48, 51, 225, 382 at Hayden, Stone, 31–33, 35–37, 44, 46, 225 Intel, 55–57, 237, 378 “intellectual book value,” 47, 78, 390 Kapor and, 135 SDS investment, 48–50 Tandem Computers, 71 Rockefeller, Laurance, 26 Rockefeller family, 26, 32, 35, 51, 56, 71 Rockefeller University, 68 Rodgers, T.

A World in Disarray: American Foreign Policy and the Crisis of the Old Order
by Richard Haass
Published 10 Jan 2017

In other areas, a willingness to use military force may well be essential if terrorism is to be minimized and proliferation frustrated—although even here a degree of restraint will be required in when and how force is used. The United States needs to accept special obligations in the economic realm given the role of the dollar as the world’s de facto reserve currency. This means taking into account the views of others when deciding on interest rates or asset purchases (quantitative easing). Regular, serious consultations between the Federal Reserve and its central bank counterparts around the world are essential. Trade disputes should be taken to the WTO rather than acted on unilaterally, as well. Consistent with all this, and to return to a theme that has appeared throughout this book, legitimacy requires a commitment to process as well as policy.

The New Economics: A Bigger Picture
by David Boyle and Andrew Simms
Published 14 Jun 2009

The Bank of England should, for example, exercise its power to create money to provide the loan finance for the new local lending infrastructure. This should be repaid, free of interest, when the task is complete, and then withdrawn from circulation. (Note: this proposal has been put into practice in a basic form by the UK government and is known as ‘quantitative easing’.) 166 THE NEW ECONOMICS 8 Innovations for productive and secure savings (a): Introduce a ‘People’s Pension’ to provide secure savings vehicles for retirement Attempts to leverage private sector cash to pay for schools and hospitals have repeatedly been exposed as bad deals for the public.

The Decadent Society: How We Became the Victims of Our Own Success
by Ross Douthat
Published 25 Feb 2020

The first possibility inspired what was, in hindsight, unwarranted anxiety during the aftermath of the 2008 financial crisis, when “as goes Greece, so goes the entire West” was a common fear among deficit hawks, and everyone from German bankers to Tea Party Republicans was preaching the absolute necessity of austerity. This style of thinking had a lot of intuitive power but foundered on the facts—specifically the total absence of the inflation that it predicted would follow from stimulus spending and quantitative easing. So today, including on the Trumpified American right, the consensus has turned over. The smartest thinking holds that central banks were too tight after the crisis rather than too loose; that the real constraint on deficits is the inflation rate, not some arbitrary debt-to-GDP ratio; and that Greece went bankrupt as much because of Germany’s inflation paranoia as because of its own profligacy.

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

The immediate response to the crisis by finance ministers and central bankers from autumn 2008 to spring 2009 was admittedly praiseworthy; they acted in concert to arrest the global collapse in demand by expanding government budgets and pumping money through the economy’s financial arteries in the form of quantitative easing (large-scale purchases of financial securities). This stopped the downturn from becoming a repeat of the 1930s Great Depression. But outside the most acute crisis management period—both before and after—policy making was riddled with mistakes. During the boom, all had not been well, and it was in two of the West’s biggest economic engines that trouble first appeared.

Nine Crises: Fifty Years of Covering the British Economy From Devaluation to Brexit
by William Keegan
Published 24 Jan 2019

Balls had delivered a powerful critique of Osborne’s policy in his Bloomberg speech of August 2010 when, bizarrely, in view of his economic qualifications, he had not yet been appointed shadow Chancellor. Insofar as there was a macroeconomic justification for the austerity policy, it was that the fiscal squeeze would be counterbalanced by monetary policy – low interest rates, quantitative easing (a silly euphemism for expanding the money supply). But the confidence was not there, and the banks were not lending. Indeed, the official figures for credit growth were going backwards. As Wolf pointed out in the 2013 Wincott Lecture, ‘Monetary policy clearly and decisively failed to promote recovery.

Mastering the Market Cycle: Getting the Odds on Your Side
by Howard Marks
Published 30 Sep 2018

In addition to controlling inflation, they are expected to support employment, and, of course, employment does better when the economy is stronger. So central banks encourage this through stimulative actions such as increasing the money supply, decreasing interest rates, and injecting liquidity into the economy by buying securities—as in the recent program of “quantitative easing.” Central bankers who focus strongly on encouraging employment and lean toward these actions are called “doves.” The bottom line is that most central bankers have two jobs: to limit inflation, which requires restraining the growth of the economy, and to support employment, which calls for stimulating economic growth.

Affluence Without Abundance: The Disappearing World of the Bushmen
by James Suzman
Published 10 Jul 2017

For instance, if we substitute “subprime mortgage” (or any number of other purchases on easy credit) for “magic pot”; “mortgage-backed security” for “donkey”; “promised returns” for “donkey shit”; “Wall Street bankers” for “Jackal”; and “everyday dupes” for “the Herero,” then you have most of the key elements needed for retrospective analysis of the subprime financial crisis that began in 2007. You could just as easily equate the magic pot with a moribund economy that fails to deliver growth no matter how hard it is whipped, and the donkey with a central bank “quantitively easing” magical money from its rear. The possibilities are almost endless. If /Engn!au’s story of a magic pot can be read as an allegory of a convoluted financial crisis, then it is not surprising that most of the questions about money that continue to perplex Ju/’hoansi and others on the fringes of the world economy also perplex most people in advanced monetized economies.

The Enablers: How the West Supports Kleptocrats and Corruption - Endangering Our Democracy
by Frank Vogl
Published 14 Jul 2021

In the foreword to the 2020 debt tables, World Bank president David Malpass noted: “The landscape of development finance is marked by the growing debt vulnerabilities of low- and middle-income countries. The post-2008 financial crisis era is characterized by a rapid rise in lending to them, fueled by factors including buoyant commodity prices, quantitative easing, and low interest rates in high-income countries. With increased access to international capital markets, many low- and middle-income countries shifted away from traditional sources of financing and experienced a sharp rise in external debt, raising new concerns about sustainability.” Also see IMF, “External Sector Report 2020: Global Imbalances and the COVID-19 Crisis,” published in August 2020. 2.

Liberalism at Large: The World According to the Economist
by Alex Zevin
Published 12 Nov 2019

If states must curb the power of bankers, it was so as to pare back what waged workers could expect too: for the US to ‘reduce its debt burden, it must tackle its cherished entitlement programs’, retirement, pensions, health care, social security.131 Beddoes, for her part, did not see a serious divide between Hayek and Keynes at the Economist in the years leading up to her appointment. ‘Ed Lucas may think my economic views are crazy. A few are sceptical of quantitative easing or fiscal stimulus. But not many’, she said in 2012. For her, the crisis simply required ‘pragmatic short-term acceptance of demand stimulus, without abandoning small state micro-economic policies, and with a path to balanced budgets’. The survey she wrote in October 2012, ‘True Progressivism’, was in fact a kind of synthesis of the two positions, incorporating the Coggan critique of finance within it.

…

‘The Land that Labour Forgot’, 5 September 2015. ‘Only in the time-warp of Mr Corbyn’s hard-left fraternity could a programme of renationalisation and enhanced trade-union activism be the solution to inequality.’ Rent controls would ‘exacerbate the shortage’ in housing and a ‘people’s QE’ – after the quantitative easing undertaken by central banks to prop up asset prices and stimulate private lending after 2008 – ‘threatens to become an incontinent fiscal stimulus’. Scrapping university tuition fees ‘would be regressive and counterproductive’: ‘Backwards Comrades’, 19 September 2015. 138.‘The Way Ahead’, 8 October 2016. 139.

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope
by John A. Allison
Published 20 Sep 2012

Freddie and Fannie (along with their clone the Federal Housing Administration [FHA]) still dominate the housing finance market and are still politically controlled. Regulations have been increased. Government spending and government debt have expanded rapidly. The Federal Reserve is “printing” money (through quantitative easing, or QE2), laying the foundation for the next bubble (misinvestment/overinvestment). Unless the United States changes direction, we face severe financial problems in 20 to 25 years. The deficits in social security and Medicare, unfunded government pension liabilities, annual operating deficits, demographic issues, and a failed K–12 educational system will lead to a much lower real standard of living.

The Precariat: The New Dangerous Class
by Guy Standing
Published 27 Feb 2011

Temporary contracts and part-time employment with inferior wages and benefits crept in. Then governments moved against the sector as a whole. Public pensions were declared ‘unaffordable’ and ‘unfair’; governments used comparisons with the private economy to justify cutting public wages. It did not help that fiscal stimulus packages, quantitative easing and subsidies created bulging public deficits. That was not the fault of the public sector, but it became an easy target for budget cuts. Insecure private sectors looked on without solidarity. Financial markets too insisted on public spending cuts as evidence that governments were on ‘the right track’.

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America
by Matt Taibbi
Published 15 Feb 2010

Those primary dealers (as of this writing there are eighteen of them, all major institutions, including Goldman Sachs, Morgan Stanley, and Deutsche Bank) on occasion sell those T-bills to the Fed, which simply credits that dealer’s account when it buys the securities. Through this circular process the government prints money to lend to itself, adding to the overall money supply in the process. In recent times, thanks to an utterly insane program spearheaded by Greenspan’s successor, Ben Bernanke, called quantitative easing, the Fed has gotten into the habit of buying more than just T-bills and is printing billions of dollars every week to buy private assets like mortgages. In practice, however, the Fed’s main tool for regulating the money supply during the Greenspan years wasn’t its purchase of securities or control over margin requirements, but its manipulation of interest rates.

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe
by Greg Ip
Published 12 Oct 2015

,” Foreign Affairs, September/October 1996. 18 In the 1990s, governments: Galina Hale and Maurice Obstfeld, “The Euro and the Geography of International Debt Flows,” Federal Reserve Bank of San Francisco and University of California, Berkeley, working paper, December 26, 2014. 19 A merger or acquisition “within the euro area”: Ernst Welteke, “The Effect of the Euro on the German Economy—A View from the Deutsche Bundesbank,” Speech to the German-British Chamber of Industry and Commerce in London, May 29, 2001, available at http://www.bis.org/review/r010530a.pdf. 20 As one study documented: The backsliding on reforms in Greece, Spain, Ireland, and Portugal is examined by Jesus Fernandez-Villaverde, Luis Garicano, and Tano Santos in “Political Credit Cycles: The Case of the Euro Zone,” NBER Working Paper no. 18899, March 2013. 21 That October in Deauville: Charles Forelle, David Gauthiers-Villars, Brian Blackstone, and David Enrich, “Europe on the Brink: As Ireland Flails, Europe Lurches Across the Rubicon,” Wall Street Journal, December 28, 2010. 22 This meant that if a private saver: The ECB, however, would only buy the bonds of a government that was adhering to the conditions of a reform program hammered out with the rest of Europe. This program was distinct from the “quantitative easing” launched in 2015 under which the ECB bought government bonds as a means of boosting economic growth rather than ensuring that those governments could obtain funding. 23 “The German economy is competitive”: Harriet Torry, “Germany Hits Back at U.S. Over Economic Criticism,” Dow Jones, October 31, 2013. 24 The head of the IMF repeatedly: Michel Camdessus, managing director of the IMF, recalls issuing the warning, in an interview with BusinessWeek in December 2007, cited in “The IMF Crisis,” Wall Street Journal, April 15, 1998. 25 Many of these conditions had: Independent Evaluation Office, “The IMF and Recent Capital Account Crises: Indonesia, Korea, Brazil” (Washington: International Monetary Fund, 2003): 48. 26 His fellow governor: Ben Bernanke, “The Global Saving Glut and the U.S.

Inventing the Future: Postcapitalism and a World Without Work
by Nick Srnicek and Alex Williams
Published 1 Oct 2015

A series of emerging contemporary phenomena must be thought through carefully: for instance, the causes and effects of secular stagnation; the transformations invoked by the shift to an informational, post-scarcity economy; the changes wrought by the introduction of full automation and a universal basic income; the possible approaches to collectivising automated manufacturing and services; the progressive potentials of alternative approaches to quantitative easing; the most effective ways to decarbonise the means of production; the implications of dark pools for financial instability – and so on. Equally, research should be revived on what postcapitalism might look like in practice. Beyond a few outdated classics, very little research has been done to think through an alternative economic system – even less so in the wake of emerging technologies like additive manufacturing, self-driving vehicles and soft AI.68 What role, for instance, could non-state cryptocurrencies have?

Digital Bank: Strategies for Launching or Becoming a Digital Bank
by Chris Skinner
Published 27 Aug 2013

In Brazil (real / cruzeiro), Iran (rial / toman) and other countries, they just rename the currency officially or unofficially when it becomes less valuable. The same thing can be practised for a currency that becomes more valuable. But finite currency levels undermine monetary control of days of old, as central banks won’t be able to issue more currency to ease economic issues, such as the Quantitative Easing of Europe and America in recent times. Well, if there’s no central issuing authority to issue more or less money for monetary control, then that’s the real issue. So you can’t address the issues in economies with money, but I would argue ordinary fiat currencies are actually less of a benefit to societies and economies if those currencies can be manipulated.

Disrupted: My Misadventure in the Start-Up Bubble
by Dan Lyons
Published 4 Apr 2016

This new bubble contains the same kind of magical thinking, but with an added twist, courtesy of the Federal Reserve. This time around the problem isn’t just that investors have gone a little bit crazy, but also that money is cheap. That at least is what one venture capital expert tells me. He theorizes that the policy of “quantitative easing” instituted by the Federal Reserve and other central banks after the financial meltdown of 2007 and 2008 is contributing to the stock market boom. By printing more money, the central banks are inflating stock prices. That in turn drives up the value of big pension funds and college endowments.

This Changes Everything: Capitalism vs. The Climate
by Naomi Klein
Published 15 Sep 2014

All over Southern Europe, environmental policies and regulations have been clawed back, most tragically in Spain, which, facing fierce austerity pressure, drastically cut subsidies for renewables projects, sending solar projects and wind farms spiraling toward default and closure. The U.K. under David Cameron has also cut supports for renewable energy. So if we accept that governments are broke, and they’re not likely to introduce “quantitative easing” (aka printing money) for the climate system as they have for the banks, where is the money supposed to come from? Since we have only a few short years to dramatically lower our emissions, the only rational way forward is to fully embrace the principle already well established in Western law: the polluter pays.

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Boone, 237–38, 252 Pickens Plan, 237 Pierre River Mine, 379–80, 383 Piketty, Thomas, 113, 154–55 Pinatubo eruption (1991), 258–59 weather effects of, 259, 270, 271–72, 274 Pinatubo Option, 258, 259–62, 274 famine and drought as consequences of, 270, 279, 287 solar power generation affected by, 259 termination problem in, 260 weather patterns affected by, 260, 268, 270–71 Pine Ridge Reservation, 393, 396 pipelines, 141, 157, 349, 352, 362, 413, 446 as common threat, 315–16 Indigenous peoples and, 315, 319, 344–45 public value of renewable energy projects vs., 400 see also specific pipeline projects Pittsburgh, Pa., rights of nature ordinance in, 444 place, love of, in Blockadia movement, 337–66 planetary exodus, 288–89 planned obsolescence, 91 planning, long-range, see long-range planning Point Carbon, 225 Point Hope, Alaska, 375 Poland, 75, 144, 200, 225 polar bears, 435 Policy Implications of Greenhouse Warming, 282 Polis, Jared, 314 politicians, responsibility evaded by, 12, 119 politics, elite control over, 18, 119 polluter pays principle, 110–19, 202–3 pollution regulations, 39 polychlorinated biphenyls (PCBs), 203, 429 polycyclic aromatic hydrocarbons (PAHs), 426 Pooley, Eric, 207, 208 Pope, Alexander, 446 Pope, Carl, 237, 356, 357n population, 14, 114n populism, 117 postindustrialized nations, 79, 132, 177, 387, 460 poverty, 7, 19, 61, 85, 110, 115, 119, 134–36, 157, 177, 343, 455, 458 consumption and, 91 in developing world, 40, 55, 88n, 179–82, 409, 416, 418 extractive industries and, 181–82, 416 lack of protection and, 49 renewable energy and, 391, 399 Powder River Basin, coal mines in, 320, 323, 343–44, 395 power, corporate, 25 Power Past Coal, 349 power plants, coal-fired, see coal-fired power plants precautionary principle, 335–36 Premier Gold Mines, 382 Presidential Oil Spill Commission, 330 President’s Science Advisory Committee, climate change report of, 261 price controls, 125 PricewaterhouseCoopers, 15 Princeton Environmental Institute, 113 Princeton University, Carbon Mitigation Initiative of, 113–14 Prince William Sound, impact of Exxon Valdez oil spill in, 337–39, 426 privatization, 8, 9, 39, 72 diminished services under, 128 of disaster response, 51–52 of former Soviet economies, 19 and infrastructure investments, 108–9 as license to steal, 154 of public sphere, 19–20 reversals of, 39, 95, 96–103 Prize, The (Yergin), 311 Proceedings of the National Academy of Sciences, 79, 217, 328n “proof of harmlessness,” 271, 272 propane, 328 Prosperity Without Growth (Jackson), 93 protectionism, 64–65, 84 Public Accountability Initiative, 216 Public Citizen, 80, 213 Global Trade Watch of, 359–60 public health systems, 10, 109 public infrastructure, 19, 20 public sector, 95 crumbling institutions, 158 green energy and, 97–103, 406–7 and infrastructure investments, 108–9 spending cuts in, 19, 72, 110 public services, zero-carbon, 19–20 public transit, 7, 40, 92, 93, 108, 121, 124, 126, 127 in Brazil, 157 cheap, 91 in France, 109 in wartime, 16–17 public works, 39 Pungesti, Romania, anti-fracking movement in, 298–99, 303, 347, 404 quantitative easing, 110 Quebec: anti-fracking movement in, 303–4, 313, 348, 358–59 fracking moratorium in, 71 opposition movements in, 9, 464 Queensland, 27, 301 racism: environmental, 205, 429 sacrifice zones and, 310–11, 314 railways, 91, 108, 122, 133 coal transport by, 234, 362, 389, 397 high-speed, 126 oil transport by, 311–12, 325, 332, 333 Rainforest Action Network, 197, 296, 356 “Rainforest Chernobyl,” 309, 378 Rakotomanga, Cressant, 221–22 Rand, Ayn, 44 Rasch, Phil, 264 rationing, wartime, 115–16 Raytheon, 9 Read, Joe, 53n Reagan, Ronald, 39, 117, 203–5, 229 real estate: disaster infrastructure and, 51 in wake of Superstorm Sandy, 9, 235n re-communalization, 96–103 Red Cloud, Henry, 24, 393–97 Red Cloud Renewable Energy Center, 396 REDD-Monitor, 223 RedGE, 78 Red Hook, Brooklyn, 105n, 405 Reilly, John, 11 reinsurance, 9, 234 religion, and dominion over nature, 41, 74, 177 re-municipalization, 96–103 renewable energy, 16, 18, 67, 90, 93, 127, 131, 218, 253, 283 Asia and, 349–50 buy-local programs for, 77 cheap natural gas as undercutting, 128–29 community ownership of, 398–99 Gates’ dismissal of, 236–37 in Germany, 97–98, 130–31 incentives for, 138–39 investment in, see green technology, investment in major oil companies and, 111–12 maturing technology for, 213–14 misleading cautions on, 199–200, 394–95 noncorporate providers of, 131 100 percent, 101, 102, 137, 214–15 private sector and, 100–101 public ownership and, 97–103 public sector and, 97–103, 406–7 public value of, extractive projects vs., 400 in Spain, 110 transition to, 89, 97–103, 115, 214–15, 364 and variability of natural systems, 394–95 as viable alternative to fossil fuels, 349, 398, 399, 400–401, 403, 413–18 WTO’s slowing of, 71–72 reparations, 414–15 see also climate debt REPOWERBalcombe, 403–4 Republican party, 35, 118, 125, 141, 204 climate change denial and, 34, 36, 46, 407 Republic Windows and Doors, 123n resilience, 419, 442 Resisting Environmental Destruction on Indigenous Lands (REDOIL), 375–76 resources, depletion of, 450 Responsible Endowments Coalition, 401 Reyes, Oscar, 224 Richmond, Calif., 321, 402 right wing: as barrier to progress, 31–63, 75, 124 on climate change as left-wing plot, 31, 32, 156, 411 Rignot, Eric, 14 Rio Earth Summit of 1992, 55, 76, 77, 83, 85, 150, 200, 293, 363 Risky Business project, 49 Roberts, David, 364–65 Robertsbridge Group, 249n Robertson, Julian, 208 Robock, Alan, 264, 270, 273–74 Rockaways, 103–6 Rodríguez, Heriberto, 222 Rogers, Jim, 196 Romania: fracking in, 298–99, 303, 344 government repression of environmental protest in, 298–99, 303 Romm, Joe, 54 Roosevelt, Franklin Delano, 121 Roosevelt, Theodore, 211 Rosebud Sioux, 375 Rothschild, Richard, 31, 34 rotifers, BP oil spill and, 432 Rousseff, Dilma, 179 Rowe, Stan, 444 Royal Canadian Mounted Police, 299 Royal Society, 152, 266 Chicheley Hall geoengineering conference of, 256–61, 263–67, 280–81, 284–85, 451 royalties, on oil, gas, and coal extraction, 112–13 Roy, Arundhati, 291 Ruffalo, Mark, 317 Russia: Greenpeace activists arrested by, 300 oil and gas companies in, 178–79 see also Soviet Union Sacramento, Calif., 99 sacrifice zones, 172–73, 310–15 Safe Drinking Water Act, 328 Safety and Environmental Enforcement Bureau, U.S., 332 Sahel, 270, 274, 275–76 Sainsbury, 116 St.

Roller-Coaster: Europe, 1950-2017
by Ian Kershaw
Published 29 Aug 2018

Vast amounts of money were certainly poured into the economy, though most of it went to save the banks, not directly to stimulate recovery. Further immense sums were spent by the Bank of England (£375 billion between 2009 and 2012) and later the European Central Bank (1.1 trillion Euros in 2015–16) in creating new electronic money to buy government bonds in order to increase the money supply – the method known as ‘quantitative easing’. This was a central part of monetary policy once interest rates had been reduced to almost zero, and was aimed at preventing deflation turning the recession into a disastrous depression, as had happened in the 1930s. In this aim the method could claim success. The recession would have been very much worse without it.

…

But it was less successful in reviving the economy, largely because banks remained unwilling to lend and anxieties about the economy meant that people were reluctant to borrow. So most of the stimulus remained within the banking sector and did not pass down to the great majority of citizens. The quantitative easing was a sort of neo-Keynesianism, though primarily just to aid the banks. But little else followed neo-Keynesian methods. Once the recession had set in, the remedies largely followed neo-liberal prescriptions – retrenchment rather than expansionism. Debt reduction through austerity was the main message.

Brexit, No Exit: Why in the End Britain Won't Leave Europe
by Denis MacShane
Published 14 Jul 2017

In July 2012, once Trichet had gone, Draghi promised to ‘do whatever it takes’ to promote growth. But the Trichet years and the overwhelming dominance of German austerity ideology had already done their damage. For the British, with a much more flexible approach to monetary policy, including the Keynesian policy of so-called ‘quantitative easing’ – in effect printing money, launched in 2009 under Gordon Brown, a politician who understood economics – the refusal of dominant national capitals in Europe to promote pro-growth policies allowed pro-Brexit politicians to denounce the eurozone as a promoter of policies that stopped growth, increased unemployment, especially youth unemployment, and imposed public spending or pension cuts.

The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

Advocates of loose monetary policy pretend that expanding the monetary base could have large short-term stimulatory effects through negative interest rates, without long-term consequences—as if we could have our cake and eat it too.53 In truth, loose monetary policy likely only has short-term effects if it has long-term consequences. Otherwise, when its long-term costs are minimized—that is, if the Fed reins in the monetary base when the economy recovers—monetary policy has only minimal short-term effects in a recession. Even Ben Bernanke now admits that unless quantitative easing is permanent—unless it is guaranteed to inflict inflation on the economy—it is unlikely to have much if any stimulatory effect.54 But with the Fed in uncharted waters, never having to have controlled credit growth and price inflation with $2.6 trillion of excess reserves on deposit in the banking system, one has to wonder why there has been little, if any, fear of inflation at all.

The God Species: Saving the Planet in the Age of Humans
by Mark Lynas
Published 3 Oct 2011

Money, however, is not a limited resource in the same sense as energy. Finance we can create, if we are clever enough. Jasper Sky, a colleague at Oxford University’s Environmental Change Institute, suggests creating new funds with a novel twist on the traditional tactic used by recession-hit governments of “quantitative easing” (QE). QE normally means that a central bank buys government bonds from investors, in effect creating new cash, which is then available to banks to encourage them to lend more and thereby increase economic activity. Sky suggests that a central bank could buy specially issued bonds from a Green Investment Bank, which would then use its funds to support new clean technology deployment at a large scale, from offshore wind to nuclear to supergrids.

The Uninhabitable Earth: Life After Warming
by David Wallace-Wells
Published 19 Feb 2019

It’s not just bee rapture, after all: we see visions of our own world being wiped out in the mysterious deaths brought about by Ebola, bird flu, and other pandemics; in anxiety about a robot apocalypse; in ISIS, China, and the Jade Helm exercise in Texas; in runaway inflation that never actually happened in the wake of quantitative easing, or the gold rush such fears spawned, which did. One does not open the Wikipedia page for “Honeybee” expecting an encounter with millenarianism. But the more you read about colony collapse, the more you are filled with a kind of awe for just how much the internet is a divining rod by which we choose to intuit an end of days.

Keeping at It: The Quest for Sound Money and Good Government
by Paul Volcker and Christine Harper
Published 30 Oct 2018

Only the massive interventions in the securities markets during and after the 2008 financial crisis—operations in which the Fed purchased long-term government debt and mortgage-backed securities in extremely large multiples of anything contemplated in the 1950s—confirmed its demise. Under the rubric of “quantitative easing,” debt management seems to be back in a more exaggerated style. Few tears have been shed. But what hasn’t disappeared is the basic underlying question: How far should a central bank—shielded from political pressures—go in indirectly financing budgetary deficits and influencing the distribution of credit broadly in the economy?

Green and Prosperous Land: A Blueprint for Rescuing the British Countryside
by Dieter Helm
Published 7 Mar 2019

There are two dimensions to this extra consumption that impact on the natural environment: how much is spent; and what it is spent on. How much is spent should not be based on the 2 to 3 per cent GDP growth number, and there is a lot to be put right before economic growth can be accommodated, including the impacts of all the fiscal deficits, trade deficits and quantitative easing that pumped consumption up artificially high since the financial crisis of 2007/08. Current growth and spending levels are not sustainable: we are living beyond our means. It is not that these numbers cannot rise without damage to the environment. They can. Rather, it is that the numbers need first to be adjusted so that they are in fact sustainable.19 The amount of consumption growth after these corrections depends on technical progress, and there is lots more of this to come.

Hate Inc.: Why Today’s Media Makes Us Despise One Another
by Matt Taibbi
Published 7 Oct 2019

She left the industry prior to the 2008 crash and became an important resource for all Americans in the years that followed, helping explain what banks were doing, and why, from an inside perspective. In recent years she became increasingly alarmed by central banking policies around the world. In Europe and the United States, she zeroed in on programs like Quantitative Easing that overworked the money-producing powers of the state and pumped giant sums of invented cash into the finance sector. She called this a “massive, unprecedented, coordinated effort to provide liquidity to [the] banking systems on a grand scale.” These policies are a kind of permanent welfare mechanism for the financial sector, and have had a dramatic impact around the world.

Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis
by Scott Patterson
Published 5 Jun 2023

Spitznagel found himself battling an altogether different and more powerful foe: Ben Bernanke and the Federal Reserve. In response to the financial crisis, Bernanke cranked up the financial stimulus dial to 100. Central bankers, having lowered short-term interest rates to near zero, had begun implementing a strategy known as quantitative easing, or QE. It sounds complicated. It’s not. The Fed simply buys lots and lots of bonds. Mortgage bonds, Treasury bonds. Billions and billions of dollars’ worth of bonds. That can stimulate growth in a few ways. For one, it can shrink the balance sheets of banks, which no longer have to hold those bonds.

Good Times, Bad Times: The Welfare Myth of Them and Us
by John Hills
Published 6 Nov 2014

For instance, the minimum contributions from employer, employee and tax relief under Automatic Enrolment, eventually adding up to 8 per cent of earnings above a threshold once they have been phased in, are still well below – probably half – what would be needed in addition to state pensions to give people the kind of income in retirement that they regard as an absolute minimum.35 With much lower long-term interest rates in the wake of the economic crisis than before – a product of the Bank of England’s ‘quantitative easing’ – this has only got worse. With low long-run returns on investments, you need to save more to get the same end result. Adding to the uncertainty are the ‘pension freedom’ rules that now allow people to withdraw their pension funds altogether as a lump sum, rather than having to turn them into a flow of income through retirement.

Tower of Basel: The Shadowy History of the Secret Bank That Runs the World
by Adam Lebor
Published 28 May 2013

W., 122 Pohl, Karl Otto, 210 Pol, Heinz, 130, 224 Poland, 79, 153 Pons, María A., 55 Porters, Robert, 36 Portugal, 87, 198, 248 Potsdam Conference, 131, 138 Price Waterhouse, 75 Puhl, Emil conviction of for war crimes, 86, 159–160 interrogation of by American intelligence, 126–127 Jacobssen, relationship with, 84 McKittrick, relationship with, 82–83, 90, 115, 156–157 post-war trip to U. S., 177 on relationship of BIS with Reichsbank, 83–85, 217 Q Quantitative Easing, 247 Quarterly Review (BIS), 237 Quesnay, Pierre, 24 R Red House Report, 155 Reichsbank abolishment of, 151 founding of, 30 Hjalmar Schacht and, xvii, 7, 9, 24, 33 policy on BIS, 27–28 relationship with BIS, 83–85, 114–115, 127 reparations payments and, 9–10 Reichsgruppe Industrie, 153 Rentenmark, 6–7, 9 Reparation payments, World War I arguments about, 5–6 cancellation of, 29 Dawes Committee (1924), 9–10 moratorium on, 28 Reparations Commission (1921), 6 Young Plan (1929), 11–13 “Report to the Secretary on the Acquiescence of this Government in the Murder of Jews” (Morgenthau’s staff), 160 Reserve currency rescue, coordination of by BIS, 193 Retinger, Joseph, 173 Revelstoke, Lord (John Baring), 11, 12 Reynolds, Jackson, 18 Ribbontrop, Joachim von, 90 Rijksbank, 108 Ripley, Joseph, 146 Romania, 25, 87, 98, 184 Roosevelt, Eleanor, 186–187 Rooth, Ivar, 89, 108–109, 117 Rooth, Lars, 108 Rosière, Jacques de la, 204 Ruiz, Elena Martínez, 55 Russia, 257 S Saudi Arabia, 257 Schacht, Hjalmar acquittal of war crimes, 160–162 appointment of von Schröder to BIS board, 35 Ashton-Gwatkin, meeting with, 70–71 background, 8–9 Deutschmark, opinion of, 151 economic achievements of, 45 as founder of BIS, xvii as General Plenipotentiary for the War Economy, 46 on Germany’s armaments program, 46 Germany’s debt obligation, rewriting of, 38–39 Hitler, attempt to bring down, 48 Israel, inadvertent visit to, 162–163 Jews, emigration plan for, 48 lecture tour, 24 Montagu Norman, friendship with, 9, 30, 44–45, 162 Nazi party, assessment of, 33–34, 47–48 The Old Wizard (autobiography), 11 Owen Young, bank proposal to, 12 prestige of, 51 as Reich currency commissioner, 6–7 Reichsbank, as president of, 7, 33, 70 Reichsbank funds, manipulation of by, 46 on trial at Nuremberg, 139 Young Plan, anger at, 14, 24 Schacht, Luise, 14 Schacht, Manci, 163, 195 Schacht, Wilhelm (Hjalmar’s father), 8 Schacht, Wilhelm (Hjalmar’s grandfather), 8 Schacht & Company bank, 162 Schellenberg, Walter, 118–119 Schering company, 118 Schiller, Karl, 193 Schindler, Dieter, 79–80 Schleminger, Gunther, 201 Schmidt, Orvis, 123, 124–126 Schmitz, Hermann, 35–36, 50–51, 149, 158, 159 Schnitzler, Georg von, 129–130, 158 Schrobanco, 17, 18 Schroder, Bruno von, 35 Schröder, Kurt Freiherr von, 34–35, 38, 159, 187 Schubert, Heinz Hermann, 159 Sequel to the Apocalypse: The Uncensored Story—How Your Dimes and Quarters Pay for Hitler’s War (Booktab), 102 Seyss-Inquart, Arthur, 221 Sheets, Nathan, 235, 250 Sibert, Anne, 244 Siegman, Charles J., 229 Simon, John, 61, 63 Simpson, Christopher, 184 65th Annual Report (BIS), 237 Skinner, Thomas, 64 Slovakia, xxii Slovenia, xxii Small Working Group, 153 Smith, Walter Bedell, 173 Snake in the Tunnel, xxi, 209, 222 Solvay & Cie, 143, 170 Solvay American Investment Corporation, 37 South Africa, 198 Soviet Union, 55, 79–80, 129, 205, 206 Spain, 55–56, 198 Spanish Civil War, role of transnational capital in, 54–57 Special Drawing Right, 268 Spitzweg, Carl, 46 Square Mile, 227 SS (Schutzstaffel), financial empire of, 154–155 Stability and Growth Pact (1997), 231 Standard Oil, 36, 100–102, 121 Steffeck, Clara, 7 Stephens, Glenn, 248 Sterling Products, 101 Stimson, Henry, 32, 131, 144 Strauss, George, 59 Streit, Clarence K., 15 Strong, Benjamin, 3, 214 Sudetenland, 53, 59 Sullivan and Cromwell, 16, 18, 75, 170 Sunday Times (London), on Mark Carney, 249 Sweden, xi, 25, 84, 108–109, 116–117, 119 Swiss Bank Corporation, 118 Swiss Federal Council, 261, 263 Swiss National Bank, 87–88, 114–115 Switzerland BIS, defense of immunities of, 261 in European Payments Union, 167 on Financial Stability Board, 257 General Agreement to Borrow, contribution to, 191 gold, storage of in, 115 gold-for-coal arrangement with Germany, 87 Hague Convention, signing of, 20 as intelligence-gathering location, 113 as intermediary, 91 in London Gold Pool, 188 neutrality of, 81, 84, 91, 109 Romanian oil, buyer of, 98 T Taibbi, Matt, 257 Tasca, Henry, 88 Teagle, Foundation, 104 Teagle, Walter, 36, 100, 104 Thyssen, Fritz, 145 Tiarks, Frank, 17, 34, 35 Tietmeyer, Hans, 226 Times (London), on London Gold Pool, 189 Toniolo, Gianni, 20, 22, 29, 68, 264 Tower of Babel, story of, 255, 271 Treaty of Paris (1951), 167 Treaty of Rome (1957), 217 Tribune de Lausanne, on BIS wartime activities, 132 Trichet, Jean-Claude, 242, 252–253 Trip, Leonardus, 34 Trott zu Solz, Adam von, 99 Turkey, 87, 167, 198 U Unilever, 183, 187 Union Banking Corporation, 145–146 United Nations Monetary and Financial Conference (1944), 121–125 United States BIS, investigation of, 82 BIS, opposition to, 32, 89 blockage of BIS transactions by, 95, 111, 133 chemical companies, lawsuits against, 143 continuation of links with German industry, 119–121, 129 ESCU, loan to, 174–175 gold reserves of, 55–56 gold standard, 42 influence on postwar Europe, 173 in London Gold Pool, 188 monitor of export of German capital, 156 monitor of Wallenbergs and Enskilda Bank, 118 Nazi industrial espionage in, 101 Spanish civil war, view of, 56 United States, takeover of GAF by Treasury Department, 102 Urbig, Franz, 74 V Vaulx, Charles de, 243 Vocke, Wilhelm, 151–152 Volcker, Paul, xiii, 206, 231 Völkischer Beobachter newspaper, 76 Voorhis, Horace Jeremiah, 97 Vossische Zeitung newspaper, 130 Vulture funds, 260 W W.

A Pelican Introduction Economics: A User's Guide
by Ha-Joon Chang
Published 26 May 2014

Major financial institutions (e.g., the UK’s Royal Bank of Scotland) and industrial firms (e.g., GM and Chrysler in the US) were bailed out with public money. Central banks brought interest rates down to historical lows – for example, the Bank of England cut its interest rate to the lowest level since its foundation in 1694. When they could not cut their interest rates any more, they engaged in what is known as quantitative easing (QE) – basically, the central bank creating money out of thin air and releasing it into the economy, mainly by buying government bonds. Soon, however, free-market orthodoxy came back with a vengeance. May 2010 was the turning point. The election of the Conservative-led coalition government in the UK and the imposition of the Eurozone bail-out programme for Greece in that month signalled the comeback of the old balanced budget doctrine.

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond
by Chris Burniske and Jack Tatar
Published 19 Oct 2017

For example, with oil, there’s the famous Organization of the Petroleum Exporting Countries (OPEC), which has had considerable control over the supply levels of oil. The central banks that control currency supply have even more control than OPEC. As the world has witnessed since the financial crisis of 2008 and 2009, a central bank can choose to issue as much currency in the form of quantitative easing as it wants. It does this most often through open market operations, such as buying back government issued bonds and other assets to inject cash into the economy. Central bank activity can lead to drastic increases in the supply of a fiat currency, as we have seen in the U.S. dollar. Figure 8.1 shows a comparison of the supply schedules of bitcoin, the U.S. dollar, and gold.8 Figure 8.1 Comparison of supply schedules of bitcoin, the U.S. dollar, and gold Precious metals have long been valued for their scarcity and aesthetic appeal, even though, as metals, most are largely inferior to other more common metals.

Broke: How to Survive the Middle Class Crisis
by David Boyle
Published 15 Jan 2014

It means that the financial sector has used its ingenuity to manufacture an endless series of financial bubbles which burst because those who created them start to sell again — only to buy their deflated assets back when the market reaches the bottom. Last time the global economy was pushed into depression by the disastrous 1929 bubble bursting, the government bailout went into the productive economy in the New Deal. This time, it went into the financial economy, propping up the failed banks and creating money in the form of quantitative easing which boosted bank reserves, and was then recycled into more exorbitant bonuses. It was testament to what had been created in the financial districts, something beyond arrogance or insolence. The result is a kind of economic stagnation for everyone else. The middle classes, buttressed by modern capitalism, have been deluded into cheering on the very forces that have caused their disintegration.

The AI Economy: Work, Wealth and Welfare in the Robot Age
by Roger Bootle
Published 4 Sep 2019

Although there continue to be marked disagreements among economists about policy details, it is now pretty much the accepted wisdom among policymakers and academics that not only is there the possibility of governments and central banks taking action to prevent and, if necessary, to correct pronounced shortfalls of aggregate demand, but also it is their duty to take such action.8 The candidate measures include increases in government spending, reductions in taxes, cuts in interest rates or increases in the money supply through the policy that has become known as quantitative easing (QE). In the end, if all else fails, there is the option of distributing money to the people gratis – the so-called “helicopter money,” first referred to by Professor Milton Friedman, and recently discussed and advocated by, among others, the former chairman of the Federal Reserve Ben Bernanke.

The Four Pillars of Investing: Lessons for Building a Winning Portfolio
by William J. Bernstein
Published 26 Apr 2002

The rational person thus chooses to believe in Him. The financial markets work the same way, and the canyons of Wall Street are littered with the bones of those who forgot this simple principle. Here’s how it works with today’s bond market: it is entirely possible that the Fed’s unprecedented “kitchen sink” approach to both monetary and quantitative easing will savage long-term bond investors through hyperinflation. Or not. I know a lot of very smart folks on both sides of this question and am myself an agnostic on the issue. I do, nonetheless, know one thing for sure: if you fear inflation, consequently keep your bond maturities short, and then turn out to be wrong, you’ve lost only a few percent of yield.

Inside the Nudge Unit: How Small Changes Can Make a Big Difference
by David Halpern
Published 26 Aug 2015

As Keynes put it, ‘a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations … a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities’.12 In other words, businesses’ decisions are based on mental processes that are far from perfect, and in times of recession and doubt, much of policy is really about moving this sentiment. It may seem strange to think about it this way, but often the billions of pounds spent on schemes from tax breaks to quantitative easing (the printing of money) is more about sentiment than direct effect. If we think it’s getting better, or that someone has a plausible programme that might work to boost growth, then this itself can become a self-fulfilling prophecy, or at least one that will amplify the impact of the programme itself.

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management
by Alexander Elder
Published 28 Sep 2014

Granville monitored intraday prices by tuning his TV into CNBC with the sound turned off and a towel draped over the upper portion of the screen, so that all he could see was the tape, running along the bottom of his screen. 2. Remember, we're talking about the force of market crowds, not the formula in physics. 3. This cycle was grossly distorted by the Fed's “quantitative easing” following the 2008 debacle, but it's likely to return, once we crawl out of the Great Recession. PART 6 General Market Indicators You can use technical indicators reviewed in previous chapters to analyze any trading vehicle: a stock, a future, an index, etc. Such tools as moving averages, MACD, Force index, and others, can provide signals for any ticker in any timeframe.

Breakout Nations: In Pursuit of the Next Economic Miracles
by Ruchir Sharma
Published 8 Apr 2012

Its massive stimulus programs have driven government debt up from 40 percent of GDP in 1980 to more than 90 percent of GDP in 2011, a level that can weigh down on growth. With short-term interest rates close to zero, the Federal Reserve has run out of easy money to pass around, though it has still tried. Its inventive crisis policy of “quantitative easing” has done more damage than good because much of that easy money found its way into speculative investments—the bulk of it in commodities like oil and gold—rather than new lending by banks to new businesses at home. The end result is likely to be a return to shorter expansions and sharper recessions in the economy, as well as shorter bull runs in the stock market, and not only in the United States.

New Laws of Robotics: Defending Human Expertise in the Age of AI
by Frank Pasquale
Published 14 May 2020

Keynes could joke that it mattered not whether a state endeavoring to put its citizens back to work spent money on burying and exhuming bottles or building a new pyramid of Cheops. In our time, the disastrously pollutive effects of much consumption are well known. So the political face of MMT in our time is not simply an argument for a “people’s quantitative easing” or a universal basic income (both of which would undoubtedly reduce unemployment to some degree). Rather, it is a Green New Deal, an investment in the types of productive capacity that can decarbonize (or at least not contribute to the carbonization of) the atmosphere.63 This substantive emphasis is a major advance past classic Keynesian doctrine.

After the Fall: Being American in the World We've Made
by Ben Rhodes
Published 1 Jun 2021

When the bottom fell out in 2008, the steps necessary to rescue the global economy made it impossible to overhaul the global economy because it required pumping an enormous amount of money into the hands of the very same people who had spent down those dividends. As if to reassure me that there was little that could have been done very differently during my time in government, he pointed to the example of “quantitative easing”—a monetary policy designed by the Federal Reserve and a practice that I’d occasionally have to defend at international summits. To stave off a global collapse after 2008, central banks—particularly in the United States—pumped money into the organs of the global economy to keep the body from dying.

Finance and the Good Society
by Robert J. Shiller
Published 1 Jan 2012

The information technology revolution, coupled with innovations in nancial technology, is even now changing policy. Central bank policy, traditionally focused on managing the money supply, is already relying on tools that were unknown a short while ago, such as large-scale asset purchases, currency swaps, and quantitative easing. The scope and complexity of the financial system are fundamentally changing. And even more fundamental changes are in the o ng, like the elimination of money in favor of electronic units. The change could be the occasion for a new system of economic units of measurement, like the baskets described in Chapter 22 of this book.

How I Escaped My Certain Fate
by Stewart Lee
Published 18 Aug 2010

The pending Pestival performance aside, I’d already agreed not to do a new stand-up show for the summer of 2006, intending to leave the field fallow for a year, hoping to escape an inevitable critical backlash after two well-reviewed sets. And Roland Keating’s promise of a small BBC fee would create a degree of what we now know as quantitative easing, so I threw myself into some theatre projects: a workshop of something about William Blake I was toying with for the National Theatre Studio, featuring Johnny Vegas and the folk-singer Eliza Carthy, and directing a revival of Talk Radio by Eric Bogosian, an American performance artist and comic I used to listen to on the Peel show as a teenager, with Phil Nicol for Underbelly in Edinburgh.

The Black Box Society: The Secret Algorithms That Control Money and Information
by Frank Pasquale
Published 17 Nov 2014

They can continually malign the government’s fiscal foundations, all the while depending on the Fed to back them in case their own gambles fail.145 During Franklin Roosevelt’s presidency, government tended to fight back, underscoring the need for public alternatives to private promises to store and build wealth. The Bush and Obama administrations have taken a fundamentally different course. They have backed cash infusions for the banks and quantitative easing (essen- FINANCE’S ALGORITHMS 133 tially, hundreds of billions of dollars of purchases of certain securities) that raised the price of stocks to record levels. The fundamental concern has been to rebuild public confidence in equity and debt markets as safe and reliable guardians of fi nancial security.

It's Better Than It Looks: Reasons for Optimism in an Age of Fear
by Gregg Easterbrook
Published 20 Feb 2018

Hillary Clinton’s declaration that she would be: Avi Zenilman, “Commander-in-Chief of the Economy,” Politico, March 24, 2008. the crack-up disproved “the idea of an all-powerful free market that is always right”: Bruce Crumley, “Europe’s Conservatives Sour on the Free Market,” Time, September 26, 2008. Today, when the Federal Reserve “prints money,” no printing may occur: See Edison Yu, “Did Quantitative Easing Work?” (Philadelphia: Federal Reserve Bank of Philadelphia, 2016). “Jobless Rate Falls but Many Feel Passed By”: This was the subhead of the page-one story by Patrician Cohen, “Obama’s Gift to Successor,” New York Times, December 3, 2016. Social scientist Carol Graham of the University of Maryland has shown: Carol Graham, The Pursuit of Happiness (Washington, DC: Brookings Institution Press, 2011).

Greater: Britain After the Storm
by Penny Mordaunt and Chris Lewis
Published 19 May 2021

There is also evidence that 60 per cent of American workers are so indebted they don’t have $500 in savings to cover an emergency.33 A study by the Royal Society of Arts echoed this, showing that around 70 per cent of British workers are chronically broke, with some 32 per cent having less than £500 in savings.34 Such economic hardship is why inflation is one of the themes of the moment all across the globe. If the stimulus of quantitative easing wasn’t working, the increased defence expenditure, Trump’s presidential tax cuts, China’s Belt and Road Initiative (BRI) and spiralling Chinese wages certainly are. China is investing trillions of dollars in global infrastructure with the BRI, but that injection of capital is not necessarily picked up by traditional monetary aggregate measures because it’s being spent overseas.

This Land: The Struggle for the Left
by Owen Jones
Published 23 Sep 2020

Although in today’s Britain 1.9 million pensioners continue to languish in poverty – a shamefully higher rate than in most wealthy nations – successive governments have tended to legislate in their favour. Pensioners’ living standards have rightly been protected, and even improved, through a ‘triple lock’ which ensures annual rises in the state pension; through increasing levels of home-ownership among older people, rising house prices (until Covid-19 hit), and quantitative easing inflating asset prices and equity. Governments’ focus on this demographic is unsurprising: not only do they constitute a quarter of the electorate, they are the most motivated to vote. Given that this older demographic is also the most socially conservative on issues ranging from immigration to LGBTQ rights to Muslims, it’s equally unsurprising that Labour has not won a majority of pensioners since 1997.

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis
by Anatole Kaletsky
Published 22 Jun 2010

After the crisis, however, this situation has changed. In 2006, for example, the sum of circulating cash plus reserve deposits was 6.5 percent of GDP in the United States and only 5 percent in Britain. This compared with 9 percent in the eurozone and 17 percent in Japan. As a result of the money printed under the Fed and Bank of England quantitative easing program, the U.S. and British liquidity levels shot up to around 13 percent of GDP in early 2010, similar to the newly increased level in the eurozone. If this level of liquidity were permanently mandated by regulation, future financial crises would become much less likely. On top of that, the U.S. and British governments would gain seignorage revenue (the profit governments make from issuing money without paying interest) equivalent to between 0.25 percent and 0.5 percent of GDP—up to $70 billion a year in the case of the United States.3 This money would effectively be a stealth tax on the banks, with the burden ultimately shared between their shareholders, borrowers, and employees.

The Downfall of Money: Germany's Hyperinflation and the Destruction of the Middle Class
by Frederick Taylor
Published 16 Sep 2013

The eventual result, however, was to help create another, even worse, kind of trouble - one that manifested itself a decade down the line in the shape of the Nazi dictatorship. This is a fact of which modern Germans are well aware. The spectacle of the Anglo-Saxon countries ‘solving’ the recession by conjuring money up from nowhere to keep the economy going unsettles minds east of the Rhine. London and Washington may call it ‘quantitative easing’, but to those Germans with even the dimmest memory of the early 1920s, the story of the Reichsbank’s printing presses clattering away around the clock to produce million, billion and trillion mark notes, and the chaos that resulted, is irresistibly brought to mind. Germans’ awareness of their own history, including the price they paid for the hyperinflation – financial aversion therapy of the most drastic sort – as well as the benefits of financial discipline, which transformed the country after the Second World War, makes it obvious to most Germans that a similar course of action must be pursued by their troubled eurozone friends if they are to lift themselves out of the mire.

AI 2041: Ten Visions for Our Future
by Kai-Fu Lee and Qiufan Chen
Published 13 Sep 2021

Bitcoins are also computationally guaranteed to be limited to no more than 21 million coins, which avoids oversupply and inflation. Bitcoins became particularly attractive after COVID-19, because more corporations and individuals are looking for safe assets impervious to inflation caused by central banks’ quantitative easing. As an engineered safe-haven asset, bitcoins appreciated substantially. In January 2021, the total value of bitcoins exceeded $1 trillion. Stealing bitcoins seems petty compared to the grand applications described earlier for QC, but it is actually a problem known to be solvable by a modest QC, and thus likely the first lucrative application of QC.

Money for Nothing
by Thomas Levenson
Published 18 Aug 2020

* To step well ahead of this historical moment, in modern, postmetallic-money states, there’s a more direct way to deal with government shortfalls: states can simply create money through a variety of central bank operations. One controversial form of such money creation was used during the Great Recession that began in late 2007, so-called quantitative easing, in which central banks buy financial assets—bonds and other forms of debt—and thereby inject money created by the central bank into the broader financial marketplace; that “new” money is then available for use in the economy as a whole. The same money-creation power can in principle be used to pay back any official obligation expressed in that nation’s currency; the risk of paying off the entire US debt in this way would be inflation and a rapid depreciation of the value of the US dollar against any other currency.

The Billionaire Raj: A Journey Through India's New Gilded Age
by James Crabtree
Published 2 Jul 2018

At first he had other problems, beginning with inflation, a scourge that India had never properly managed to bring under control. Then, a few months before he took over, India was hit by a serious financial crisis, as US Federal Reserve chair Ben Bernanke hinted that he would begin to throttle back America’s quantitative easing effort, the multitrillion-dollar cash-printing machine that had helped to stave off the worst of the global crisis. Investors around the world panicked, pulling capital out of emerging markets and from India in particular, with its historically weak public finances and ominous current account deficit.

Valuation: Measuring and Managing the Value of Companies
by Tim Koller , McKinsey , Company Inc. , Marc Goedhart , David Wessels , Barbara Schwimmer and Franziska Manoury
Published 16 Aug 2015

The financial crisis of 2007–2009 Adding the historical risk premium to the current Treasury yield worked well until the financial crisis of 2007–2009. To combat the financial crisis, the U.S. Federal Reserve reduced short-term rates to almost zero, pulling down long-term rates as a by-product. It also began a policy of repurchasing bonds in the open market (known as quantitative easing), further pushing up prices and driving down yields. At the same time, U.S. government bonds became a safe haven for investors around the world, leading to high prices and lower yields for government bonds. As the crisis and subsequent recession unfolded, the yield on 10-year government bonds began a long and volatile decline, reaching an all-time low of 1.5 percent in July 2012.9 During this period, many practitioners realized that valuation models based on these interest rates didn’t lead to sensible results.

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Techniques similar to this date back to Charles Dow in the 1920s, and many authors have tested the concept.13 Two studies used analyst forecasts to estimate growth,14 but many argue that analyst forecasts focus on the short term and are severely upward-biased. In a 2001 working paper, Fama and French used long-term dividend growth rates as a proxy for future growth, but they focus on dividend yields, not on available cash flow.15 Therefore, we believe this implementation is best. 12 R. Dobbs, T. Koller, and S. Lund, “What Effect Has Quantitative Easing Had on Your Share Price?” McKinsey on Finance, no. 49 (Winter 2014): 15–18; and M. H. Goedhart, T. M. Koller, and Z. D. Williams, “The Real Cost of Equity,” McKinsey on Finance, no. 5 (Autumn 2002): 13–15. 13 E. Fama and K. French, “Dividend Yields and Expected Stock Returns,” Journal of Financial Economics 22, no. 1 (1988): 3–25; R.

The Great Railroad Revolution
by Christian Wolmar
Published 9 Jun 2014

Kaufman, Leaders Count: The Story of BNSF Railway (BNSF Railway, 2005), 74. 11. Technically, the Reconstruction Finance Corporation was created by his predecessor, Herbert Hoover, but Roosevelt greatly extended its scope and the amount of money it had at its disposal. The scheme bears an uncanny resemblance to the “quantitative easing” that has become almost routine following the banking crisis of 2008. 12. Ibid. 13. For the most part, these were technically diesel-electrics. In other words, the diesel combustion engine was used to run an electric motor that then powered the locomotive. 14. Allen, Railways of the Twentieth Century, 76. 15.

Globalists: The End of Empire and the Birth of Neoliberalism
by Quinn Slobodian
Published 16 Mar 2018

Nor that the application of market solutions to social prob­lems or the calculation of all ­human value in monetary terms has ceased, nor that we have witnessed a return to a pattern of re­distribution or a turn to Keynesian welfare state ideology. The state absorption of private debt and policies of quantitative easing have not reversed the long-­standing realities of “private Keynesianism” that exacerbate the gap between the hyperwealthy and the rest. Yet the legitimacy crises that have plagued the WTO since its creation suggest that ordoglobalism as a distinct strain of neoliberalism may have overreached.

How to Be a Liberal: The Story of Liberalism and the Fight for Its Life
by Ian Dunt
Published 15 Oct 2020

Doctors, teachers, landlords and charity workers were turned into outsourced border agents: tasked with discovering and reporting undocumented immigrants for deportation. This new approach was called the Hostile Environment. Even the name reflected the true intention. Most government initiatives bore euphemistic designations intended to mask their true purpose, like ‘quantitative easing’ or the ‘spare room subsidy.’ That wasn’t the case here. The phrase Hostile Environment was intended to be heard. It was meant to intimidate. Britain’s National Health Service was ordered to share data on its patients, so that it could be used for ‘tracing immigration offenders.’ Doctors were told to interrogate patients about their immigration status.

The Asian Financial Crisis 1995–98: Birth of the Age of Debt
by Russell Napier
Published 19 Jul 2021

The rise in foreign reserves was the counterpart for an increase in the size of the domestic central banks’ balance sheets. I was wrong to refer to this money as ‘notes’ earlier as it is created in the form of commercial bank reserves – an electronic transfer that can be transformed into banknotes at the commercial bank’s request. Today we might call this action by the central banks quantitative easing with the central banks’ balance sheets creating ever more commercial bank reserves as its holdings of government debt, in this case the debt primarily of the US government, expanded. In Asia, the local commercial banking systems responded to this increase in their available reserves in the way that one would expect, and they accelerated their loan growth and their money creation.

Unfinished Empire: The Global Expansion of Britain
by John Darwin
Published 12 Feb 2013

First, the pound sterling had a fixed value in gold, and could be exchanged for gold (a gold sovereign) on demand. Second, in practice that meant that the issue of banknotes had to be limited to a ratio of the gold reserve kept in the Bank’s vaults: approximately three pounds in paper for one pound in gold. Hence, devaluing the currency by printing more banknotes, or ‘quantitative easing’, was ruled out completely – an important reassurance to foreign holders of sterling who supplied a good deal of the City’s liquidity. Third, a deficit in the balance of payments had to be met by supplying gold in lieu – leading automatically to a reduction in available money and a rise in the bank rate to attract foreign depositors.

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown
by Philip Mirowski
Published 24 Jun 2013

Under P-IPP, for instance, private firms needed only to put up $1.67 to purchase $100 retail of “toxic assets”; further, the taxpayer provided a promise to cover 93 percent of any potential losses.34 “Shadow” or hidden bailouts were also pursued through the Federal Home Loan Bank system, stepping up Fannie and Freddie purchases, and unconventional expansion of the Fed balance sheet. In effect, the government acted to directly or indirectly provide a price floor for selected investors for all manner of financial assets, no matter how dubious or damaged. In a pinch, the central banks were brought in to do much the same thing under the euphemism of “quantitative easing.” In the few instances when the government was forced to take an equity stake as well, it did so with the proviso that it would not actually “nationalize” the companies in question, and would endeavor to sell off the stake as soon as feasible. This pattern was followed with minor variations in the United Kingdom and throughout the European Union as the financial crisis spread.

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy
by Francis Fukuyama
Published 29 Sep 2014

The United States Federal Reserve, Treasury, and Congress responded quite forcefully to its financial crisis, with a massive expansion of the Federal Reserve’s balance sheet, the $700 billion TARP, a second $700 billion stimulus package in 2009, and continuing asset purchases by the Fed under successive versions of quantitative easing. Under emergency circumstances, the executive branch was able to browbeat the Congress into supporting its initiatives. The European Union, by contrast, has taken a much more hesitant and piecemeal approach to the euro crisis. Lacking a monetary authority with the same powers as the Federal Reserve, and with fiscal policy remaining the preserve of national-level governments, European policy makers have had fewer tools than their American counterparts to deal with economic shocks.

Expected Returns: An Investor's Guide to Harvesting Market Rewards
by Antti Ilmanen
Published 4 Apr 2011

Like many others, I expected the crisis to have a long-lasting impact on this generation’s risk appetite—echoing that of the conservative “depression babies”—but the sharp risky asset rally in 2009 and early 2010 suggests that the lessons were not very memorable. The mother of all stimulus efforts succeeded in reviving animal spirits in 2009. Asset reflation was the key policy for pulling the economy back from the edge of the precipice. Major contributors were record-low short-term interest rates set by Fed policy; “quantitative easing”; bailouts, guarantees, and support programs; and fiscal expansion. This reflation policy may have worked too well to bolster financial markets but insufficiently to support job markets—the collateral damage to public-sector finances has been substantial. Box 27.1. Thoughts on the origins of the financial crisis The big picture is that the crisis followed the broad underpricing of risk in several asset classes amid persistently loose financial conditions.

Fall Out: A Year of Political Mayhem
by Tim Shipman
Published 30 Nov 2017

One observer summed up the speech, with its statist slant and red meat for the faithful, as ‘part Ed Miliband, part Daily Mail’. There was a second gaffe as well. In explaining that the economy had failed to help many since the economic crash, May had said, ‘While monetary policy, with super-low interest rates and quantitative easing, provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects.’ Her words appeared to be a breach of the convention, established when the Bank of England was granted independence in 1997, that politicians refrain from commenting on monetary policy, and it caused a temporary fall in the pound.

Basic Economics
by Thomas Sowell
Published 1 Jan 2000

However, the disastrous consequences of the resulting inflation have made this too risky politically for most governments to rely on this as a common practice. Even when the Federal Reserve System of the United States resorted to the creation of more money, as a policy for dealing with a sluggish economy in the early twenty-first century, the Federal Reserve coined a new term—“quantitative easing”—that many people would not understand as readily as they would understand a more straightforward term like “printing money.” Tax Rates and Tax Revenues “Death and taxes” have long been regarded as inescapable realities. But which of the various ways in which taxes can be collected is actually used, and which particular tax rate is imposed, makes a difference in the way individuals, enterprises, and the national economy as a whole respond.