unorthodox policies

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

Similar conclusions were drawn in the UK.8 In fact, ever since the ‘Greenspan put’ that followed the 1987 stock market crash, investors have counted on the fact that policymakers will hold interest rates down in the wake of a market crash.9 Central banks proved unable (some did not even try) to unwind the asset purchasing programmes implemented in response to the 2008 credit crunch. Part of the reason for the ongoing necessity of unorthodox monetary policy was the refusal of many governments – obsessed with the threat posed by the bond vigilantes and their maxims about ‘sustainable’ rates of borrowing – to use government spending to boost productivity and investment.10 But another, even more significant, factor was the sheer weakness of the global ‘recovery’ from the financial crisis itself.

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The most propitious time for these firms to access such investment was in the wake of a crisis that had depressed returns and when investors were desperately seeking out the next big thing – for the tech companies, this meant either the tech crisis of the early 2000s, after which Google launched its IPO, or the financial crisis of 2008, after which many companies went public, including Facebook and Twitter.17 The cheap capital – in part a result of unorthodox monetary policy – swashing around the global economy in the wake of a financial crisis that had depressed returns everywhere provided the perfect conditions for these plucky tech companies to become the behemoths we know today. Just a few years ago, Amazon was struggling to turn a profit – now it is completely unassailable.

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

These countries also employed macroeconomic and financial controls that kept their currencies competitive in world markets. All of them undertook industrial policies to nurture new manufacturing sectors and reduce their economies’ dependence on natural resources. And each country fine-tuned the specifics of its strategy beyond these generalities. Many observers of Asia’s experience and the success of its “unorthodox” policies conclude that these cases have proved standard economics wrong. This interpretation is incorrect. It is true that many of Asia’s economic policies do not make sense in light of economic models with well-functioning markets. But these are evidently the wrong models to use. There is very little in China’s or South Korea’s strategy that cannot be explained by models that take on board some of the major second-best challenges these economies faced.11 When economists confront the way markets really work—or fail to work—in low-income settings with few firms, high barriers to entry, poor information, and malfunctioning institutions, these alternative models prove indispensable.

Radical Cities: Across Latin America in Search of a New Architecture
by Justin McGuirk
Published 15 Feb 2014

Its effectiveness has diminished in recent years (following a swing to the right in the 2004 local elections), but Porto Alegre is now a touchstone of bottom-up urban management, and the policy has been implemented by more than 140 municipalities across the country, and 3,000 across the world. Also in Brazil, we might cite Curitiba, where in the 1970s and 80s Mayor Jaime Lerner (an architect) brought in a series of often unorthodox policies that transformed its public transportation and made the city, in current parlance, more sustainable. Most famous of these is the so-called Bus Rapid Transit system, which revolutionised mobility in the city, but his reforms also included offering slum dwellers free bus passes and groceries in return for collecting their own trash.

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

Moreover, the more forceful and well targeted that any initiatives aimed at macro-stabilization and job creation are, the lighter will be the burden placed on monetary policy, with all its distributive wrinkles. So much for the theory. Researching the distributive detail of monetary policy – and especially of unorthodox monetary policy – is difficult. There are many channels and contradictory forces to consider, some of which – such as perceptions of job security and financial anxiety – do not lend themselves well to quantification. Nevertheless, much work has been done in this area, and the Bank of England itself undertook some of the most detailed study.

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Furthermore, a distinctly unequal initial distribution of income and wealth, and the manifest variation in absolute monetary gains, rather than percentage ones, left plenty of room for subjectivity and misinterpretation to adversely colour perceptions and influence public opinion about the central bank’s policies. Nor was enough done by the Bank or by successive governments to combat the development of such misperceptions. In conclusion, the issue was not so much what the Bank did and how it did it, it was the initial distributional context within which its unorthodox policies were forced to operate. coming up short The economic record of the 2010–15 coalition government is unimpressive. The pace of overall recovery was sluggish both in a historical context and relative to other economies at the time. Confidence remained low, and uncertainty and economic insecurity high.

Straight Talk on Trade: Ideas for a Sane World Economy
by Dani Rodrik
Published 8 Oct 2017

The critical challenge facing mainstream political parties in the advanced economies today is to devise such a vision, along with a narrative that steals the populists’ thunder. These center-right and center-left parties should not be asked to save hyperglobalization at all costs. Trade advocates should be understanding if they adopt unorthodox policies to buy political support. We should look instead at whether their policies are driven by a desire for equity and social inclusion or by nativist and racist impulses, whether they want to enhance or weaken the rule of law and democratic deliberation, and whether they are trying to save the open world economy—albeit with different ground rules—rather than undermine it.

Platform Capitalism
by Nick Srnicek
Published 22 Dec 2016

This glut of corporate savings has – both directly and indirectly – combined with a loose monetary policy to strengthen the pursuit of riskier investments for the sake of a decent return. At the other end, tax evasion is, by definition, a drain on government revenues and therefore has exacerbated austerity. The vast amount of tax money that goes missing in tax havens must be made up elsewhere. The result is further limitations on fiscal stimulus and a greater need for unorthodox monetary policies. Tax evasion, austerity, and extraordinary monetary policies are all mutually reinforcing. To define the present conjuncture, we must add one further element: the employment situation. With the collapse of communism, there has been a long-term trend towards both greater proletarianisation and greater numbers of surplus populations.33 Much of the world today receives a market-mediated income through precarious and informal work.

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.

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

The Treasury was the plum job, but there was only one post available that year and the top candidate, a bright classicist from Oxford University called Otto Niemeyer, took it. Keynes, therefore, had to settle for the India Office. Had Keynes come top and got into the Treasury, he might have stayed. We might never have had the Keynesian revolution in economics. Coming full circle, in the 1920s and 30s, when struggling to push his unorthodox policies arguing for government spending against the orthodox ‘Treasury view’, Keynes’s principal opponent in the Treasury, and later in the Bank of England, was none other than Sir Otto Niemeyer, GBE, KCB. According to the Oxford Dictionary of National Biography, he was ‘the outstanding Treasury official of the post-war years’.

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

The Treasury was the plum job, but there was only one post available that year and the top candidate, a bright classicist from Oxford University called Otto Niemeyer, took it. Keynes, therefore, had to settle for the India Office. Had Keynes come top and got into the Treasury, he might have stayed. We might never have had the Keynesian revolution in economics. Coming full circle, in the 1920s and 30s, when struggling to push his unorthodox policies arguing for government spending against the orthodox ‘Treasury view’, Keynes’s principal opponent in the Treasury, and later in the Bank of England, was none other than Sir Otto Niemeyer, GBE, KCB. According to the Oxford Dictionary of National Biography, he was ‘the outstanding Treasury official of the post-war years’.

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

In a similar vein, I believe an “extreme” policy stance, such as the one the FOMC has pursued since late 2008 and indicates that it will continue until late 2014, generates expectations that the economy is much worse than it might otherwise appear. 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.

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

The IMF called it the most effective debt-relief programme since US president Roosevelt’s plan in 1933 kept 800,000 Americans in their homes at an eventual profit to his government. There were several other schemes to support householders. The IMF called a special conference to learn lessons from Iceland’s unorthodox policies. ‘Iceland set an example by managing to preserve, and even strengthen, its welfare state during the crisis,’ concluded the IMF’s Nemat Shafik. So Iceland bailed out its own people rather than the moronic foreign creditors of its insane banks. And the result, to date, is a growing economy. But the bailout has come with a caution.

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

Chapter 7 • Milton Friedman163 Attempts to follow particular measures of the money supply in the UK in the 1980s ended after it was shown that direct and predictable links between the growth of the money supply and the rate of inflation broke down. This form of monetarism was replaced first by exchange rate targeting and then by inflation targeting. Some of Friedman’s unorthodox libertarian policy proposals – such as school vouchers and a volunteer army – have gained mainstream acceptance while versions of a negative income tax have found a home in the UK’s Working Tax Credit and the US Earned Income Tax Credit. Others, such as the legalisation of drugs and prostitution, may be ideas whose time is yet to come.

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

To some extent, the controversy, the plaudits, and the blame are all just a consequence of the new postcrisis role of central banks: despite the power shift away from EU institutions (see chapter 2), the ECB is the only one that grew in power (in addition to the newly created ESM). The enhanced influence of central banks is not confined to Europe but is really common in all big industrial countries. The European discussion has its parallels in the United States, where the Fed and especially its chairman were attacked by Republicans in the 2012 election. Unorthodox policies required choosing to buy particular assets, with a redistributional consequence. There was a move from monetary policy to credit policy and, in effect, for the central bank to be making fiscal policy.69 This same criticism has been made in Europe and comes from some powerful and influential former policy makers.

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

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.

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

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.

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

Just as ECB research used to dwell on the reasons behind persistent inflation in certain sectors or geographies of the European economy, the central bank should now spend more time researching the causes of unduly low inflation and what can be done about it. The ECB undertook a valuable research exercise in 2015 and 2016, which showed that unorthodox monetary policy (such as quantitative easing) helped to expand aggregate demand in these periods of economic weakness.6 If central bankers can anxiously scan the horizon for wages that rise too fast and threaten to push prices higher, they can surely do so for persistently low inflation, deflation, and disinflation

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

The president figured he was going to get the credit or blame for the economy’s performance, so he should be able to decide on the money supply.48 He announced Arthur Burns’s nomination on October 17, 1969, and from the start, made clear to Burns that he had little regard for “the myth of the autonomous Fed.”49 Like many economists who came of age during the Great Depression, Burns believed government policy had an obligation to prevent a recurrence of the unacceptably high levels of unemployment that followed and should focus on that task above all else. By the time Burns was nominated, however, inflation was on a sharp upward turn. He began advocating for an unorthodox “incomes policy” that would use wage and price controls, not interest-rate increases, to hold down inflation. Nixon was furious when he read press reports about the proposal, which he didn’t support. After White House adviser John Ehrlichman delivered a stern admonition from the president, Burns’s reply revealed his sense of devotion to Nixon: “The idea that I would ever let a conflict arise between what I think is right and my loyalty to Dick Nixon is outrageous.”50 By the summer of 1971, the economy was six months into a recovery, and inflation held at a still-high 4.4 percent.

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
by Marc Levinson
Published 31 Jul 2016

Armed with only an undergraduate degree, Prebisch began studying the relationship between his country, thinly populated and heavily reliant on agriculture, and the advanced economies of Europe and North America. Argentina, he discovered, was far more prone to boom-and-bust cycles than Europe because of its dependence on foreign borrowing and its undiversified, resource-driven economy. He concluded that Argentina’s distinct conditions required unorthodox economic policies rather than the classical free-market ideas preached—although not necessarily practiced—in more industrialized countries. A formal man who detested sports and had no hobbies, Prebisch threw himself into economics, working first for a powerful farm lobby and then government. After a rocky start to his career—twice, while on official business abroad, he was forced to pay his own way home when a change in government terminated his appointment—Prebisch’s wide contacts led to a position as undersecretary of finance at the age of twenty-nine.

New Laws of Robotics: Defending Human Expertise in the Age of AI
by Frank Pasquale
Published 14 May 2020

Given pandemic threats, a “Public Health New Deal” should also be on the table.64 As the massive interventions in the economy by central banks in 2020 showed, even establishment voices stop worrying about debt when an emergency strikes. A pandemic shutdown was an immediate and urgent stimulus to action, but it should not be the only threat to spark unorthodox monetary policy. For those left jobless by advances in technology, the rise of AI and robotics is also an emergency. It deserves a commensurate response. Of course, if inflation (rather than debt level) becomes the key constraint on government spending, there will be controversial decisions to make about the measurement of prices, and which prices matter.

The Divided Nation: A History of Germany, 1918-1990
by Mary Fulbrook
Published 14 Oct 1991

German troops marched over the Rhine to reoccupy the demilitarized left bank, in clear defiance of the Versailles Treaty. This served to boost Hitler's domestic popularity considerably, and occasioned only very limited criticism from abroad. From then on, foreign policy moved into a new gear. Under the Four Year Plan, presided over by Goering, rather unorthodox economic policies were initiated, which marked a clear break with Hjalmar Schacht's notions of economic management. Schacht's resignation as Minister of Economics in November 1937 came partly as a result of conflicts between the Economics Ministry and Goering's office. There were similar conflicts between Nazis and more traditional conservative nationalists on the diplomatic front.

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

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. The hope is that other long-term interest rates (e.g., on mortgages and corporate debt) will follow, because interest rates on government debt tend to be a benchmark by which all other rates are set. A few empirical papers argue that these unorthodox central bank policies have accomplished more than meets the eye.5 Nevertheless, the stunning challenges that the Bank of Japan and the ECB have faced in lifting inflationary expectations suggest that unconventional policies are vastly less effective than plain vanilla interest rate policy might have been, if unfettered negative rate policy were fully possible—that is, if all the institutional, legal, and other barriers were cleared away, as we discuss in chapters 10 and 11.

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

However, over the years, these bankers have shown a willingness to innovate. 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.

How Markets Fail: The Logic of Economic Calamities
by John Cassidy
Published 10 Nov 2009

The financial stabilization programs that were adopted in the United States and elsewhere involved three elements: a pledge not to let systemically important institutions collapse; a commitment to use taxpayers’ money to socialize some of the losses that had been incurred; and an endorsement of unorthodox central bank policies aimed at kick-starting the credit markets. All of these policies were based on the belated recognition that if private decision-makers were left to react to market incentives on an individual basis, they would pursue collectively self-defeating actions, such as withdrawing their money from financial firms and refusing to lend.

Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes
by Mark Skousen
Published 22 Dec 2006

Canadian economist Lorie Tarshis, the first to write a Keynesian textbook, warned that a high rate of saving is "one of the main sources of our difficulty," and one of the goals of the federal government should be "reducing incentives to thrift" (Tarshis 1947, 521-12). Keynesian economist Hyman Minsky confirmed this unorthodox approach when he said, "The policy emphasis should shift from the encouragement of growth through investment to the achievement of full employment through consumption production" (Minsky 1982,113). Of course, all of this Keynesian theory goes counter to traditional classical growth theory that a high level of saving is a key ingredient to economic growth.

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

In the developed world, the list of nations with relatively good prospects includes Germany and the United States; in the large class of middle-income nations, much of eastern Europe and Mexico seem well poised for growth; among low-income nations, the relative stars are likely to emerge from South Asia, East Africa, and parts of Southeast Asia. That is how these nations stack up at this moment in time—March 2016—but the rankings could change suddenly with an untimely assassination, an unorthodox shift in economic policy, a startling invention, or some act of providence. Also, if a global recession does materialize this year, as currently feared, it will be difficult for any country to achieve a “good” growth rate in the near future. But this phase too shall pass, given that global recessions typically last a year, and the outlook here is for the next five years.

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

In the recent crisis, the Fed pushed the statutory envelope, assuming various powers, implied and otherwise, to swap safe government bonds for toxic assets and, more radical, to purchase toxic assets and hold them on its balance sheet. Such measures, even if they prove effective, amount to an end run around the legislative process. Bernanke’s response, orchestrated by himself and other central bankers, offers a glimpse of the unorthodox ways in which monetary policy can be used—and perhaps abused—to prevent a crisis from spiraling out of control. Deflation and Its Discontents Since the end of the Second World War, the American business cycle has followed a fairly predictable path. The economy would emerge from a recession, grow, and eventually boom; the Federal Reserve would then begin to bring the cycle to a close by hiking interest rates to keep inflation in check, and more broadly, to keep the economy from overheating.

The Man Who Knew: The Life and Times of Alan Greenspan
by Sebastian Mallaby
Published 10 Oct 2016

Upon hearing of Blinder’s likely arrival, Greenspan asked David Mullins, the outgoing vice chairman, to check into Blinder’s writings. Mullins quickly discovered that in one crucial respect, Blinder was actually the anti-Volcker. In a book published seven years earlier, Blinder had trumpeted an unorthodox complaint: American policy makers erred “by exaggerating the perils of inflation.”5 Rising prices were “more like a bad cold than a cancer on society,” Blinder maintained; and whereas the Fed under Volcker and Greenspan had elevated the fight against inflation above concerns for employment, Blinder argued for parity.6 “Unemployment represents a waste of resources so colossal that no one truly interested in efficiency can be complacent about it,” he lectured; it caused revenue losses that ran into the trillions.7 Moreover, one argument commonly advanced for prioritizing inflation—that it was extraordinarily costly to reverse—did not impress Blinder in the least.

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