QE | Milton Friedman om en QE3 (MF i Canada anno 2000)

Milton Friedman Bio
I 2000 holdt Milton Friedman hovedtalen ved en konferanse i regi av Bank of Canada. I ‘Spørsmål og Svar’ delen var det noen interessante spørsmål.

Om euroen (som knapt hadde feiret ett-årsdagen):

Milton Friedman:…I think the euro is in its honeymoon phase. I hope it succeeds, but I have very low expectations for it. I think that differences are going to accumulate among the various countries and that non-synchronous shocks are going to affect them. Right now, Ireland is a very different state; it needs a very different monetary policy from that of Spain or Italy. On purely theoretical grounds, it’s hard to believe that it’s going to be a stable system for a long time. …

If we look back at recent history, they’ve tried in the past to have rigid exchange rates, and each time it has broken down. 1992, 1993, you had the crises. Before that, Europe had the snake, and then it broke down into something else. So the verdict isn’t in on the euro. It’s only a year old. Give it time to develop its troubles.

Merk hvordan han får hovedproblemet til euroen inn i én setning:

I think that differences are going to accumulate among the various countries and that non-synchronous shocks are going to affect them.

Alle i Nei-til-Eu har vel lært seg uttrykket ‘usynkron’.

Om Japan og renten ved nedre grense:

David Laidler: Many commentators are claiming that, in Japan, with short interest rates essentially at zero, monetary policy is as expansionary as it can get, but has had no stimulative effect on the economy. Do you have a view on this issue?

Milton Friedman: Yes, indeed. As far as Japan is concerned, the situation is very clear. And it’s a good example. I’m glad you brought it up, because it shows how unreliable interest rates can be as an indicator of appropriate monetary policy. The Japanese bank has supposedly had, until very recently, a zero interest rate policy. Yet that zero interest rate policy was evidence of an extremely tight monetary policy. Essentially, you had deflation. The real interest rate was positive; it was not negative. What you needed in Japan was more liquidity.

During the 1970s, you had the bubble period. Monetary growth was very high. There was a so-called speculative bubble in the stock market. In 1989, the Bank of Japan stepped on the brakes very hard and brought money supply down to negative rates for a while. The stock market broke. The economy went into a recession, and it’s been in a state of quasirecession ever since. Monetary growth has been too low. Now, the Bank of Japan’s argument is, “Oh well, we’ve got the interest rate down to zero; what more can we do?” It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan
needs is a more expansive domestic monetary policy.

Første paragraf går litt tilbake til hva Paul Krugman sier om måten man leser yieldkurver på:

The reason for the historical relationship between the slope of the yield curve and the economy’s performance is that the long-term rate is, in effect, a prediction of future short-term rates. If investors expect the economy to contract, they also expect the Fed to cut rates, which tends to make the yield curve negatively sloped. If they expect the economy to expand, they expect the Fed to raise rates, making the yield curve positively sloped.

But here’s the thing: the Fed can’t cut rates from here, because they’re already zero. It can, however, raise rates. So the long-term rate has to be above the short-term rate, because under current conditions it’s like an option price: short rates might move up, but they can’t go down.

Be en kjørelærer forklare deg hvordan man over- eller underkorrigerer en bil i høy fart og konsekvensene det har. Der har du et økonomisk argument i ett nøtteskall.

Hele talen og S&S sekvensen finner du her (pdf, 12 sider)

(Hodenikk går til Alex Tabarrok)

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