The Fed’s bond purchases make matters worse by enabling Washington’s fiscal irresponsibility. The Federal Reserve’s monetary policy is broken. Normalization of interest rates has been needed for years to allow markets, not regulators, to allocate capital. But with interest rates at 5.5% and the dollar strong, the inflation battle must shift to ...

WASHINGTON, DC – Faced with growing threats to biodiversity and the natural systems that are crucial to all economies, conservation efforts that merely stop nature loss are no longer enough. Rather, we need to reverse the decline, which means changing how we produce and consume. The Earth's biodiversity and the services provided by ...

WASHINGTON, DC – Expanding people's access to finance, reducing the cost of digital transactions, and channeling wage payments and social transfers through financial accounts will be vital to mitigating recent economic setbacks in developing countries. Governments and the private sector can help further this transformation in several ways. ...

WASHINGTON, DC – According to the World Bank’s latest forecast, global growth is projected to slow by 2.7 percentage points between 2021 and 2024 – more than twice the deceleration between 1976 and 1979. To avoid a prolonged period of stagflation, policymakers worldwide must focus on five key areas. Just over two years after COVID-19 caused ...

WASHINGTON, DC – When schools around the world moved online due to COVID-19, children in developing countries suffered the most. Even though digital learning does not produce the same outcomes as in-person education, technology used effectively can close educational gaps and prevent learning loss. As the third year of the COVID-19 ...

WASHINGTON, DC – The current approach to COVID-19 vaccination – using limited vaccine supplies to protect low-risk populations in a handful of countries while low- and middle-income economies wait indefinitely for doses – doesn't make sense for anyone. A successful global vaccination effort must be equitable, and it must stand on three ...

From education to entrepreneurship, global recovery efforts need to pay particular attention to the needs of women and girls. Policymakers haven't always considered how economic shocks impact women and men differently — or how governments should respond. When the 2008 recession hit, few asked how stimulus measures would affect women compared ...

This economic crisis is even harder than usual for the worst-off. Concessions from creditors can ease recovery. The Covid-19 pandemic has taken lives and disrupted livelihoods in every corner of the globe. It has knocked more economies into simultaneous recession than at any time since 1870. According to World Bank estimates, in its first year ...

WASHINGTON, DC – Governments increasingly recognize that economies can reach their full potential only with the full participation of both women and men. To help countries achieve this goal, the World Bank Group is focusing on four key areas in particular. Girls are attending school in greater numbers than ever before, and women are ...

It’s hard to imagine central banks getting even wilder, but never underestimate government expansionism. That’s the red flag raised by the Financial Times with its headline Wednesday: “Helicopter drops (of money) might not be far away.”

Columnist Martin Wolf argues that, if the fiscal authorities are unwilling to behave sensibly by expanding public investment, the central banks should step in: “Give central banks the power to send money, ideally in electronic form, to every adult citizen... (generating) a ...

The stage was set for the 2016 market slide well before the Fed’s long overdue rate increase. The market turmoil of 2016 continues, with financial stocks getting hammered this week and markets still testing high-yield bonds and technology darlings. Some blame the Federal Reserve’s decision in December to inch the federal-funds rate up by a ...

The central bank needs to try something different—and has serious options to get median income rising. Last week’s dismal jobs report for September will throw an indecisive Federal Reserve deeper into paralysis. For months the central bank hinted that it would end its near-zero interest rate policy, before backing down amid fears of soft ...

So the economy isn’t ready to withstand a quarter-point rate hike even after seven years of stimulus? Like Lucy in the classic “Peanuts” comic strip, the Federal Reserve Thursday invited a running kick of the football—the first interest-rate hike in nine years—only to pull back at the last minute. The Fed cited recent “global economic ...

PROTESTERS AT the Federal Reserve's August retreat in Jackson Hole confronted the assembled officials with a polarizing banner: "Do black lives matter to the Fed?" I've been a major critic of the Fed, but the problem is the Fed's policies, not its motives. It cares a lot about those with lower incomes or no jobs.
The Fed's progressive critics ...

Inflation is the main subject of the ongoing Federal Reserve conference in Jackson Hole. That’s a great topic because confidence in the stability of prices and the dollar is one of the most important ingredients for fast economic growth. It ranks with such growth luminaries as property rights, low tax rates on a broad base, a liberal ...

Yuan devaluation is part of a shift away from the dollar bloc that has dominated Asia since World War II. On Tuesday China stopped supporting the yuan’s tight link to the strong dollar, allowing its currency to weaken by 3% through Friday. That’s not large by foreign-exchange standards—Japan’s yen has fallen by 35% since 2012. Yet the ...

To succeed in its dual mandate of price stability and maximum employment, the Fed must offer consistent rules for which it takes responsibility. Its current view of its role appears to be to expand its regulatory structure, stay as large as possible for as long as possible and avoid causing any losses for the overheated bond market. This ...

ESTABLISHMENT ECONOMICS should be having a complete nervous breakdown. It claimed that growth and fairness could be created through government spending, zero or negative interest rates and central bank bond-buying. Applied massively, those policies are working in reverse, causing repeated downward revisions to growth expectations and ...

The decision to hike rates may get harder as the year progresses. Financial markets applauded the Federal Reserve this week when it straddled the fence on rate hikes, but the bigger message was the downgrade in its growth forecast to 2.5% in 2015. That means another year stuck in the weak “new normal” that began ...

The European Central Bank embraces quantitative easing despite the sorry track record of ‘helicopter money.’ Central banks in the U.S., Japan and Europe are trapped in a loop. They are fully invested in the theory that zero rates and bond buying are stimulative and add to inflation, yet growth, inflation and median incomes keep ...

WORLD INFLATION IS FALLING, along with oil prices. This shouldn't have caught financial markets by surprise, since private-sector credit growth remains very slow. As discussed in past columns, the Federal Reserve is creating IOUs called bank reserves but is not fostering new money in the private sector or adding to inflation. The slowdown ...

With disinflation spreading, we're lowering our 2015 forecast for world dollar GDP. We had thought that global GDP would grow enough in 2015 to provide a platform for some further growth in U.S. corporate earnings, a key issue for equity prices and asset valuation. However, we now think world dollar GDP will decline 0.4% to $76.7 trillion in ...

ONE OF THE MOST important functions of constitutional government is to limit the government's power and guide it in useful directions, not for self-aggrandizement. Another is to facilitate sound money, which is at the core of free markets and property rights, central tenets of the rule of law and the ability of a country to ...

The stock-market turmoil is fresh evidence that the central bank must return to market-based monetary policy. The Federal Reservehas been a crucial bulwark of America’s market economy. Yet with interest rates near zero since the 2008 financial crisis and the Fed now controlling huge swaths of the financial industry, a central-banking approach ...

Instead of tackling a complex new investment mission, the Fed should establish a clear portfolio wind-down process. The Federal Reserve recently made clear it is planning to maintain its enormous balance sheet—roughly $4.5 trillion in Treasurys and mortgage-backed securities—for many years, while keeping interest rates near zero at least ...

INTEREST RATE HIKES are the most discussed topic in financial markets, but the bigger problem–the elephant in the room no one wants to discuss–is the likelihood that returns on capital in coming decades will be substantially lower than past returns. Since the 1980s normal returns have been enhanced by the long decline in bond yields, fast ...

The U.S. has set aside the doctrine of “peace through strength,” relying instead on hope and multilateralism. The New York Times captured the consequences of this in its June 23 headline on Iraq: “Reality Overtakes Hope.” That’s just the latest evidence of policy failure.

Russia has reabsorbed Crimea and may control parts of eastern Ukraine, scaring other neighbors. A tape recording recently caught the foreign minister of Poland–the U.S.’ best friend in eastern Europe–telling a former finance minister over dinner that ties with the U.S. are ...

The Federal Reserve is ending its policy known as quantitative easing by tapering its bond purchases and the buildup of idle bank reserves. This is already helping bank lending. The prospect of a further gradual normalization of Fed policy should lift economic growth above its devastating “new normal”–the slow GDP growth and high unemployment ...

Bank lending rose sharply in January and February. At this rate we may see real growth. The Federal Reserve started tapering its bond purchases at the beginning of the year and is on track to end them by October. That's good news for small businesses, jobs and living ...

Interest rates have been held near zero for so long they have begun to seem normal. But that’s a delusion. It’s no more possible to run a market economy on free credit than it would be to run one on free gasoline or free labor. It works for the government and the well-connected but not for the rest, especially small businesses and new workers. ...

Stifling economic growth and benefiting insiders with Washington access do not help the middle class. Inequality is the wedge issue that Democrats hope will carry them through the 2014 and 2016 elections, neutralizing the ObamaCare fiasco. The issue has popular appeal because median incomes (after inflation) have been falling throughout ...

The Federal Reserve is building the tools it will need to exit from its extraordinary monetary policy. Just as the market was against the Fed tapering, it will worry periodically about rate hikes, but we think the Fed is gradually laying the groundwork.• The three-month Eurodollar futures market now expects a 1.2 percent Fed funds rate ...

Wednesday’s Wall Street Journal front page has an article on non-bank lending to traditional banking areas. “He figured a bank would put him through weeks of aggravation, then reject him. He turned instead to one of the nonbank, short-term lenders that have been gaining traction…”We think Washington’s combined monetary and credit/regulatory ...

We think most markets are fully priced waiting for a sense of direction on U.S. and global growth. Recent data has been moderate, beating our expectations. The ISM orders for November were strong, and today’s retail sales showed November up 0.7 percent from October, in part due to heavy discounting.Initial jobless claims rose but the four ...

We think the global growth outlook is deteriorating due to lack of structural reforms, under-investment and contractionary U.S. monetary policy.Interest rates are set below-market, limiting credit growth and channeling it to the government and established corporations.This rationing process causes the same problems experienced with other types ...

We think U.S. and global growth prospects are deteriorating under the weight of bad monetary policy, making equities vulnerable until policies improve.Today’s PPI declined 0.2% month-over-month for October. Yesterday’s CPI data showed month-over-month inflation at -0.1% for October and year-over-year inflation slowing to 1%.Industrial ...

On Saturday the New York Times had a very interesting write-up (buried on page B6) of Harvard University professor Larry Summers’ Friday panel discussion with Ben Bernanke at a Washington International Monetary Fund conference. The article, “Candid Criticism of the Fed,” quotes Summers as saying, “There’s no evidence of growth that is ...

A staggering $250 billion per month, 80% of spending, runs on autopilot without congressional control. At its core, the shutdown is part of a much bigger battle to restrain the federal government. It is spending $3.6 trillion per year without a budget, and its expenditures are expected to increase rapidly in the years ...

Republicans can't force major changes to ObamaCare. But they can make Democrats vote for bigger government. When the debt limit expires later this year, it will provide one of the few remaining opportunities to slow the Obama administration's expansion of government. The $831 billion 2009 stimulus package has morphed into trillions of dollars ...

Business loans, auto sales and hourly earnings are up. The Federal Reserve needs to exit from monetary extremes. The U.S. economy may finally be in a position to accelerate above the so-called new normal—the painfully slow 2% average growth rate that has persisted since ...

The stock market is soaring. Yet real median income has fallen 5%, unheard of except during the Great Depression. Former Federal Reserve Chairman Paul Volcker said in a speech to the Economic Club of New York on Wednesday that the Fed should not be asked to "accommodate misguided fiscal policies" and "will inevitably fall short." He outlined ...

The president proposes more debt and bigger government, despite ample evidence that the approach doesn't work. Presidents use their budgets to set priorities, make choices and provide leadership. Budgets are one of the most important tools for guiding and managing a large, ...

The Senate fiscal-cliff bill still means higher taxes on every working American. So much for just going after 'the rich.'

Whatever ultimately emerges from the fiscal-cliff negotiations over the past 48 hours, the country will survive. But the damage can't be undone. Taxes are going up for all working Americans. And so is the size of government. ...

Whoever wins, entrenched defenders of big government will fight to protect high levels of spending.

Voters go to the polls with an unusually clear choice in U.S. economic policy: We can double down on the current approach in the hope that bigger government will create jobs, or we can adopt growth policies that are more market-oriented and less government-centered. ...

From Greece to Washington to New York state, there's no effective mechanism to control spending.

Across Europe and the United States, the fiscal crisis is setting up an epic battle among government services, pensioners, government employees, creditors and taxpayers. There is simply not enough money coming in to pay all the promises politicians have made. The shortfalls ...

Investors are looking for a home for trillions in idle Federal Reserve-generated dollars, and a little reform in Europe might attract them


The world is waiting anxiously for Europe to use a bazooka on its debt problems—i.e., to make such a strong financial commitment to European banks and bonds that they become investable again, unfreezing markets. ...