A Quote by Ben Bernanke
The more guidance a central bank can provide the public about how policy is likely to evolve the greater the chance that market participants will make appropriate inferences.
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It's important for market participants to have a sense of how we think about the economy and the appropriate path of policy, to look at incoming data, and to form their own judgments as to whether or not changes in policy would be appropriate.
If the public understands the central bank's views on the economy and monetary policy, then households and businesses will take those views into account in making their spending and investment plans; policy will be more effective as a result.
However, you have to recognize that regulations will never be completely successful and they will always be full of holes. You must constantly be ready to fill new holes. Actually regulation should be kept to a minimum, but there has to be some cooperation between market participants and authorities - as was the case in the early postwar years. The Bank of England was a very successful regulator by cooperating with market participants. This cooperative spirit was broken by the market fundamentalists.
Financial market participants appear to recognize the FOMC's data-dependent approach because incoming data surprises typically induce changes in market expectations about the likely future path of policy, resulting in movements in bond yields that act to buffer the economy from shocks.
In stabilizing the macroeconomic environment, we have focused on aligning fiscal with monetary policy and nudging the central bank toward the objective of more market-determined exchange rates.
A government cannot be expected to allow independence to its central bank unless that bank is also accountable to it and to the wider public. That is, the central bank must be able to be judged on whether or not it has achieved its agreed objective.
Timing is everything. Tell me how a young man spends his evenings and I will tell you how far he is likely to go in the world. The popular notion is that a youth's progress depends upon how he acts during his working hours. It doesn't. It depends far more upon how he utilizes his leisure...If he spends it in harmless idleness, he is likely to be kept on the payroll, but that will be about all. If he diligently utilizes his own time...to fit himself for more responsible duties, then the greater responsibilities - and greater rewards - are almost certain to come to him.
We need to revise our economic thinking to give full value to our natural resources. This revised economics will stabilize both the theory and the practice of free-market capitalism. It will provide business and public policy with a powerful new tool for economic development, profitability, and the promotion of the public good.
Classroom teachers can play an active role in instructing children about appropriate conduct online, even where there is no school policy on the issue. By promoting public discussion about their lives on the Internet, teachers and students can work together to share advice and develop 'rules to type by' or similar Internet-minded guidance.
Now it is worth noticing two things about the private substitutes that I have described. The first is that in the aggregate they are probably much more expensive than would be the implementation of the appropriate public policy. The second is that they are extremely poor replacements for the missing outcomes of good public policy. Nevertheless, it is plain that the members of a society can become so alienated from one another, so mistrustful of any form of collective action, that they prefer to go it alone.
The central bank needs to be able to make policy without short term political concerns.
The lesson for Asia is; if you have a central bank, have a floating exchange rate; if you want to have a fixed exchange rate, abolish your central bank and adopt a currency board instead. Either extreme; a fixed exchange rate through a currency board, but no central bank, or a central bank plus truly floating exchange rates; either of those is a tenable arrangement. But a pegged exchange rate with a central bank is a recipe for trouble.
The longer you hang in there, the greater the chance that something will happen in your favor. No matter how hard it seems, the longer you persist, the more likely your success.
Even the National Bank of Romania doesn't have the huge resources needed to intervene in the market and keep the leu at an acceptable level, because they're drawing close to a floor below which the bank's reserves can't drop. The central bank has to wait for a moment of calm to efficiently conduct its interventions.
Global central banks are working hard to lift their economies through an aggressively easy monetary policy. The ECB [European Central Bank] and BOJ [Bank of Japan] are buying tens of billions of bonds and other financial securities each month in an effort to stimulate their economies, which is pushing down rates everywhere, including in the U.S.
A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army. We must not let our rulers load us with perpetual debt.
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