The limits of monetary policy - a dinner discussion
Held on Thursday, November 10, 2016
With support from Ruffer LLP
There is a long-running debate (and endless controversy among economists) on the pros and cons of our current (over-) reliance on monetary policy.
Is there really a ‘zero-bound’ for interest rates? What happens when we go beyond it (after all, there is now almost US$13 trillion of government bonds out there yielding less than zero)? And is there any evidence that cutting interest rates to unimaginable levels actually changes individual or corporate behaviour – for the better or for the worse?
Beyond that, there is the (arguably, more fundamental) issue of ‘helicopter’ money.
Why do we worry about ZIRP or NIRP when (it is said) we could just give everyone US$X or US$Y by crediting their bank accounts – or by leaving piles of dollar bills at street corners?
We at the CSFI don’t normally worry our pretty heads about macro (or micro-) economics. But what happens to monetary policy is crucial for banks, insurers, asset managers – and their clients. I am, therefore, delighted that Jamie Dannhauser (Ruffer’s in-house Economist) has agreed to kick off a discussion with his perspective.
Joining him to discuss the complications and controversies will be:
- Roger Bootle, who has just stepped down as Executive Chairman of Capital Economics (though he will continue as Non-Executive Chairman), in order to expend more time on writing, speaking and influencing policy-makers. He is also a Specialist Adviser to the House of Commons Treasury Committee.
- Chris Giles, Economics Editor for the Financial Times and a former winner of the Wincott Foundation’s Financial Journalist of the Year.
- James Ferguson, founding partner at MacroStrategy Partnership and former head of strategy at Westhouse Securities Limited and chief strategist at Pali International.
This is an important, if difficult, area, and I am sure it will provoke a lively discussion – about the merits of helicopter money generally, about how it might work in practice, and about alternative forms of stimulus.