Benn Steil

Geo-Graphics

A graphical take on geoeconomic issues, with links to the news and expert commentary.

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Showing posts for "Central Banks"

Why Does the Fed Keep Lowering Its Unemployment Threshold?

by Benn Steil and Emma Smith

For years, Fed watchers have been getting antsy as unemployment falls toward NAIRU—the Fed’s estimate of the bound below which inflation rises.  But as shown in the graphic above, each time unemployment has threatened to break through NAIRU the Fed has lowered NAIRU rather than raise interest rates.  Why? Read more »

China’s Exorbitant Detriment, Mirror Image of America’s Exorbitant Privilege, Is Costing It Dearly

by Benn Steil and Emma Smith

The so-called Exorbitant Privilege of the United States, the power to conjure the world’s primary reserve currency, is reflected in the unique combination of being deeply in debt to the rest of the world (that is, having a massive negative net international investment position, or NIIP) while earning far more income abroad than it pays out in interest (that is, having massive positive annual net investment income, or NII).  The U.S. NIIP averaged negative $7.5 trillion over FY15/16, while its NII was positive $167 billion, as shown in the top left of the graphic above.  Basically, foreigners are willing to accept a trivial return to hold dollar-denominated assets. Read more »

What If Japan Becomes Treasury’s First Currency ‘Manipulator’ in 22 Years?

by Benn Steil and Emma Smith

In May, Japanese Finance Minister Taro Aso and colleagues warned of their willingness to intervene in currency markets to counteract upward pressure on the yen.  And in the wake of Britain’s historic Brexit vote on June 23, which prompted another surge in the currency, even Prime Minister Shinzo Abe joined the chorus. Read more »

The World Economy is Running on Monetary Fumes

by Benn Steil and Emma Smith

With global growth stalling, the IMF is calling for more assertive policy action to boost it.  In normal times, monetary stimulus is—even for liberal Keynesians like Paul Krugman—sufficient to address deficient demand.  But these are most surely not normal times. Read more »

Has the Fed Become More Accommodative than the ECB and BoJ?

by Benn Steil and Emma Smith

A Japanese interest-rate strategist recently told the Wall Street Journal that “every day is like being Alice in Wonderland” since the Bank of Japan’s foray into negative deposit rates on January 29. Though the yen initially fell, as the BoJ wanted, it reversed course quickly.  The yen has of late been trading near 18-month highs.  What is going on? Read more »