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  • Commentary posted July 2, 2015 by Norbert J. Michel, Ph.D. Two Months To Go, Two Jackson Hole Conferences

    In exactly two months the Federal Reserve Bank of Kansas City will hold its annual symposium in Jackson Hole, Wyoming. It is here that, for more than 30 years, “participants from across the globe gather…to discuss important policy issues of mutual interest.” Previous topics have included labor market dynamics and unconventional monetary policy, but this year’s theme is…

  • Issue Brief posted July 1, 2015 by Salim Furth, Ph.D., James M. Roberts, Mike Gonzalez, Norbert J. Michel, Ph.D. Puerto Rico Needs Economic Freedom, Not Bailouts

    Puerto Rico is in a debt crisis, and Governor Alejandro García Padilla (D) has announced that “the debt is not payable” given the commonwealth’s large deficits and collapsing economy.[1] Presenting a government-commissioned report, economist Anne Krueger explained that the origin of Puerto Rico’s debt is decades of stimulus spending and economic stagnation: Since 1996,…

  • Commentary posted June 18, 2015 by Norbert J. Michel, Ph.D. Basel III Does Not Justify The Export-Import Bank

    I’ve mostly stayed out of the debate over reauthorization of the U.S. Export-Import (Ex-Im) Bank. My colleague Diane Katz, and some others, have run with the issue. And they’ve done a great job of pointing out the hyperbole that Ex-Im supporters rely on to make their case. Ex-Im financing supports only about 2 percent of the nation’s exports, but we’re supposed to…

  • Issue Brief posted June 4, 2015 by John Gray, Norbert J. Michel, Ph.D., Michael Sargent House Transportation, Housing and Urban Development Appropriations: The Highway to Bankruptcy

    The House of Representatives will soon consider the Transportation, Housing and Urban Development (THUD) appropriations bill. The THUD appropriations bill provides funding for the Departments of Transportation and Housing and Urban Development. The bill provides $55.3 billion in discretionary budget authority. This represents a $1.5 billion increase above the current…

  • Commentary posted June 2, 2015 by Norbert J. Michel, Ph.D. Changing U.S. Bankruptcy Law Will Not Help Puerto Rico

    Imagine a small U.S. city that owns and operates its own electric power company. The business has been poorly run for decades. But it’s backed by the government, so it’s been able to borrow huge sums of money. Much of the borrowing was done via a set of special tax-exempt bonds, with contracts that spell out exactly what the power company can and can’t do in the event it…

  • Backgrounder posted May 11, 2015 by John L. Ligon, Norbert J. Michel, Ph.D. The Federal Housing Administration: What Record of Success?

    More than 80 years ago, Congress passed a series of laws that significantly expanded the federal government’s presence in the housing finance system. These federal programs have grown and contributed to an explosion of mortgage debt over the past few decades. Homeownership rates, however, have barely changed since the late 1960s. The long-term increase in mortgage debt…

  • Commentary posted May 5, 2015 by Norbert J. Michel, Ph.D. End -- Don't Mend -- The Fed's Emergency Lending

    There’s still a widespread belief that the federal government will bail out large financial firms if there’s another crisis. Curbing the Federal Reserve’s ability to spread money around would be a great way to lower the chances of future bailouts. So it’s encouraging to learn that Senators Elizabeth Warren (D-Mass.) and David Vitter (R-La.) have joined forces in an…

  • Commentary posted April 22, 2015 by Norbert J. Michel, Ph.D. Status Quo On Housing Finance Keeps Failed System In Place

    The status quo. It’s a powerful force in Washington, D.C. No matter how destructive or inefficient an existing program, institution or system may be, it’s always safer for politicians to maintain the status quo rather than meaningfully change direction. Exhibit A: federal housing finance policy. Prior to the 2008 financial crisis, the federal government spent decades…

  • Commentary posted April 7, 2015 by Norbert J. Michel, Ph.D. Risks From Fed's Interest On Reserves Threaten More Than Monetary Policy

    The Federal Reserve started paying interest on reserves (IOR) in October 2008. Many now suggest this policy has blunted the effectiveness of its expansionary monetary policies. One possibility is that IOR has helped keep all the excess reserves the Fed created in check. That is, because banks receive interest on these excess reserves, they’re not using them to create new…

  • Commentary posted March 25, 2015 by Norbert J. Michel, Ph.D. Congress Should Not Treat Financial Companies As Public Utilities

    Last week a group of eight U.S. Senators sent a letter to Federal Housing Finance Agency (FHFA) Director Mel Watt regarding concerns over what’s known as the Common Securitization Platform. This “platform” is meant to standardize the process of issuing mortgage-backed securities (MBS) in the U.S., and the FHFA has been working on it for more than two years. The FHFA is…

  • Backgrounder posted March 20, 2015 by Norbert J. Michel, Ph.D. Financial Market Utilities: One More Dangerous Concept in Dodd–Frank

    An underreported problem with the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act is that it broadens the concept of what constitutes a public utility. In particular, Title VIII of Dodd–Frank confers a special status on firms that it identifies as financial market utilities (FMUs).[1] This change marks a dangerous shift in the relationship between…

  • Commentary posted March 11, 2015 by Norbert J. Michel, Ph.D. Has Bitcoin's Time Come? The Market--Not Public Policy--Should Decide

    Victor Hugo, author of The Hunchback of Notre Dame, famously said “All the forces in the world are not so powerful as an idea whose time has come.” Perhaps Bitcoin is just such an idea? Digital currencies are still rather new, so it’s hard to know for sure. But for all of their faults, they do seem to be catching on. In less than eight years we’ve gone from zero to…

  • Backgrounder posted February 11, 2015 by Norbert J. Michel, Ph.D. Why Congress Should Institute Rules-Based Monetary Policy

    Many economists take for granted that the Federal Reserve has contributed positively to economic stabilization in the U.S., but its track record warrants a critical appraisal. Since the creation of the Federal Reserve in 1913 the U.S. has experienced the Great Depression in the 1930s, severe inflation and unemployment during the 1970s, a major banking crisis in the 1980s,…

  • Commentary posted January 28, 2015 by Norbert J. Michel, Ph.D. Government Policies Caused The Financial Crisis And Made the Recession Worse

    In his State of the Union address last week, President Obama argued we need government polices to build “the most competitive economy anywhere.”  He’s wrong.  We need the government to leave the private sector alone so that it can build the most competitive economy anywhere. The President and his supporters don’t want to admit it, but the anemic recovery they’re happily…

  • Commentary posted January 13, 2015 by Norbert J. Michel, Ph.D. New Congress, New Opportunities

    Today I’ll be taking part in Heritage Action for America’s 2015 Policy Summit. This event, titled “Opportunity for All, Favoritism to None,” highlights key opportunities for the new Congress to roll-back the reach of government into our lives. The summit covers issues that range from financial market and energy regulations to healthcare and education reform. The best…