Financial markets discussion
On Wed Sept 24th at 2:30pm the Hunter Economics Department will host an informal panel discussion on the current turmoil in financial markets. Room to be announced here soon.
Posts
Liquidity Trap? Currency crisis?
Remember the term 'liquidity trap' from your Eco 100 discussion of the Great Depression? Paul Krugman fears we might be entering one right about now.. based upon amongst other things, the sudden one day dive in yields on US treasuries: This suggests investors flight to safe investments even if they yield very little at all, which in turn clearly signals their lack of interest in making most other types of loans that would normally be part of the money creation process. In such situations the Federal Reserve loses their ability to control the money supply. update 9/18: Paul Krugman checks the markets again this morning and finds that the return on the three month treasury is negative ! People are willing to pay $100 today for a treasury bill that pays less than $100 in three months time! As he points out, this didn't even happen in the Great Depression. No surprise then to hear this 3am announcement that "the world's biggest central banks planned to pump...