Unraveling the Mysteries of Money

Harald Uhlig and I did a fun interview run by Gideon Magnus (Chicago PhD) at Morningstar. We talk about the foundations of money, fiscal theory, monetary policy, European debt problems, etc. Gideon framed it well, and Harald is really sharp. Somebody combed my hair. A cleaned up version of the interview appeared in the Morningstar Advisor Magazine (html) (A prettier pdf)



A link in case the video doesn't work or doesn't embed well (if you see "server application unavailable" the link usually still works), or if you want the original source.

The video starts a little abruptly, as it left out Gideon's thoughtful introduction (it's in the Magazine) and framing question:

Gideon Magnus: I want to discuss the value of money and the idea that money is valued similarly to any other asset. Are there really assets backing money? If so, what are they? John, please explain.

Price and volatility in the great crash

I made the following cool graph last week. (Well, I think it's cool):

Japan

I'm in Japan, one great data point on the ineffectiveness of fiscal stimulus, and the reason for blog silence for the last week or so. I will be giving a talk about asset pricing, based on the "Discount Rates" paper, at a Chicago Booth  event on Friday evening March 23 at the American Club in Tokyo, details here. Blog readers and ex-students most welcome. It's a public event, but you have to register.  

All the world's troubles in 10 minutes

Last month, John Taylor asked me to give some  lunch-time remarks at a conference on "Restoring Economic Growth" at the Hoover institution. "Oh," said John, "Just talk about what's going on in Europe and how to fix the U.S. economy. Keep it to about 10 minutes." As any economist knows, it's easy to talk for an hour and nearly impossible to talk for 10 minutes. Then I looked at my fellow panelists, who turned out to be George Schultz and Alan Greenspan. Heady company, I feel like a kid again.

The euro crisis,some emerging thoughts on how to create a run-free financial system, a review of why everything on the current policy agenda does not have a prayer of working, and a note of cation to economists'  collective habit of jumping from bright idea to policy. (There is a permanent version on my webpage)

In case you’re not reading the papers, we’re in financial crisis 3.0, a run on European banks stemming from their sovereign debt losses.

This is not high finance. European banks have been failing on sovereign debt since Edward III stiffed the Perruzzi in 1353. This is not a “multiple equilibrium,” a run of self-confirming expectations. People are simply getting out of the way of sovereign default, since it’s pretty clear that governments are at the end of the bailout rope.