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George Magnus

Economist and Author

George Magnus

Economist and Author

How Trump could completely reshape the federal reserve

By George Magnus Posted on October 1, 2017November 16, 2017 In United States Federal Reserve, quantitative easing 0

First published: Prospectmagazine.co.uk, 11/11/2017

The resignation of Vice Chair Stanley Fischer reminds us that the fed faces an uncertain future

This Friday will mark ten years since Lehman Brothers filed for bankruptcy.

Whatever happened in the decade before and wherever we want to place the blame, there is no question that the US authorities were out of the blocks pretty quickly to try and contain the financial and economic carnage. They rushed through an $800 billion stimulus programme that President Obama signed into law in February 2009, acted promptly to forcibly recapitalise banks, and the Federal Reserve started quantitative easing (QE) in December 2008. As Washington politics dulled the capacity to use fiscal policy, the Fed was left as the only agency of macroeconomic stability.

By and large, it has done a good job, even if QE has had consequences that weren’t necessarily intended. But ten years on, the Fed faces an uncertain future. We knew this before the surprise resignation of Vice Chair, and second in command, Stanley Fischer last week, but his imminent departure has illuminated the problem anew.

Fischer will be a big loss. He had a stellar reputation as an academic and practical economist and central banker. He governed the Bank of Israel from 2005-13. On monetary policy, he was somewhat on the hawkish side of the Federal Reserves’s policy making committee, but was adamant about not succumbing to political pressures for financial deregulation…..

previously

previously

Can Macron get labour reforms to work?
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up next

The Brexit ghost is haunting party conferences

About

George Magnus

George Magnus

George Magnus is an independent economist and commentator, an Associate at the China Centre, Oxford University, and an adviser to some asset management companies.

He is a regular contributor to the Financial Times, Prospect Magazine and other written media, and appears regularly on BBC TV and radio, Bloomberg TV and other outlets.

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"George Magnus does not look like a prophet. Yet this is the man widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession."

- Josephine Moulds, The Daily Telegraph

George Magnus's Viewpoints Blog

  • Decoupling
  • Common prosperity: more slogan than solution
  • Whither China’s investment in the UK
  • Whatever RCEP is, it’s not the answer to the slump in world trade
  • Ofcom, CGTN and BBC row, the latest nail in Britain’s golden era coffin with China

Latest Articles

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    First published: The New European 20-03-2023

    With any luck – and we will need some – the maelstrom going through the banking sector and global financial markets will blow over without triggering the kind of meltdown we experienced in 2008.

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  • Is China turning Japanese?

    China has some advantages over Japan, such as a state-owned financial system that can prevent significant banks from failing and a closed capital account that can protect the country’s banking system and the economy from the risk of significant capital flight. This however might not prevent China from taking the same economic trajectory Japan has. Read more →

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    China’s sharp diplomatic and foreign policy edges never really went away, but may have been rested temporarily simply for reasons of expediency. Read more →

  • China’s economy will rebound. But for how long? 

    A falling population and the political scars from its zero Covid policy present warning signs for China. Read more →

  • The Economic Consequences of Xi Jinping

    Xi Jinping's China in the aftermath of the 20th party Congress is on a path populated by political determination to succeed, but also systemic economic fragility and policy instability. Read more →

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