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Post–1920s financial booms and busts can be traced back to monetary disorder by the Federal Reserve, argued Brendan Brown of Mitsubishi Securities International at an AEI book event on Wednesday. The "global curse of the Federal Reserve" is not only the progressive erosion of the dollar, said Brown, but the waves of irrational exuberance that have swept the world. Brown emphasized how asset price inflation and an anemic level of equity risk taken on by investors will plague a healthy capitalist economy, and he recommended six solutions to cure the curse.
Mark Calabria of the Cato Institute stressed that monetary policy must be analyzed from a historical perspective. But to reach long-term price stability, said Calabria, it is not enough for the Federal Reserve to separate itself from political ties. Walker Todd of the American Institute for Economic Research explained that the Federal Reserve's balance sheet currently has a record high level of excess reserves. He concluded that the Fed has painted itself into a corner with its policies, meaning the US economy remains vulnerable to asset price instability.
The financial crises of the past four decades have made them among the most troubled decades in international financial history. Why is this? In his new book “The Global Curse of the Federal Reserve,” Brendan Brown argues that the Federal Reserve has been a key source of instability — ironically while pursuing stability — to the world through its role as fiat currency central bank and financial manipulator. Governments are now focused on trying to control systemically important financial institutions (SIFIs). But the biggest and most uncontrolled SIFI of them all is the Fed.
In this book forum, Brown will address the Federal Reserve’s role in creating periodic bubbles and busts, both in the US and around the world, over most of its 100-year life. He will consider how central bank discretion can be replaced, and propose that we can rethink monetary order and long-term price stability through a “New Monetarist Revolution.” Two expert discussants will also review the book.
If you cannot attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Alex J. Pollock, AEI
Brendan Brown, Mitsubishi Securities International
Mark Calabria, Cato Institute
Walker Todd, American Institute for Economic Research
Alex J. Pollock, AEI
Wine and Cheese Reception and Book Signing
For more information, please contact Emily Rapp at Emily.Rapp@aei.org, 202.419.5212.
For media inquiries, please contact MediaServices@aei.org, 202.862.5829.
Brendan Brown is executive director and head of economic strategy at Mitsubishi UFJ Securities International plc. His areas of expertise include monetary theory, European monetary integration, global flow of capital, the Japanese economy, and international financial history. Brown has published many books on contemporary finance and financial history. His book “The Global Curse of the Federal Reserve” (Palgrave, 2011) stirred particular controversy, and a revised paperback edition was launched in February 2013. The second paperback edition of his “Euro Crash: The Route Back from Monetary Failure in Europe” was published in February 2012 along with Japanese and Chinese language editions. Other titles of his previous books include “Monetary Chaos in Europe 1914–31,” which was re-issued in paperback in June 2012 by Routledge (original issue in 1986). Brown is a regular contributor to financial newspapers in Switzerland and Japan and also to Bloomberg and CNBC TV. He has recently been a speaker at the Adam Smith Institute, AEI, and the Ludwig von Mises Institute. In 2012, he was Bloomberg’s best economic forecaster on the Japanese economy.
Mark Calabria is director of financial regulation studies at the Cato Institute. Before joining Cato in 2009, he spent seven years as a member of the senior professional staff of the US Senate Committee on Banking, Housing, and Urban Affairs. In that position, he handled issues related to housing, mortgage finance, economics, banking, and insurance for Senator Richard Shelby (R-AL). During his service on Capitol Hill, Calabria drafted significant portions of the Housing and Economic Recovery Act of 2008, which established a new regulatory regime for the government-sponsored enterprises. Before his service on Capitol Hill, Calabria served as deputy assistant secretary for regulatory affairs at the US Department of Housing and Urban Development. He has also held a variety of positions at Harvard University's Joint Center for Housing Studies, the National Association of Home Builders, and the National Association of Realtors. Calabria has also been a research associate with the US Census Bureau's Center for Economic Studies. He is a frequent contributor to the op-ed pages of the New York Post, National Review, and Investor’s Business Daily, and makes frequent appearances on CNBC, Bloomberg, Fox Business, BBC, and BNN.
Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is the author of numerous articles on financial systems and the organizer of the Deflating Bubble series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is the lead director of CME Group, a director of Great Lakes Higher Education Corporation and the International Union for Housing Finance, and chairman of the board of the Great Books Foundation.
Walker Todd has been an adjunct faculty member of the Cleveland-Marshall College of Law at Cleveland State University for 13 years. He has written numerous publications on banking and monetary topics, including those related to international debt, the International Monetary Fund, and the regulation of the banking system and financial markets.