Fireside Chat, Interview, Conference Presentation, Statement
MI Forum: Hall of Mirrors
- The Milken Institute forum is scheduled for Tuesday, January 20th, featuring John Hope Bryant moderated by Paul Irving, with registration expected via email or the institute's website.
- Michael Hiltzik's book Big Science, Ernest O. Lawrence, The Cyclotron and the Birth of the Military-Industrial Complex is expected to be published later this year.
- Barry Eichengreen has three new books scheduled for publication over the coming weeks, including Hall of Mirrors and two works focusing on the Korean and Chinese economies.
- The euro is projected to indefinitely interfere with European recovery due to the perception that monetary union is irreversible, likened to "Hotel California."
- The outcome of the Greek election on January 25th regarding potential exit from the Euro is described as uncertain and fearsome.
- A serious misjudgment regarding the consequences of a country leaving the Euro was made, creating high uncertainty and fearsome outcomes.
- Stabilizing the money supply and addressing banking issues is deemed necessary but insufficient to prevent economic catastrophe without lessons from the Great Depression.
- Spontaneous economic recovery does not occur; government intervention is required to stabilize the economy, contradicting the view that government should simply withdraw.
- The economy in 2009 would have been infinitely worse without intervention, as allowing it to run its course was deemed disastrous.
- Federal Reserve monetary policy prior to the crisis was too loose for too long, fueling the housing bubble and excessive risk-taking.
- The Federal Reserve missed problems in the shadow banking system and misjudged the damage caused by the failure of Lehman Brothers.
- Quantitative easing was less effective than it could have been due to political criticism and threats to Fed independence preventing serious implementation.
- The effects of the third round of quantitative easing (QE3), begun in 2011, are currently visible in a stronger economy.
- The Federal Reserve currently lacks instruments to prevent the next financial crisis, as crises are inherent and will differ from previous ones.
- Deep reform requires prior economic recovery, as success in limiting damage from the last crisis reduces the political pressure needed for structural changes.
- Economic growth is expected to be half as fast as typical for a recession recovery, leaving U.S. society 10% poorer than it would have been without the Great Recession.
- The Dodd-Frank Act of 2010 is characterized as weak, taking only baby steps that failed to solve underlying financial problems or break up big banks.
- The SEC and the Fed are expected to issue operational regulations for Dodd-Frank that are more ambitious and severe than banks anticipated.
- Government programs to write down mortgages would have created big losses for banks and required a multi-trillion dollar stimulus rather than the $787 billion stimulus provided.
- Another financial crisis similar to 2008 is likely to occur in less than 80 years, as the success of limiting the last crisis reduces the drive for reform.
- Europe is expected to solve its economic problems through a combination of European Central Bank quantitative easing and a commitment to infrastructure spending.
- The Federal Reserve should not unwind its $4 trillion portfolio currently due to millions of workers potentially re-entering the labor force, but should do so slowly in the future.
- The Federal Reserve can shrink its balance sheet in the future by allowing securities maturing in five, seven, or ten years to expire without replacement.
- Financial regulators attempt to measure systemic importance but continue to address weaknesses based on size because interconnectedness is hard to measure.
- The benefits of economic growth are not filtering down to the working and middle classes, creating a risk to social consensus over time.
- Income inequality can be addressed in the short term by raising minimum wages with little evidence of a cost to job creation, and in the long term through education and vocational training.
- Real-time economic data was insufficient in 2008, as Commerce Department revisions later revealed a more rapid contraction than initially known.
- Globalization will not cease, and equipping Americans with necessary skills is identified as the most important long-term solution to wage stagnation.