Central banks have balance sheets like other banks and in theory their liabilities can exceed their assets, meaning they are insolvent. But they can always create new money so they can settle their debts. So can they really go bust? * A bank (or any other company) is insolvent if its assets are less than… Continue Reading
Tag Archives: QE
Getting money right
It must be puzzling and exasperating to the general public that economists still seem so clueless about perhaps the most important and central topic in economic policy, the money system. Yet a lot of economic news is about the problem of money – not having too little but the money system. The Fed has been… Continue Reading
The controversy over quantitative easing
Quantitative easing (QE) has become a highly controversial policy, particularly in the USA, where the Federal Reserve has been criticised by politicians, investors and academics up to and including the charge of treason. Yet the Chairman of the Fed, Ben Bernanke, is a highly respected former academic economist, a scholar of the 1930s great depression… Continue Reading