Disquiet on the Home Front

By Karen Shaw Petrou and Basil N. Petrou

On June 20, FRB Chairman Powell said, “Nine years into an expansion that has sometimes proceeded slowly, the U.S. economy is performing very well.”  Although Mr. Powell noted low labor participation, puzzling inflation, and problematic wage growth, he said that all will come right as long as the Fed stays the course.  No mention was made of unprecedented U.S. income and wealth inequality or of a housing market serving mostly the oldest, wealthiest, and most coastal among us.  Too bad – inequality and the impediments to effective monetary-policy transmission it erects are among the most important reasons that the nine years Mr. Powell cites have seen the slowest recovery in decades in concert with new threats to financial stability. Continue reading “Disquiet on the Home Front”

Vollgeld as Voldemort: Is the Swiss Villain Coming for American Banking?

By Karen Shaw Petrou

On Sunday, June 10, Swiss voters resoundingly rejected “Vollgeld” – a sovereign-money referendum that would have made the Swiss National Bank an all-powerful arbiter of money and credit.  Defeat notwithstanding, Vollgeld is just a test run.  In this blog post, we consider Vollgeld’s impact with particular attention to the U.S.  Any doubts that its impact could be significant is dispelled by a brand-new paper laying out a U.S. Vollgeld from a think tank with ties to Sen. Warren – a national leader of progressive Democrats with considerable power to influence thinking, if not, for now, actual legislation.  Continue reading “Vollgeld as Voldemort: Is the Swiss Villain Coming for American Banking?”

Very, Very Safe Banks and a Very, Very Unequal Economy

By Karen Shaw Petrou

On April 13, federal banking agencies released their plan to require regulatory-capital recognition of the FASB’s new current expected credit loss (CECL) accounting method.  Doesn’t it sound technical, dull, and irrelevant to economic equality?  The integration of capital regulation with CECL is indeed technical and often dull, but it’s absolutely critical to the ability of U.S. banks to make the long-term, higher-risk loans essential for reversing at least some U.S. income and wealth inequality. Continue reading “Very, Very Safe Banks and a Very, Very Unequal Economy”

Baseball Cards for the Equality Game?

By Karen Shaw Petrou

Although the Federal Reserve resolutely rebuffs suggestions – mine included – that it’s exacerbated U.S. economic inequality, the Bank of England has been forced by public outcry to deal directly with its own inequality impact.  Reacting to strong public protest and withering fire from the Prime Minister, the BoE recently released not only a report denying the charges itself, but now also an exculpatory speech by Andrew Haldane, its influential chief economist.  Clearly feeling the heat, the Bank of England has even come up with a way to sell its positive message:  personalized “scorecards” proving to the skeptical citizenry that it’s better off than personal economic problems might lead it to believe.  Continue reading “Baseball Cards for the Equality Game?”

One Small Step for Better Monetary-Policy Models

By Karen Shaw Petrou

When I spoke at the Federal Reserve Bank of New York on March 1, I pressed hard for less reliance on data that washes away growing U.S. economic-inequality gaps.  Happily, many at the talk readily concurred.  For those who disagree, take note: an amendment added on March 6 to a House Financial Services Committee budget statement for the first time demands that the Fed do better when it makes judgments about U.S. prosperity. Continue reading “One Small Step for Better Monetary-Policy Models”