Public or Perish? The Future of Public Banking

By Karen Petrou and Drake Palmer

“Public” banks have been touted since before the U.S. Revolution as a remedy for a variety of common financial ailments, most recently as a cure for private banking’s presumed indifference to public purpose in order to protect personal profit.  The 21st-Century Equality Bank we previously outlined is one way to align a bank’s private interest with public purpose without public subsidy.  Is it enough or are public banks also required?  The public-bank scorecard documents several centuries of well-intentioned financial institutions brought down due to immunity from effective regulation and a lack of market discipline.  Given the renewed interest in public banks, will this time be different?  We doubt it.  Continue reading “Public or Perish? The Future of Public Banking”

Wondering Why Trump Loves Tariffs? Check Out Globalization’s Inequality Impact

By Karen Shaw Petrou

When the IMF was established at Bretton Woods in 1945, it was key to the post-war creation of a globalized international economic and financial system.  That was then.  Now, the Fund has released a ground-breaking paper finding that globalization not only does not boost growth in advanced economies, but also appears to worsen income inequality.  The paper does not go on to push for protectionism – blasphemy at the Fund and not borne out for trade in goods by the detailed findings of this study.  It does, though, show that the more globalized capital flows grow in concert with more imports, the harder it is for low-skilled workers to get ahead.  No wonder the Rust Belt’s as angry as it said it was in 2016. Continue reading “Wondering Why Trump Loves Tariffs? Check Out Globalization’s Inequality Impact”

Still Economic Waters Hide Lurking Danger

By Karen Shaw Petrou

On Tuesday, FRB Chairman Powell delivered a strongly-positive statement on the state of the U.S. economy.  Citing factors such as recent wage growth and employment, Mr. Powell is far more worried about keeping the good times going than about how inequitably the good times deliver the goodies across the gaping U.S. income and wealth divide.  This is setting monetary and regulatory policy the same way a diver looking only at a calm, blue surface jumps into a lake and breaks his neck.  Continue reading “Still Economic Waters Hide Lurking Danger”

The Mysterious Case of the Misfiring Monetary Policy

By Karen Shaw Petrou

When former Fed Chairman Bernanke launched a new approach to U.S. monetary policy earlier this year, he prompted many within and outside the U.S. central bank to call for sweeping change that would solve the “mystery” Janet Yellen says bedevils post-crisis monetary-policy transmission.  Just like the blue carbuncle Sherlock Holmes eventually found inside a large goose, central bankers are searching for a new gemstone within reams of data by which to guide increasingly complex policy-transmission channels.  Continue reading “The Mysterious Case of the Misfiring Monetary Policy”

How Equality Hangs in the Balance Sheet

By Karen Shaw Petrou

As Thomas Piketty’s book and much other research show, economic equality is a cumulative-return construct – that is, absent engines of growth, the rich get richer and middle-income households fall ever farther behind.  Thus, when bank balance-sheet capacity shrinks and lending to core economic engines such as housing and small business falters, income distribution widens and wealth inequality grows inexorably worse.  Continue reading “How Equality Hangs in the Balance Sheet”