Academic Papers etc. 2026
Commanding Heights: Central Banks at the Crossroads – IMF Lecture hosted by G30 – April 2025
1. Disdain for data dependence. Economic data is imprecise and subject to frequent revision.
2. Near term forecasting is a distration and causes forecasters to become “prisoners to their own words”
3. Forward Guidance was an appropriate tool for the financial crises. It is not appropriate now.
4. The US is on a fiscally unsustainable path. The Fed is partly responsible for enabling the government. Posits the risk of “Monetary Dominance” where central bank policy becomes the ultimate arbiter of fiscal policy.
5. Fed should not rewrite its mandate with approval of congress. e.g. Jackson Hole 2020 should not have occurred.
6. Criticism of the Fed is not the same as interference. Central bank independence has been granted, but when central banks fail in their objectives they should be subject to scrutiny.
7. In sum, central banks – and the Fed in particular – have become too powerful, taken on an ever wider remit and, in so doing, caused more harm than good.
House of Lords – Economic Affairs Committee – Kevin Warsh Testimony – July 2023
Familiar themes for public remarks by Warsh.
1. Too much focus on inflation undershoots.
2. Too much false precision/ spurious accuracy by central bankers.
3. Too wide a remit, central banks should focus on price stability as core principle (applying a “Maslow hierarchy of needs” with price stability as the foundation.
4. Dangers of forward guidance AND excessive communication mean that central bankers become hostages to their public remarks, unable to change their minds.
5. Therefore favours fewer meetings, fewer public remarks and greater emphasis on (in words of Lord King) “what the central bank has done, not speculation about what it might or might not do in the future.”
6. A scepticism of quantitive easing, the asymmetry of easing (e.g. given but not withdraw), apparent willingness to forever prop-up asset prices, being in awe of and in hoc to financial markets.
7. Sceptical that monetary policy and financial stability can ever be truly separate.
8. Desire to see less intervention in money markets by central banks, desire for central banks to have smaller balance sheets.
9. Great scrutiny of central banks on money and credit.
10. Central banks should not seek to control asset prices but abnormal movements in asset prices should tell them that something is wrong.
Some key quotes:
“Inflation is a choice. It does not just happen magically.”
“The definition of price stability that I like, which might be a bit oldfashioned, is the one that former Chairman Greenspan used to talkabout: You want the change in prices in an economy to be such that no one is talking about them or thinking about them… For my money, I would keep the focuse to the left of the decimal point”
He criticises the asymmetry of the central bank reaction function: “we need to throw everything we could to raise inflation a few tenths of a per cent, but now are we comfortable with inflation on a persistent basis running at 50% higher?”
Long-term Issues for Central Banks – Kevin Warsh
Scott Bessent Paper – The International Economy – Spring 2025
Fairly mainstream criticism of QE era. More intersting was the observation that supervision of banks fell increasingly to Fed and away from FDIC and Office of the Comptroller of the Currency has resulted in an institutional bias towards ease: the conention being that the Fed will seek to paper over the cracks arising from its own inadequate supervision.
Understanding Gold – Claude Erb, Campbell Harvey
They are neither rabid gold bugs nor “barbarous relic” types, so it is that rare thing: a reasonably balanced and nuanced paper on gold. I have some quibbles with it, but basically its pretty good.
Academic Papers etc. 2025
Financialization: How Fiscal Prolicy Has Inflated Profits and Equity Valuations – Chris Brightman & Alex Pickard (Research Affiliates)
Describes (through Kalecki equation framework) how combination of rising fiscal transfers, rising deficits has lowered domestic investment and resulted in higher corporate profits, higher financialisiation and higher equity valuations.
Understanding Gold
Describes various frameworks for thinking abou the gold price and the portfolio role of Gold. Asks question whether the price level of gold has fundamentally shifted with the advent of ETFs and other innovations.
Recycling Risk: Synthetic Risk Transfers
https://d1e00ek4ebabms.cloudfront.net/production/uploaded-files/Recycling_Risk-_Synthetic_Risk_Transfers_IMF_October_2025-ff340759-46a0-418b-83e1-ad5671d28ff7.pdf
AQR – Portfolio Rebalancing – Antti Ilmanen, Thomas Maloney
Man Group – Strategic Rebalancing
https://www.man.com/insights/strategic-rebalancing-summary
Bumps in the road? – speech by Sarah Breedon
https://www.bankofengland.co.uk/speech/2025/september/sarah-breeden-speech-cardiff-business-school-afternoon-briefing
Jackson Hole Address – Jerome Powell
https://www.federalreserve.gov/newsevents/speech/powell20250822a.htm
American Unexceptionalism – Ben Inker & John Pease – GMO
Argues that most of the outperformance of US equities of last decade related to increased valuations and dollar strength. Highlights political challenges arising from Trump administration to growth.
Of Interest – David Hume
https://davidhume.org/texts/pld/in
First paper (of which I am aware) setting our theoretical basis for level of interest rates.
Of Public Credit – David Hume
https://davidhume.org/texts/pld/pc
So many banging quotes
A Mathematical Theory of Saving – Frank Ramsey
http://piketty.pse.ens.fr/files/Ramsey1928.pdf
Astonishing article seeting out theoretical framework for saving vs. consumption
Franco Modigliani & the Life Cycle Theory of Consumption – Angus Deaton – NBER
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=686475
Great summary of Modigliani’s work
Interest Rates, Expectations and the Wicksellian Policy Rule – Thomas Humphrey – Richmond Federal Reserve Bank
https://ssrn.com/abstract=2115894
Great summary of Wicksell’s theories
Bank of England – Quarterly Bulletin, 1982 Q1
https://www.bankofengland.co.uk/quarterly-bulletin/1982/q1/general-assessment
Description of the monetary corset
How Did Ancient Bureaucrats Set Their Interest Rates? – Michael Hudson
https://www.biblicalarchaeology.org/daily/ancient-cultures/daily-life-and-practice/ancient-interest-rates/
Secular Stagnation: The History of a Macroeconomic Heresy – R Backhouse & M Boianovsky
https://www.tandfonline.com/doi/full/10.1080/09672567.2016.1192842
On Secular Stagnation in the Industrialized World – Lukasz Rachel & Larry Summers
https://larrysummers.com/wp-content/uploads/2025/04/Secular-Stagnation.pdf
Best summary of secular stagnation theory
Academic Papers, Essays, Investment Letters – Pre-2025
One Hundred Inflation Shocks: Seven Stylised Facts – IMF
https://www.imf.org/en/Publications/WP/Issues/2023/09/13/One-Hundred-Inflation-Shocks-Seven-Stylized-Facts-53
AQR – Changing Stock Bond Correlation – Journal of Portfolio Management
https://www.aqr.com/Insights/Research/Journal-Article/A-Changing-Stock-Bond-Correlation
Chris Clothier 