Brett Fiebiger’s research while affiliated with Independent Forensics and other places

The purpose of this paper is to examine the rationale for the unconventional monetary policies adopted by central banks in response to the Global Financial Crisis. Quantitative easing appears to be a return to monetarist principles. Indeed, the Bank of England emphasised a causal chain running from increases in broad money to spending and inflation, while the Bank of Japan later pointed to a theorised relation between base money and expected inflation. Some aspects of monetarism have been renounced, albeit not necessarily with convincing reasoning. Monetarist principles can also be discerned in the ‘credit view’ associated with the research of two-term US Federal Reserve Chair, Ben Bernanke. An understanding of the banking system and the channels of monetary transmission is still a work in progress.

As is well known, the closure of the canonical Neo-Kaleckian model is an endogenous rate of capacity utilisation. To allay concerns of Harrodian instability one response has been to endogenise the normal rate to effective demand pressures. Recent contributions have stressed microfoundations for an adjustment in the normal rate towards the actual rate. The new approach focuses on shiftwork and redefines capacity utilisation as the average workweek of capital. This paper examines whether the new concept of capacity utilisation can provide a firmer basis for endogeneity in the normal rate. It argues that the assumption of variability in the normal shift system cannot be generalised across manufacturing industries, while the potential relevance for non-manufacturing industries is unknown. Another concern is that long-run trends in the average workweek of capital and aggregate demand do not coincide. The paper also finds that the long-run trend in the US Federal Reserve's index of capacity utilisation for the manufacturing sector is not flat as frequently claimed. Instead, there is a downward trend from the mid 1960s, which matches the slowdown in aggregate demand.

The purpose of this article is to examine the intellectual roots of monetary dominance over fiscal policy. A first step was Milton Friedman’s reinterpretation of the Great Depression based on the money-multiplier story associated with the fractional-reserve system. In the 1990s New Keynesian authors and Ben Bernanke in particular never got away from Friedman’s interpretation and remained faithful to the loanable funds theory despite their new focus on bank credit and their apparent abandonment of monetarism. New Consensus Macroeconomics kept arguing that expansionary fiscal policy could only lead to higher inflation rates and real interest rates that lowered potential output. The New Keynesian literature on the zero lower bound of the early 2000s thus mostly overlooked the benefits of expansionary fiscal policy; instead, the optimism on unconventional monetary policies failed to prepare policymakers for the Global Financial Crisis. The crisis demands far-reaching changes to monetary and macro theory not least of which is a recognition that the theory of loanable funds is incapable of providing any insight into how the financial system works in practice.

This article distinguishes between credit easing policies and quantitative easing (QE) policies. The authors argue that there are two broad transmission mechanisms associated with quantitative easing: the Friedmanian mechanism, which is based on the theory of the money multiplier and the fractional-reserve banking system; and the Keynesian mechanism, advocated by Keynes in 1930, which relies on its impact on interest rates. The article also deals with the likely consequences of various incarnations of QE policies: QE done with banks, QE done with non-banks, QE for the people, Corbyn's people's QE and green QE. This is done by looking at the impact of these policies on the balance sheets of banks, private agents, the central bank and the government, and on their consequences for the fiscal balance of the government when taking into account the profits that are distributed by the central bank to the government. It is concluded that accounting tricks cannot modify reality.

Similar patterns can be observed in post-WWII US business cycles. The initial upswings tend to be led by household investment and debt-financed personal consumption expenditures, which then wane in relative importance, and lead downswings. As those expenditures are financed in significant part by money creation, they function as an external market-driving accumulation by enabling monetary profit realisation-in a way analogous to Rosa Luxemburg's treatment of the public and foreign sectors. Empirical studies on wage-led/profit-led demand regimes typically exclude household investment or include it in with business investment. This paper argues that it is vital to distinguish an independent role for 'semi-autonomous' household expenditures as a driver of effective demand and cyclical dynamics. The failure to do so in empirical studies sustains misleading conclusions such as the perceived relevance of Goodwin-type profit squeeze cycles. © The Author(s) 2017. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

After the global financial crisis, the Bank for International Settlements emerged as an influential voice in policy debates. Under the rubric of preventing ‘financial imbalances’, and concerned with the ‘illusory’ nature of demand management, the Bank has proposed a macro policy framework based on ‘finance-neutral’ output gaps. This paper critiques the analysis of the New Austrian School, that is, the Bank for International Settlements. The Bank is seeking an operational anchor for a Hayekian version of the Wicksellian ‘natural rate of interest’ that would obtain a ‘sustainable’ output level consistent with a long-run ‘financial equilibrium’ for the private non-financial sector. The fuzzy concept of ‘financial imbalances’ plays a similar role to that of ‘forced saving’ in the Old Austrian School framework. Incredibly, the institutional flaws in the eurozone that made sovereigns vulnerable to debt crises, large current-account surpluses, high rates of unemployment and rising inequality are not deemed as ‘imbalances’ worthy of a public policy response.