The last twenty years offer remarkable evidence about the irrelevance of some political labels. The drift into permanent inflation, initiated by a "liberal" Administration under President Johnson, was continued under three "conservative" Administrations. The drift in our budget "policies" even...

The deficit of the Federal budget dominates the attention of the public arena. The process began with President Carter's ill-fated budget announcement in February 1980. The response of the bond market revealed at the time that an increasing segment of the public recognized the futility of...

The reflexes of politicians to problems, in particular those created by their past policies, are well conditioned. This pattern holds in particular for international financial problems. Major swings in the dollar in foreign exchange markets seem reliably associated with rising demands for...

The Shadow Open Market Committee was initiated in the summer of 1973. It was designed to offer an organized forum for a systematic appraisal of U.S. stabilization policies. A deep concern over policies pursued in the past ten years motivated the initiative. The financial policies dominantly...

The Shadow Open Market Committee warned in its first meeting in September 1973 against our drift into permanent inflation. The Committee's concern was motivated by the repeated failures of our policymaking in 1967,1970 and again in 1972. The monetary authorities abandoned in each case an...

On October 24 and November 1, 1978, President Carter announced a program allegedly designed to protect the domestic and international value of the dollar. My position paper prepared for the meeting of the Shadow Open Market Committee in March 1979 examined the proposals advanced. It was noted at...

Between 1990 and 1996, capital inflows to emerging market countries rose from $60 billion to $194 billion. Mexico’s problems in 1995 changed the form of these capital transfers. Equity owners learned from their losses. After 1995, portfolio investment declined, but direct investment increased....

This paper proposes a low cost alternative to the large bailout packages that the International Monetary Fund (IMF) has organized to address financial crises. The IMF would act as a lender of last resort. Faced with an unsustainable debt burden, a government would declare default. It would...

Testimony Prepared for Joint Economic Committee February 24, 1998