Here we present a history of the Fed in charts. As you’ll surely glean from the below — the Fed has degenerated from a by and large passive institution (dealing only in high-quality self-liquidating commercial paper and gold) to an active pursuant of junk, an enabler of wars, a ‘benevolent’ combatant of the depressions of its own creation, a central planner of employment & prices and of course a forgiving friend to inconvenient market follies.


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I was looking through the traffic logs the other day and I noticed that our posts about real interest rates get quite a lot of traffic every day. So I thought it would be useful to set up an interactive, auto-updating real interest rate charts page so that you can always keep up-to-date with them. You can find the page here.


Any feedback / suggestions would be happily received as always (you can catch me on


Hope you find it useful.

 Real Interest Rates Charts Page Screenshot

Niall Ferguson and Andreas Schaab (Harvard) and Moritz Schularick (The Bonn Institute of Macroeconomics and Econometrics) have an interesting new study out detailing the history of central bank balance sheet expansions and contractions in “12 advanced economies since 1900.”


Mainstream economists tend to belittle the significance of this subject. Monetarists and Keynesians regard an elastic money supply, manipulated by central banks, as a desirable weapon to be used in smoothing out the business cycle. Some economists even go so far as to argue that with interest rates at record lows and inflation tepid, central banks should be directly monetising government infrastructure projects.

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The French economist Thomas Piketty is being referenced a lot at the moment. In case you don’t know, Piketty has written a book called Capital in the Twenty-First Century – the title deliberately Marxist in tone – about the problem of growing inequality, and how capital’s ever-greater share of the world’s riches is leading us towards a system where inherited wealth is central to one’s personal fortunes (or otherwise).


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Much has been said about how developed governments have been deficit spending as if they’re at war since 2007-2009. And you might expect the story to be similar on the monetary side. After all, the central bank balance sheet expansions that we’ve seen over the past few years look unprecedented. The reality may surprise you. We’ve charted the change in notes in circulation over WWI below and included a chart of central balance sheet expansions over the past 5 years. As you’ll see, it’s clear that wartime monetary easing was way in excess of what we’re seeing today. The central banks that have expanded their balance sheets the most recently are at worst comparable to neutral countries in WWI. See for yourself below. It could be much worse…

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If you measure the laxness of a central bank by the magnitude of its balance sheet expansion then there’s been a clear winner in recent years: the Bank of England (which has quadrupled its balance sheet since mid-2008). This leaves the UK at risk of a huge expansion in the broad money supply if the fractional reserve banking machine were to get going again. This, however, could be some time away and is not the only mechanism in play. Here we’ll look at central bank balance sheet expansions in relation to government accounts. By the end of this piece you’ll have a good understanding of how addicted various governments are to the printing press.

continue reading » have come up with a large graphic (an “addogram”) about the evolution of central banking in England and America going as far back as 1640. If you take a look at the zoomable image (click “Explore this addogram in high-resolution” once at the link above) you can see how UK & US central banks affected (and were affected by) equity, bond and gold prices since 1840. Present dynamics in central bank balance sheets and long & short-term yields looks eerily similar to 1930-1950. Interesting stuff.

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