The New Lombard Street

How the Fed Became the Dealer of Last Resort

Perry Mehrling

• Editorial: Princeton University Press
• Año: 2010
• ISBN:
  9781400836260
• Categoría: Economics
• Categoría: Banks & Banking

How the U.S. Federal Reserve began actively intervening in markets Walter Bagehot's Lombard Street, published in 1873 in the wake of a devastating London bank collapse, explained in clear and straightforward terms why central banks must serve as the lender of last resort to ensure liquidity in a faltering credit system. Bagehot's book set down the principles that helped define the role of modern central banks, particularly in times of crisis—but the recent global financial meltdown has posed unforeseen challenges. The New Lombard Street lays out the innovative principles needed to address the instability of today's markets and to rebuild our financial system.Revealing how we arrived at the current crisis, Perry Mehrling traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913. He explains how the Fed took classic central banking wisdom from Britain and Europe and adapted it to America's unique and considerably more volatile financial conditions. Mehrling demonstrates how the Fed increasingly found itself serving as the dealer of last resort to ensure the liquidity of securities markets—most dramatically amid the recent financial crisis. Now, as fallout from the crisis forces the Fed to adapt in unprecedented ways, new principles are needed to guide it. In The New Lombard Street, Mehrling persuasively argues for a return to the classic central bankers' "money view, " which looks to the money market to assess risk and restore faith in our financial system.

Index

The index that appeared in the print version of this title does not match the pages in your eBook. Please use the search function on your eReading device to search for terms of interest. For your reference, the terms that appear in the print index are listed below

AAA tranche

ABX index

academic advice

Ad Hoc Subcommittee on the Government Securities Market

Age of Management academics and arbitrage and “bills only” policy and, Employment Act of 1946 and expectations hypothesis and Fed-Treasury Accord and free reserves concept and Gurley-Shaw idealization and, liquidity and Marschak-Tobin model and, Minsky and normalcy and prices and shiftability and Walrasianism and

AIG.

Aldrich Bill of 1912.

Aldrich-Vreeland Act of 1908.

Ambac

American Economic Association

American Finance Association

arbitrage Age of Management and learning from crisis and New Lombard Street approach and private dealers and swaps and, uncovered interest parity (UIP) and, war finance and

Arrow, Kenneth

Arthur D. Little

asset-backed commercial paper (ABCP).

Bagehot, Walter active management and learning from crisis and “money does not manage itself,” money view and, New Lombard Street approach and Old Lombard Street approach and, private dealers and swaps and

balance sheet: credit channel and money channel and New Lombard Street approach Old Lombard Street approach. See also Federal Reserve

Banking Act of 1933.

Banking Act of 1935.

banking principle

Bank of America

Bank of England, Age of Management and financial crisis and Goodhart and, Issue Department of as lender of last resort, Old Lombard Street approach

Bank of England Operations(Sayers).

bank rate

bank runs

Bear Stearns

Bernanke, Ben

“bills only” policy

Black, Fischer

Bretton Woods

British system: Bagehot and Hawtrey and LIBOR and Minsky and Sayers and swaps and

Brunnermeier, Markus

bubbles: instability of credit and, learning from crisis and, money rate of interest and private dealers and responsibility and stock market crash of 1929 and

capital Age of Management and fixed instability of credit and, learning from crisis and money view and (see also money view); New Lombard Street approach and private dealers and shadow banking system and swaps and, working

capital asset pricing model (CAPM).

capitalism

cash flows: Financial Instability Hypothesis and, hedge finance structures and instability of credit and Minksy and, money view and New Lombard Street approach Old Lombard Street approach Ponzi finance structures and reserve constraint and shiftability and, survival constraint and, swaps and timing of

Central Banking and Money Market Changes” (Minsky).

central banks: academic theory on Age of Management and art of Bank of England, bank rate and, dealer of last resort and, discipline and, discount accommodation and Financial Instability Hypothesis and, haircuts and, instability of credit and learning from crisis and lender of last resort and, (see also lender of last resort); Marschak-Tobin model and, money view and National Banking System and New Lombard Street approach and Old Lombard Street approach and repurchase agreements and reserve constraint and Second Bank of the United States shiftability and, stock market crash of 1929 and, survival constraint and, swaps and tightening/loosening money and Wicksellianism and. See also Federal Reserve

Citibank

Citigroup

collateral, Age of Management and, Banking Act of 1935 and instability of credit and learning from crisis and, National Banking System and New Lombard Street approach and private dealers and, shadow banking system and swaps and U.S. Treasury and war finance and

collaterized debt obligation (CDO).

commercial loan theory

commercial paper

Commercial Paper Funding Facility

convertibility

Council of Economic Advisors

creative destruction

credit: aggregate bubbles and, creative destruction and debt and, (see also debt); depression and elasticity and Financial Instability Hypothesis and, Hawtrey and hedge finance structures and inherent instability of, ; lessons from crisis and market-based credit system and, money view and New Lombard Street approach and Old Lombard Street approach and private private dealers and productive public, qualitative/quantitative control of reserve constraint and seductive allure of speculative Strong rule and survival constraint and, swaps and, tightening/loosening money and World War II era and

credit channel

credit default swap (CDS): failure of natural norm and IOUs and, learning from crisis and, liquidity and

currency: “bills only” policy and, discount accommodation and Eurodollar exchange rate and mismatch and National Banking System and Operation Twist and, real bills doctrine and swaps and, Treasury-Eurodollar (TED) spread and U.S. dollar, (see also dollar); war finance and

currency principle

dealer of last resort implications of in normal times learning from crisis and New Lombard Street approach and private dealers and swaps and shiftability and, Term Asset-Backed Securities Loan Facility (TALF) and

Debreu, Gerard

debt Age of Management and collateralized debt obligation (CDOs) and, crushing burden of future dealers of last resort and depression and Employment Act of 1946 and Fannie Mae and Freddie Mac and instability of credit and IOUs and, National Banking System and New Lombard Street approach and Ponzi finance structures and stock market crash of 1929 and swaps and Treasury

decentralized payments system

deflation

depression Age of Management and, learning from crisis and, New Lombard Street approach and noncommercial credit and smoothing and stock market crash of 1929 and, swaps and

discipline: Age of Management and elasticity and, instability of credit and, learning from crisis and money view and New Lombard Street approach and Old Lombard Street approach and private dealers and, tightening/loosening money and

division of labor

dollar Bretton Woods system and, as “coin of the realm,” devaluation of Kennedy administration and Marshall Plan and New Lombard Street approach and Operation Twist and, swaps and, Treasury-Eurodollar (TED) spread and

Dunbar, Charles F.

dynamic stochastic general equilibrium (DSGE).

Eccles, Marriner S.

economics view

elasticity: Age of Management and, banking principle and credit currency principle and discipline and, inelasticity and Minsky on National Banking System and New Lombard Street approach and, Old Lombard Street approach and private dealers and, solvency and, tightening/loosening money and war finance and

Employment Act of 1946.

equilibrium dynamic stochastic general equilibrium (DSGE) and natural tendency to instability and solvency and, swaps and Walrasianism and

Eurodollar learning from crisis and, New Lombard Street approach and private dealers and swaps and, Treasury-Eurodollar (TED) spread and

exchange rate

expectations hypothesis (EH): Age of Management and private dealers and swaps and

Fannie Mae

farming

Federal Deposit Insurance Corporation

Federal Home Loan Bank board

Federal Open Market Committee (FOMC).

Federal Reserve: academic advice and Age of Management and balance sheet for bank rate and, “bills only” policy and, centennial year of convertibility and credit and, (see also credit); dealer of last resort and, discount accommodation and Eccles and econometric model of Employment Act of 1946 and establishment of, farming problem and, fiscal agency of government debt and haircuts and, interventions by learning from crisis and as lender of last resort liquidity premium and Marschak-Tobin model and, Martin and, money view and National Banking System and New Lombard Street approach and noncommercial credit and normalcy and Operation Twist and, private dealers and repurchase agreements and shiftability and (see also shiftability); smoothing and, stock market crash of 1929 and, Strong rule and Taylor rule and tightening/loosening money and transformed role of Volcker episode and Walrasianism and war finance and

Federal Reserve Act

Fed-Treasury Accord

feedback mechanisms

finance view

financial crisis: action lag and anatomy of a asset-backed commercial paper (ABCP) and, bubbles and depression and division of labor and free fall and as “inflection point in economic history,” learning from, lender of last resort and, (see also lender of last resort); market-based credit system and, Marschak-Tobin model and, money view and Moulton-Martin model and New Lombard Street approach and noncommercial credit and normal crisis and Old Lombard Street approach and stock market crash of 1929 and, subprime mortgage, tinkering approach and war finance and

Financial Instability Hypothesis

Fisher, Irving

Fisher effect

Freddie Mac

free reserves concept

Friedman, Milton

General Equilibrium Approach to Money, A” (Tobin).

General Theory of Employment, Interest, and Money (Keynes).

Glass-Steagall Act

gold Bretton Woods system and, convertibility and devaluation of dollar and dollar standard and Kennedy administration and National Banking System and Old Lombard Street approach and war finance and

Goodhart, Charles

Goodhart's Law

government bonds

government-sponsored enterprises (GSEs).

Great Depression Age of Management and, government spending and institutional evolution and Keynesianism and learning from crisis and, noncommercial credit and stock market crash of 1929 and

Gurley, John G.

haircuts

Hansen, Alvin

Harvard

Hawtrey, Ralph: Age of Management and counter-cyclical policy and instability of credit and, National Banking System and New Lombard Street approach and Strong and

hedges Age of Management and, learning from crisis and, swaps and

Hicks, John

Hicks-Hansen IS/LM model

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