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The Federal Reserve We Need: It’S The Fed We Once Had, Timothy A. Canova

Timothy A. Canova

This article considers the empirical record of the 1942-1951 period of Federal Reserve history when the Fed was more politically accountable and more independent of private financial interests. During the 1940s, federal spending was nearly twice as high as today, and federal borrowing was more than three times higher. Yet, from 1942 to 1951, the Federal Reserve was directed by the White House and Treasury to peg interest rates at 3/8 of one percent on short-term Treasury borrowing and 2.0 to 2.5 percent on long-term borrowing. The U.S. economy grew at a real annual rate of 15 to 20 percent …

Banking And Financial Reform At The Crossroads Of The Neoliberal Contagion, Timothy A. Canova

Timothy A. Canova

At the time of publication, this article provided the most in-depth critique of capital account liberalization in any U.S. law journal. The article stemmed from a paper presented by the author to the Seventh Annual Conference of the United States-Mexico Law Institute in Santa Fe, New Mexico on October 3, 1998, during the climax of one of the most volatile periods in the global financial markets. The Russian ruble was in free fall, and so was Long-Term Capital Management, a hedge fund that was threatening to bring down its own large creditors. The crisis was averted only by an emergency …

The Macroeconomics Of William Vickrey, Timothy A. Canova

Timothy A. Canova

This article analyzes the work of the late Dr. William Vickrey, the McVickar Professor Emeritus of Columbia University and 1996 Nobel-laureate in Economics. In choosing Vickrey for the Nobel prize, the Royal Swedish Academy of Sciences notes Vickrey's fundamental contributions to the economic theory of incentives, which he applied to the areas of taxation, auction theory, and pricing. His work focused on the economics of asymmetric and private information.

Critics of Vickrey's full-employment macroeconomic vision have noted that his Nobel was awarded not for such progressive views but for his earlier work in microeconomics. This article connects Vickrey's early theoretical …

The Transformation Of U.S. Banking And Finance: From Regulated Competition To Free-Market Receivership, Timothy A. Canova

Timothy A. Canova

This article offers a critique of the deregulation of banking and finance that started with the breakdown of the Bretton Woods regime of fixed exchange rates during the Nixon administration, accelerated with interest rate deregulation during the Carter administration, and was deepened during the Reagan administration. Deregulation is seen as a changing of paradigms, from the New Deal regulatory model that limited price competition and channeled credit to socially useful purposes. The monetary and fiscal implications are significant. The regulatory model, particularly in its heyday, served to limit the authority of the Federal Reserve, neutralized monetary policy, and invigorated other …

The Swedish Model Betrayed, Timothy A. Canova

Timothy A. Canova

This article provides a history of Sweden's financial liberalization, with special attention on the deregulation of interest rates and the ceiling on housing loans from banks and finance institutions. Throughout the 1980's, Sweden's Prime Minister Olof Palme stood out on the international stage as one of the leading opponents of the financial deregulation, monetarism, and fiscal austerity. The article recounts his efforts to resist and then compromise with this neoliberal agenda. After Palme's sudden assassination, in February 1986, the new government accepted a Riksbank proposal for elimination of Sweden's long-standing system of foreign exchange controls - the transnational policy analog …