Search Results
Briefing
Stablecoins and the Demand for Dollars
Whether stablecoins threaten or reinforce the dollar's global role depends critically on how they are backed: Reserve-backed stablecoins increase demand for U.S. Treasuries, while crypto-backed ones reduce it.As stablecoin adoption broadens, investors place greater weight on safety and liquidity, making reserve-backed issuance dominant in the long run and putting downward pressure on the natural rate of interest.What initially appears to be a challenge to the dollar can — under plausible institutional arrangements, such as those required by the GENIUS Act — become a force that strengthens ...
Journal Article
When Economists Navigate by the Stars
Monetary policy is often likened to steering a ship. For instance, the key economic policy concept of "commitment" is often visualized as Odysseus listening to the Sirens' call while tied to the mast of his ship; analysis and interpretation of the data often seems like the process of navigation by the currents, the wind, and the sky. Indeed, Fed Chair Jerome Powell suggested in August that monetary policymakers are frequently "navigating by the stars under cloudy skies."But what good is celestial navigation if the navigator cannot see the sun or the stars because of clouds? The Vikings, ...
Briefing
What Is Trend Inflation?
I discuss three models of trend inflation that deliver strikingly different estimates of the trend.I argue that the concept of trend inflation is largely model and context dependent.Current estimates of trend inflation show no clear pattern about price pressures.