What I complain of is not only that this theory in its various forms has unduly usurped the central place in monetary theory, but that the point of view from which it springs is a positive hindrance to further progress.
During these volatile times, it pays to remember one of the central themes in financial theory.
If this is a cockamamie way to invest, I draw courage from the theory of central banking, which is more cockamamie still.
According to this theory, central banks would not be able to avoid a downturn by heading off a rise in interest rates.
Of course, central to the Dow Theory is that the action of the Dow Jones Industrials must be confirmed by the action of the Dow Jones Transportation Average.
In theory, a discretionary central bank could limit the quantity of money and achieve long-run price stability by controlling the growth of nominal final demand.
FORBES: The Federal Reserve's Flawed Approach To Monetary Policy
Now, once the eurozone were borrowing in this way as a de facto single sovereign entity, then of course these euro bonds would be fully sovereign bonds, available for purchase (in theory) by the central bank (though gawd alone knows whether Germany would allow it).
These three sentences do nothing less than blow apart the central tenet of modern conservative economic theory, confirming that lowering tax rates on the wealthy does nothing to grow the economy while doing a great deal to concentrate more wealth in the pockets of those at the very top of the income chain.
Yet if central banks were to build their reserves from scratch, portfolio theory would suggest that they should hold a much smaller share in gold.
In theory, Finnish ministers should share with the European Central Bank and with the European Commission the job of speaking for the euro in international forums.
While Samuel Beckett never gave any hint as to the central character's background, Sir Ian McKellen has his own theory.
The central mandate of FISA, and of the NSA, had not changed in theory: foreign intelligence gathering.
An appeals court has thrown out an asbestos verdict based on an unusual theory that seems to have caught the fancy of judges in the central Illinois city of Bloomington, even if it leaves other lawyers scratching their heads in wonder.
FORBES: Illinois Appeals Courts Stem Tide of Asbestos-Conspiracy Cases
In theory, everyone should agree on a system of appointing Europe's central bankers on merit, regardless of nationality.
Our central bank is--as are many economists--still slave to the theory, the so-called Phillips Curve, that there is a connection between prosperity and inflation.
Economic theory says the U.K. is fortunate to have its own central bank willing to print money to smooth the rebalancing of the economy.
In theory, if banks are required to hold more money on deposit with the central bank, this should increase the cost of their funds and so lead them to push up their interest rates.
ECONOMIST: Economics focus: A stitch in time saves nine | The
One theory inside the Fed is that what matters for mortgage rates isn't the central bank's day-to-day purchases, but the magnitude of mortgages that it has taken from the private sector.
WSJ: Fed Plan to Stop Buying Mortgages Feeds Recovery Worries
According to this theory it is the artificial lowering of interest rates and creation of excess credit by a central bank's monetary policy that causes investors to erroneously believe that economic conditions are better than they actually are, leading to an abundance of overconfidence.
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