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29 posts on "Economic History"
July 8, 2016

Hey, Economist! Why—and When—Did the Treasury Embrace Regular and Predictable Issuance?

Few people know the Treasury market from as many angles as Ken Garbade, a senior vice president in the Money and Payments Studies area of the New York Fed’s Research Group. Ken taught financial markets at NYU’s graduate school of business for many years before heading to Wall Street to assume a position in the research department of the primary dealer division of Bankers Trust Company. At Bankers, Ken conducted relative-value research on the Treasury market, assessing how return varies relative to risk for particular Treasury securities. For a time, he also traded single-payment Treasury obligations known as STRIPS—although not especially successfully, he notes.

May 13, 2016

Crisis Chronicles: Gold, Deflation, and the Panic of 1893

In the late 1800s, a surge in silver production made a shift toward a monetary standard based on gold and silver rather than gold alone increasingly attractive to debtors seeking relief from rising real debt burdens through higher prices. The U.S. government made a tentative step in this direction with the Sherman Silver Purchase Act, an 1890 law requiring the Treasury to significantly increase its purchases of silver. Concern about the United States abandoning the gold standard, however, drove up the demand for gold, which drained the Treasury’s holdings and created strains on the financial system’s liquidity. News in April 1893 that the government was running low on gold was followed by the Panic in May and a severe depression involving widespread commercial and bank failures.

February 19, 2016

Did Third Avenue’s Liquidation Reduce Corporate Bond Market Liquidity?

Tobias Adrian, Michael J. Fleming, Erik Vogt, and Zachary Wojtowicz The announced liquidation of Third Avenue’s high-yield Focused Credit Fund (FCF) on December 9, 2015, drew widespread attention and reportedly sent ripples through asset markets. Events of this kind have the potential to increase the demand for market liquidity, as investors revise expectations, reassess risk […]

February 5, 2016

Crisis Chronicles: The Long Depression and the Panic of 1873

It always seemed to come down to railroads in the 1800s. Railroads fueled much of the economic growth in the United States at that time, but they required that a great deal of upfront capital be devoted to risky projects. The panics of 1837 and 1857 can both be pinned on railroad investments that went awry, creating enough doubt about the banking system to cause pervasive bank runs. The fatal spark for the Panic of 1873 was also tied to railroad investments—a major bank financing a railroad venture announced that it would suspend withdrawals. As other banks started failing, consumers and businesses pulled back and America entered what is recorded as the country’s longest depression.

January 15, 2016

Crisis Chronicles: The Gold Panic of 1869, America’s First Black Friday

Wall Street in the late 1860s was a bare-knuckles affair plagued by robber barons, political patronage, and stock manipulation. In perhaps the most scandalous instance of manipulation ever, a cabal led by Jay Gould, a successful but ruthless railroad executive and speculator, and several highly placed political contacts, conspired to corner the gold market. Although ultimately foiled, they succeeded in bankrupting several venerable brokerage houses and crashing the stock market, causing America’s first Black Friday.

November 20, 2015

Crisis Chronicles: The Cotton Famine of 1862-63 and the U.S. One-Dollar Note

When the U.S. Civil War broke out in 1861, cotton was king.  The southern United States produced and exported much of the world’s cotton, England was a major textile producer, and cotton textiles were exported from England around the world.

October 2, 2015

Crisis Chronicles: Defensive Suspension and the Panic of 1857

Sometimes the world loses its bearings and the best alternative is a timeout.

July 15, 2015

A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: Does More Capital Increase Inequality?

My aim in the second post of this series on Thomas Piketty’s Capital in the Twenty-First Century is to talk about the economist’s research accomplishment in reconstructing capital-output ratios for developed countries from the Industrial Revolution to the present and using them to explain why wealth inequality will rise in developed countries.

July 13, 2015

A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: By How Much Is r Greater than g?

Maxim Pinkovskiy describes the arguments that Thomas Piketty makes to conclude that wealth inequality will rise and that global capital taxation is needed to stop it, and offers a critical discussion of the arguments.

May 8, 2015

Crisis Chronicles: The Man on the Twenty-Dollar Bill and the Panic of 1837

Thomas Klitgaard and James Narron Correction: This post was updated on May 8 to correct the book title and spelling of the author’s name in the fifth paragraph. We regret the error. President Andrew Jackson was a “hard money” man. He saw specie—that is, gold and silver—as real money, and considered paper money a suspicious […]

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