MONEY AND BANKING

The last three or four decades have seen a remarkable evolution in the institutions that comprise the modern monetary system. The financial crisis of 2018-2020 is a wakeup call that we need a similar evolution in the analytical apparatus and theories that we use to understand that system. On a per hour basis, investment bankers are not paid nearly as well. With most analysts and associate working over 100 hours per week, their hourly wages can range anywhere between $25-$35 per hour. That's not bad, but it doesn't sound as good as $100, 000 a year did. In many advanced countries, lowering the policy rate to zero will be insufficient to counter the next recession. In the United States, for example, with the target range for the federal funds rate at 1 to 1 percent, there is little scope for the nearly 5 percentage-point easing that is typical in recent recessions (see, for example, Kiley). This is the setting for this year's report for the U. S. Monetary Policy Forum, written with Michael Feroli, Anil Kashyap and Catherine Mann. Our analysis focuses on the extent to which the "new tools" of monetary policy-including quantitative easing, forward guidance.