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Floored! - How a Misguided Fed Experiment Deepened and Prolonged the Great Recession

In October 2008, as the U.S. economy plunged, the Federal Reserve began paying interest on banks' reserve balances. The resulting switch to a "floor system" of monetary control, in which changes in the interest rate on reserves, rather than reserve creation or destruction, became the Fed's chief tool for influencing economic activity, was to have far-reaching consequences--almost all of them regrettable. Besides intensifying the downturn by causing banks to hoard reserves, the floor system all but destroyed the market for unsecured interbank loans that had been banks' ordinary "first resort" source of last-minute liquidity. By depriving the Fed's asset purchases of the ability to stimulate investment and spending, it also compelled the Fed to compensate by purchasing assets on an unprecedented scale. All of this resulted in a substantial increase in the Fed's role in allocating scarce credit. Finally, by severing the ordinary connection between the stance of monetary policy and the extent of the Fed's asset holdings, the floor system risks turning the Fed's balance sheet into a fiscal-policy playground. Selgin’s book is the first comprehensive account of the Federal Reserve’s new post-crisis “floor” monetary policy operating system. Selgin will share his three-year research journey into this new experimental system, how the Fed stumbled into it, and its consequences for the economy — including how it could turn the Fed into a Trojan piggybank of fiscal profligacy.

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7/31/2020

Re-Designing the Marine Corps for Future War: Necessity or Madness?

General David H. Berger, Marine Corps Commandant, is aggressively pushing a dramatic redesign of the Corps for future war incorporating new missiles, advanced sensors, unmanned platforms, and hypervelocity weapons. HisForce Design 2030effort has drawn enthusiastic support from those who agree that the Corps must change to remain relevant on a more lethal battlefield. But it has generated an equally fervent amount of criticism from others who think the effort is overly focused on China—rendering the Corps irrelevant across a range of other potentially more likely scenarios. To achieve its vision, the Corps is doing away with tanks, reducing conventional artillery, shrinking units, and placing new demands on the Navy, already struggling to modernize its fleet. But it is adding anti-ship missiles, doubling-down on unmanned systems, and reenergizing a profound discussion about the importance of naval power.Will a redesigned Corps make it irrelevant for land operations against conventional militaries of larger state powers or irregular forces like terrorist groups? Or are General Berger’s designs essential to America’s future ability to conduct nearly any military operation in any theater against a host of potential enemies?Join us for an in-depth conversation about all of this with nationally recognized experts who hold informed opinions on both sides of this issue: Dr. Frank G. Hoffman, Lt. Col. USMCR (Ret.), Distinguished Research Fellow at the National Defense University, and Mark F. Cancian, Colonel, USMCR (Ret.), Senior Advisor, International Security Program, Center for Strategic and International Studies.