I was reading Doug Noland's recent article, "Banking and the Business Cycle", and I'll briefly mention the section of the article from which the title is drawn.
Noland mentions an article he has seen in which a Federal Reserve Bank President (Richard W. Fisher) mentions research that suggests globalization helps to contain inflation. Noland takes issue with this view and cites the overlooked role that credit inflation has in creating asset price booms. He also notes the irony that "Global Credit Inflation" is precisely what is driving the over-investment in manufacturing capacity that helps keep down the cost of goods.
"Reminiscent of the late-nineties view that extraordinary productivity gains empowered the Greenspan Fed to let the economy (and financial markets!) run hotter, today it is "globalization" that supposedly keeps "inflation" in check, thereby bestowing the Federal Reserve and global central bankers greater latitude for accommodation."
"There is a great irony in the fact that U.S. led Global Credit Inflation and attendant Asset Bubbles of unprecedented dimensions are fostering (over)investment in global goods-producing capacity, a backdrop that is perceived by the New Paradigmers as ensuring ongoing "slack" and quiescent "inflation." This is dangerously flawed analysis, and I find it at this point rather ridiculous that policymakers cling to such a narrow ("core-CPI") view of "inflation." I suggest Mr. Fisher, Dr. Bernanke, Dr. Poole and others read (or, perhaps, re-read) the classic, Banking and the Business Cycle - A Study of the Great Depression in the United States, by C.A. Phillips, T.F. McManus, and R.W. Nelson, 1937."
Has anyone read Banking and the Business Cycle? I did a search on Amazon and Bookfinder but didn't find much. There is a listing of it Amazon.com, but no one's reviewed it, so I'm left to believe that it is well out of print and one of those useful economic texts that has only been read by a small number of dedicated economists.