Professor Hanke’s Atelier: Reflections on the “Bullpen” and Raphael’s Workshop

Author Alexis Dawson Gaillard examines the teaching methods of Professor Steve H. Hanke, CFS Special Counselor and Co-Director of the Institute for Applied Economics, Global Heath and the Study of Business Enterprise at The Johns Hopkins University. Professor Hanke’s teaching methods are then compared to  Raphael Sanzio da Urbino’s instruction of his famous atelier.

In Professor Hanke’s experience, he has found that the one thing a professor can do is to introduce a student to the skills required to learn. This is the teaching methodology he implements in training his Bullpen students. Hanke begins a student’s training by stressing the most valuable and basic skills: writing and research methods.

After thorough research, Galliard discovers that Professor Hanke’s method of training clearly does mimic that of Raphael’s. Raphael not only created excellent art, but also prepared his assistants to become individual artists by cultivating their skills and stressing the importance of individuality. In this way, the ‘Bullpen’ is the modern equivalent of Raphael’s workshop. Professor Hanke instills a level of quality and commitment in each of his students that serves them forever. Both Raphael’s workshop and Hanke’s Bullpen result in an interdependent relationship between teacher and student.

The full paper can be found at:



WSJ features CFS monetary analysis and data…

This morning’s Wall Street Journal features CFS views and data in “Shadow-Credit Rise Is Good Sign” by Michael Casey on page C3.

The article highlights how CFS data on market finance or “shadow banking” can measure the durability of the recovery and help frame the policy debate in a balanced way.

A few highlights include:

“Seven years after the financial crisis, lending in the so-called shadow-banking system finally appears to have bottomed out, a reversal that could presage a long-awaited uptick in U.S. economic growth.”

“Extrapolations from CFS data show that the level of market finance is significantly below where its post-1967 trend would predict. In other words, a great deal of expansion is needed to bring this market back even to a level projected by its prebubble state. Until then, shadow banking will continue to do far less of the heavy lifting in credit creation than it used to.”

For the full article “Shadow-Credit Rise Is Good Sign,” please see page C3 of this morning’s paper or view

Historical Financial Statistics Takes a Leap Forward

CFS Historical Financial Statistics has just added a substantial amount of new data. Annual data points now total about 150,000, while high-frequency data points exceed 2 million. Coverage extends to 150 countries, though the depth of coverage varies widely.

In the five years since Historical Financial Statistics went online, computers have become faster and have gained memory, so we have consolidated many formerly separate files into a small number of often quite large files, which make data easier to find and use. We have also streamlined the Web format of Historical Financial Statistics so that everything is now accessible from one page.

New data include the following:

  • Extensive financial statistics on Austria-Hungary and the Balkans from the 1800s to World War II, by scholars in the South-East European Monetary History Network (whose impressive work I previously discussed here).
  • Three centuries of British data, by Sally Hills, Ryland Thomas, and Nicholas Dimsdale.
  • Balance sheet data from many currency boards around the world from the mid 1800s to the present, gathered mainly by Nicholas Krus and me.
  • Government finance data for many British colonies in the 19th and early 20th centuries, by Ewout Frankema.
  • Wages in a number of African countries in the 19th and early 20th centuries, by Ewout Frankema and Marlous Van Waijenburg.

We expect to add some other large data sets later this year. By bringing together previously scattered data, Historical Financial Statistics makes possible novel comparisons and new insights.

A Trove of Data on Currency Boards

With Nicholas Krus, I have written a book-length working paper called Currency Board Financial Statements. Spreadsheets accompanying the paper contain the digitized balance sheet data of currency boards from dozens of countries, both as raw data and in standardized form similar to what the International Monetary Fund does in its International Financial Statistics database. The paper itself gives information necessary to understand the balance sheets and some other aspects of the operations of the currency boards. (Fair warning: the details are often dull, and most readers will want to treat the working paper as they would an encyclopedia, dipping in here and there rather reading cover to cover.)

Data extend from as far back as the mid 1800s to as recently as 2013. For a number of currency boards we have monthly data on currency in circulation as well as annual balance sheet data. The paper fills a large gap in world monetary history. Currency boards have been widespread, existing in more than 70 countries, but their data have not hitherto been available in machine-readable form except for a few recently established cases. Our paper, while not complete, contains data on most of the major currency boards and many of the minor ones. We intend to update the paper as we accumulate further data.

The paper is jointly issued by the CFS and  the Johns Hopkins University Institute for Applied Economics, Global Health, and the Study of Business Enterprise, one of whose directors is CFS Special Counselor Steve H. Hanke. Nick Krus, my coathor, has twin interests in music and economics. While doing much of the work on the paper as an undergraduate student at Johns Hopkins and a researcher at the Institute, he was also in a band that was good enough to go on tour. Currently he combines his interests in his work as an Associate Analyst at Warner Music Group in New York.

CFS and FBI Announce Public / Private Cyber Security Partnership

In the last few days, news about cyber-attacks against a major unnamed hedge fund has highlighted the seriousness of this risk to our overall financial system.

To better assess emerging risks and facilitate coordination surrounding cyber security and threats, the Center for Financial Stability (CFS) and the Federal Bureau of Investigation (FBI) are pleased to announce the formation of a public / private partnership for the financial services community.

Meetings will be hosted by the Vulnerabilities Working Group (VWG) at the CFS. The VWG – more broadly – is at the forefront of gauging financial, macroeconomic, geopolitical, technological, and regulatory risks likely to present over the next 3 to 24 months. Specifically, the technology component will focus on topics such as national security threats, threats to financial institutions, future emerging threats, and crisis management techniques.

The group will be led by Leo Taddeo (FBI) and David X Martin (CFS).

Leo Taddeo serves as the Special Agent in Charge of the Special Operations/Cyber Division of the FBI’s New York Field Office. In this role, Mr. Taddeo leads over 400 special agents and professional support personnel in cyber investigations, surveillance operations, information technology support, and crisis management.

David X Martin is an acknowledged expert on risk management. He has served as the founding chairman of the Investment Company Institute’s Risk Committee (ICIRC), and co-chair of the Buy Side Risk Committee, composed of the chief risk officers of the twenty largest asset management firms. He has also published on cyber security. Prior to CFS, David was the chief risk officer at AllianceBernstein.

Aside from excessive central bank liquidity, cyber threats are a meaningful risk to the financial system and could ultimately be part of the next financial crisis.

For more information about this new partnership, please contact LeAnn Yee (manager of communications and development) at

News reports include:

Hedge-Fund Hack Part of Bigger Siege, Cyber-Experts Warn –

CNBC News Story –

Eduardo Aninat on Capital Tax Increases and Chilean Growth

CFS Advisory Board member and former Chilean Finance Minister Eduardo Aninat comments on proposed policies in Chile to increase the corporate tax rate from 20% to 35% and to eliminate the FUT. He expresses concern regarding the affects the plan will have on investment and growth and challenges the government to show how it came to the conclusion that investment would be unchanged.

See The Wall Street Journal article by Mary Anastasia O’Grady article titled “Assault on the Chilean Miracle.”

CFS DM4 Signaled GDP Downward Revision…

CFS Divisia M4 has proven to be a strong leading indicator of GDP growth. It also provides the most comprehensive real time assessment of the US financial system.

This morning’s downward revision of Q4 GDP data from 3.2% to 2.4% should come as no surprise. The pace of the economy also demonstrated a slowdown from a 4.1% saar expansion in Q3.

On the heels of the September CFS monetary release, we wrote Soft Spot for Financial Institutions and Economy – October 16, 2013.

The weather was clearly not the predominant story in Q4.

Based on our latest data, the economy will likely continue to soften (see CFS Monetary & Financial Data Release, February 19, 2014 or End of the Free QE Lunch, February 19, 2014 – available on request)

CFS Congratulates Professor Steve H. Hanke for the “Doctor Honoris Causa” Honor Bestowed by the BAS

The CFS is pleased to announce that CFS Special Counselor and Johns Hopkins University Professor Steve H. Hanke was awarded the honorary title of “Doctor Honoris Causa” by the Bulgarian Academy of Sciences for his role in the introduction of Bulgaria’s currency board. Professor Hanke served as an advisor to the President of Bulgaria in 1997 when the country was in the worst financial, economic and political crisis in the modern history of Bulgaria.

During the award ceremony, the Prime Minister of Bulgaria, Plamen Oresharski, “expressed satisfaction with the decision of the Executive Council of BAS for the awarding of the title and said how much Prof. Hanke has contributed to financial stability in the country…”

“For more than 15 years our monetary system has been praised and criticized, but it is a fact that it has contributed to the economic progress of our country. I want to thank Prof. Hanke for the periodic reviews – sometimes critical, sometimes encouraging, but always in a positive style. I hope that he will always be predisposed to Bulgaria,” added the prime minister.

Click here for the announcement and an audio file of Professor Hanke’s comments.