Today, Darrell Duffie asks if it is time to draw down the Fed’s multitrillion-dollar balance sheet. Michael McFaul writes about the new dawn in Hungary and what it means for global antidemocratic forces. And Eugene Volokh dives into a Florida judge’s decision to dismiss President Trump’s $10 billion defamation suit against The Wall Street Journal.
Freedom Frequency
The 2008 Global Financial Crisis set off enormous growth in the Federal Reserve’s balance sheet—and COVID measures and quantitative easing kept adding to the increase. Today, reserve balances are 300 times bigger than they were in 2007, writes Senior Fellow Darrell Duffie, who asks: Does the Fed really need them to be so high? Large caches of reserves are a direct response to the needs of the biggest and most complex banks to show self-sufficient sources of liquidity, he writes, and the banks are leery of appearing to fall short on this metric. Still, there are strategies the Fed could promote that would bring down that need for $3 trillion in reserve balances, he writes—if these changes are carried out mindfully. Read more here.
Hungary Votes
For MS Now, Senior Fellow Michael McFaul writes of the impact of Hungarian strongman Viktor Orbán’s election loss on Sunday. After 16 years in power, during which Orbán worked to gerrymander, court-pack, and influence-peddle his way to permanent control, the opposition Tisza party now has a supermajority in the House of National Assembly. McFaul writes that new Hungarian leader Péter Magyar will stop blocking EU assistance for Ukraine, slowly cut Hungarian imports of Russian oil and gas, and begin to repair democratic institutions in his country. “In the 21st-century struggle between autocrats and democrats, these election results in Hungary rank among the most significant outcomes in the past 20 years,” he writes. Read more here.
Revitalizing American Institutions
A cross-disciplinary group of scholars from Hoover and around the country gathered at the Hoover Institution on March 6 to discuss the culture on university campuses in the United States, particularly with respect to how this culture shapes open inquiry, the welcoming of students from different backgrounds and viewpoints, and public trust in higher education. “Our universities continue to be critical national assets for research and scientific innovation, for developing a well-informed citizenry, for leveling the playing field for success, for social mobility,” Brandice Canes-Wrone, director of the Center for Revitalizing American Institutions (RAI), told attendees. “And yet at the same time, we’re at a time of historically lower public trust. And as we'll talk about more today, a lot of that lower trust relates to cultural critiques.” The gathering was organized by Canes-Wrone and Senior Fellow Eugene Volokh as a collaboration between RAI’s initiative on higher education and the Hoover Institution Program on Free Expression, which Volokh leads. Read more here.
On his blog, Senior Fellow Eugene Volokh breaks down why a judge in the Southern District of Florida dismissed President Donald Trump’s lawsuit against The Wall Street Journal over its reporting on Trump’s alleged contribution to a book compiled to celebrate the 50th birthday of the late sex criminal Jeffrey Epstein. Trump’s complaint hinged in part on the claim that WSJ reporters’ continued investigation into the veracity of the entry in the birthday book, after Trump told them it was “totally fake” constituted actual malice. “To establish actual malice, "a plaintiff must show the defendant deliberately avoided investigating the veracity of the statement in order to evade learning the truth,” Judge Darrin Gayles wrote. “The Complaint comes nowhere close to this standard. Quite the opposite.” Read more here.
Iran
In The New York Post, Visiting Fellow Bjorn Lomborg points out that natural gas–produced artificial fertilizers are crucial to global food production, and about 25 percent of all artificial fertilizer produced each year has to pass through the Strait of Hormuz. “The UN estimates that the [current US-Iran] conflict could drive fertilizer prices up by 15% to 20% and push at least another 45 million people into acute hunger,” Lomborg writes. The ingenuity of methods such as using natural gas to produce fertilizer are the main reason only a small fraction of the world’s population experiences chronic hunger today. Read more here.
Related Commentary