Article Review 9: The Silver Age of the Central Banker

This week’s article is provided by Salient Partners. The author claims that we have moved on from the Golden Age of the Central Banker to the Silver Age of the Central Banker. The Golden Age was when many market participants believed that central bankers were responsible for all market outcomes. The Silver Age of the Central Banker is the demise of the golden age of the central banker. Global central bank coordination is now widespread and begins the new era. Monetary policy is now facing a structural change as it becomes more and more influenced by each nation’s domestic politics. For instance, there have been major declines in export volumes shared by every major economy on Earth. Thus, this points to the fact that the U.S is currently in a recession. Despite the fact that this is just a mild recession, also termed as a earnings recession, the fact of the matter is that this recession is getting worse. The author believes that the problem is that monetary policy leaders are partaking in a strategic interaction. However, they’re playing the Coordination Game instead of the Competition Game. The Coordination Game is like a Stag Hunt, when there’s mutual cooperation to create a stable outcome. The Cooperation Game is like the Prisoner’s Dilemma, which when played successfully gives an extraordinary payoff. The foundations for this shift were easily explained through historical precedents and game theory which made for a fascinating read that was easy to follow.