Relevant and even prescient commentary on news, politics and the economy.

Will A Rise in Interest Rates Lead to a New Debt Crisis?

by Joseph Joyce Will A Rise in Interest Rates Lead to a New Debt Crisis? The question of when the Federal Reserve will begin to reverse its loose policy stance continues to be a topic of widespread speculation. At last month’s meeting of the Federal Open Market Committee, its members showed a willingness to cut back on asset […]

How the Fed Cornered the Long Bond

Fed Treasury Holdings 5-7-2014 The above link should take you to a PDF showing the Fed’s System Open Market Accounts holdings of Treasury Bonds and Notes which the second link will tell you comprise $2.224 trillion of the total $4.017 trillion of SOMA Holdings, with that total including $1.631 trillion of Fannie and Freddie Mac […]

U.S. Federal Intergenerational Debt: Rendered and Layered

It is a common trope among Austerians that the U.S. is passing on unsustainable debt to our children and grandchildren. And certainly there are some scary numbers out there, for example “$17.4 trillion!!” A very real number. But maybe it would be useful to render that number down so as to calculate real incidence of […]

Evidence of Hampered Monetary Policy Transmission Channel in the Euro Area

Evidence of Hampered Monetary Policy Transmission Channel in the Euro Area by Rebecca Wilder Mario Draghi cautioned on the ‘hampered’ transmission channel of monetary policy in his now famous London speech last week: To the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within […]

The Non-Relationship Between Interest Rates and the Money Supply, Part 2

by Mike Kimel The Non-Relationship Between Interest Rates and the Money Supply, Part 2Cross-posted at the Presimetrics Blog. This post is a bit less about Presidents than usual, but its a follow-up to last week’s post on the non-relationship between the money supply and interest rates. (That post appeared both at the Presimetrics and Angry […]

The Non-Relationship Between Interest Rates and the Money Supply

by Mike KimelThis piece has been cross-posted at The Presimetrics Blog. The Non-Relationship Between Interest Rates and the Money Supply Figure 1 The graph shows that all but one recession since 1948 was preceded by a big drop in the real money supply per person over the length of a year. The exception – July […]

Economists = Idiots? Part 1829

It was their idea, so it’s no surprise they like paying interest on reserves, even excess reserves: For quite a while, the Fed was quite happy to have that money on its books. Indeed, the power to pay interest on reserves was considered a key tool to keep control over all the liquidity the Fed […]

Get ready for a little EM inflation

Today I was thinking about tightening cycles in emerging markets; and more specifically, about that in China. Because let’s face it, China matters. China matters to the rest of Asia via competition for export income. China matters to Europe via competition for jobs. China matters to Brazil via domestic production via imports. China matters. The […]

Fed Policy

Discussion point: Is it time for the Fed to start contracting its’ balance sheet and otherwise withdrawing the special financing it provided while it was faced with the zero interest rate boundand preparing to soon raise fed funds. My fed policy index says the zero bound should no longer apply and that it is time […]