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

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 […]

Today in "Economists Are NOT Totally Clueless" (Interlude; Part 2 of 3 or 4)

Tyler Cowen can count: In sum, maybe three percent expected inflation conflicts with the desire to rapidly recapitalize banks through maintaining a wide interest rate spread. Maybe we need that zero nominal short rate or at least the Fed thinks we do…. I also regard this as a somewhat gruesome hypothesis. It means that “Main […]