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Tag Archives: monetary policy
The Capitulation of Jerome Powell and the Fed
The Capitulation of Jerome Powell and the Fed This past week, on March 20, 2019, Federal Reserve chairman Jerome Powell announced the US central bank would not raise interest rates in 2019. The Fed’s benchmark rate, called the Fed Funds rate, is thus frozen at 2.375% for the foreseeable future, i.e. leaving the central bank […]
Weekly Commentary: No One Knows How Monetary Policy Works
Weekly Commentary: No One Knows How Monetary Policy Works My interest was piqued by a Friday Bloomberg article (Ben Holland), “The Era of Cheap Money Shows No One Knows How Monetary Policy Works.” “Monetary policy is supposed to work like this: cut interest rates, and you’ll encourage businesses and households to borrow, invest and spend. […]
Ides and Tides
Ides and Tides Just as presidents are expected to act presidentially, Federal Reserve chairpersons are expected to act oracularly — as semi-supernatural beings who emerge now and again from some cave of mathematical secrets to offer reassuringly cryptic utterances on mysteries of the economy. And so was Jerome Powell wheeled out on CBS’s 60 Minutes Sunday night, […]
A Week in the Life of a Topsy-Turvy Wildly Whirling World
A Week in the Life of a Topsy-Turvy Wildly Whirling World Let’s review this past devilishly whacky week to see if we can divine the way the world is turning and why the markets are churning. It was 2019’s worst week in stocks and, well, just about everything economic all across this crazily spinning planet. […]
Super Mario Draghi’s Day of Reckoning Has Arrived
Super Mario Draghi’s Day of Reckoning Has Arrived “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” — MARIO DRAGHI JULY 26TH 2012 No quote better defines Mario Draghi’s seven-plus years as the President of the European Central Bank than that quote. […]
What If Politics Can’t Fix What’s Broken?
What If Politics Can’t Fix What’s Broken? This is the politics of decline and collapse.The unspoken assumption of the modern era is that politics can fix whatever is broken: whatever is broken in society or the economy can be fixed by some political policy or political process– becoming more inclusionary, seeking non-partisan middle ground, etc. What […]
Loonie Tumbles After BOC Warns There Is “Increased Uncertainty” About Future Rate Hikes
Loonie Tumbles After BOC Warns There Is “Increased Uncertainty” About Future Rate Hikes Another central bank appears to be throwing in the towel on any future rate hikes. Just days after Canada reported an abysmal December GDP print, which declined for the second consecutive month and sparked fears of an imminent technical recession… … the Bank of […]
If Central Banks Are the Only Game in Town, We’ve Lost
If Central Banks Are the Only Game in Town, We’ve Lost Relying on monetary policy to prop up asset prices and smooth out global volatility is a recipe for disaster. Just since December 2018, central banks have collectively injected as much as $500 billion of liquidity to stabilize economic conditions. The U.S. Federal Reserve has […]
Remember, The Fed Hasn’t Actually Done Anything Yet
Remember, The Fed Hasn’t Actually Done Anything Yet When the financial markets got, um, choppy towards the end of 2018, the Fed caved almost instantly. But only rhetorically. Fed chair Powell promised to stop raising interest rates and shrinking the money supply, and the financial markets, trained to salivate at the sound of Fed happy […]
The return to a gold exchange standard
The return to a gold exchange standard This article makes the obvious point that a return to a gold standard is the only way nations can contain the interest cost of servicing debt, given the alternative is inflationist policies that can only lead to far higher interest rates and currency destruction. The topic is timely, […]
Who Knows the Right Interest Rate
WHO KNOWS THE RIGHT INTEREST RATE On January 6, we wrote the Surest Way to Overthrow Capitalism. We said: “In a future article, we will expand on why these two statements are true principles: (1) there is no way a central planner could set the right rate, even if he knew and (2) only a free […]
Doug Noland: Central Banks Are “Hostages Of Market Bubbles”
Doug Noland: Central Banks Are “Hostages Of Market Bubbles” Doug Noland’s weekly Credit Bubble Bulletin is always required reading. The latest – befitting the amazing things that have happened lately – is more necessary than usual. But at 10,000 words it’s also a lot longer than usual. So while everyone should definitely read the whole thing, here are some […]
Here Comes The Shanghai Accord 2.0: China Unleashes Gargantuan Credit Injection To Start 2019
Here Comes The Shanghai Accord 2.0: China Unleashes Gargantuan Credit Injection To Start 2019 One month ago, we pointed out a curious shift in the official language out of China’s central bank: in late December, when traders were generally away on vacation, the PBOC indicated a critical shift in the official monetary policy description at the December […]
The Pseudo-Psychology Behind Monetary Policy
The Pseudo-Psychology Behind Monetary Policy In his various writings, the champion of the monetarist school, Milton Friedman, argued that there is a variable time lag between changes in money supply and its effect on real output and prices. Friedman holds that in the short run changes in money supply will be followed by changes in […]
RBI Bows To Political Pressure With Unexpected Rate Cut
RBI Bows To Political Pressure With Unexpected Rate Cut Fed Chairman Jerome Powell isn’t the only leader of a major central bank to capitulate to political (and market) pressure so far this year. On Thursday, RBI Gov. Shaktikanta Das during his first meeting at the helm of the bank led a 4-2 vote to cut […]
