Home » Posts tagged 'neel kashkari'

Tag Archives: neel kashkari

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Panic Sets In: Fed Promotes More Free Money

Panic Sets In: Fed Promotes More Free Money

Lawmakers need to do more says Minneapolis Fed President Neel Kashkari.

Free Money for 18 Months

The Fed cannot directly give money away so that burden falls on Congress. Kashkari follows Fed Chair Jerome Powell in seeking Congressional Action.

“They are going to need more. If this is a slow recovery, the way I think it is — I think we’re in this for months, a year, 18 months — there are going to be a lot of families that are going to need direct financial assistance,” Kashkari said Thursday during a virtual event with CBS. “I think a V–shaped recovery is off the table.”

“Putting money directly in the hands of laid-off Americans is, I think, the most direct way to get assistance, and then they will spend the money where they need it,” Kashkari said. “I just think money in the pockets of people who have lost their jobs is what we need right now until we can get the health care system to catch up and get control of this virus.”

I case you were wondering what sent the S&P in a huge 70-point S&P 500 U-Turn today, that reason is as good as any.

Powell’s Message

Yesterday, Powell made similar statements, just not as forceful. 

Recall that the Fed has lending powers, not spending powers. A loan from a Fed facility can provide a bridge across temporary interruptions to liquidity, and those loans will help many borrowers get through the current crisis. But the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending.

…click on the above link to read the rest of the article…

Weekly Commentary: Rejoicing Central Banker Capitulation

Weekly Commentary: Rejoicing Central Banker Capitulation

June 21 – Neel Kashkari, Minneapolis Fed president: “In the Federal Open Market Committee meeting that concluded on Wednesday of this week, I advocated for a 50-basis-point rate cut to 1.75% to 2.00% and a commitment not to raise rates again until core inflation reaches our 2% target on a sustained basis. I believe an aggressive policy action such as this is required to re-anchor inflation expectations at our target.”

May 31 – Bloomberg (Matthew Boesler): “It’s too early for the Federal Reserve to begin cutting interest rates despite increasing concerns about low inflation and an escalating trade war, said Minneapolis Fed President Neel Kashkari. ‘Either of those could be cause for changing the path of monetary policy, Kashkari told Bloomberg… ‘I’m not quite there yet. I take a lot of comfort from the fact that the job market continues to be strong.’”

In three short weeks, Kashkari’s view evolved from “It’s too early” to begin cutting rates to advocating a dramatic 50 bps cut that in the past would have been in response to a market or economic shock. Yet nothing that extraordinary has occurred over recent weeks, outside of a major bond market rally that has the amount of global debt trading at negative yields jumping $2 TN to a record $13 TN (from Bloomberg). Unprecedented as well, talk is heating up for a 50 bps cut with the S&P500 at all-time highs (and corporate Credit spreads narrowing sharply and overall financial conditions loosening notably).  

Markets, Rejoicing Central Banker Capitulation, have no intention of letting off the pressure. There will be unrelenting pressure as well on Chairman Powell to fall in line – or face demotion. Crazy.  

 …click on the above link to read the rest of the article…

Dear Fed, It’s Not “Really Hard to Spot Bubbles”

Dear Fed, It’s Not “Really Hard to Spot Bubbles”

Here are some visual aids to help the Fed spot the housing bubble.

Minneapolis Fed President Neel Kashkari was the latest Fed official to claim in an essay – thus following in the time-honored footsteps of former Fed Chair Ben Bernanke – that “spotting bubbles is hard,” that the Fed cannot see them, and that if it could see them, it shouldn’t do anything to stop them because it had only “limited policy tools,” and because “the costs of making policy mistakes can be very high.”

But it’s OK to use these “limited policy tools” to inflate the greatest bubbles the world has ever seen and then preside over the damage they cause to the real economy before they even implode.

Neither Kashkari nor anyone else working at the Treasury Department in 2006 – when they were tasked by Secretary of the Treasury Hank Paulson to look for signs of trouble because they were “due for some form of crisis,” as he writes – could see any bubbles, not even the housing bubble although it was already beginning to deflate.

“It is really hard to spot bubbles with any confidence before they burst,” Kashkari writes, specifically naming stock prices and house prices. “Everyone can recognize a bubble after it bursts, and then many people convince themselves that they saw it on the way up.”

So here are some visual aids I put together for Kashkari and other Fed governors. It will help them “spot” the beautiful housing bubbles in the US – because bubbles really aren’t hard to recognize before they burst, if you want to recognize them.

What’s hard to predict accurately is when they’ll burst.

…click on the above link to read the rest of the article…

 

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase