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Economy

Another Word Degraded By Depression: Reflation In 2016 Doesn’t Actually Mean Reflation

By |2016-11-28T19:15:36-05:00November 28th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Dating all the way back to February 11 and the Chinese turn on the “dollar”, the eurodollar futures curve had been stuck in a relatively narrow range. That trading band was widened a bit in June before and after Brexit (related to CNY’s regular mid-year drop), with futures on the whole curve bid up to early July and then slightly [...]

The Last Ride Of The Unemployment Rate

By |2016-11-28T16:05:17-05:00November 28th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s easy to set aside the nostalgia, so to speak, since this is likely the last Christmas holiday season to be talked about in the media in the positively glowing terms of the unemployment rate. Ever since the “recovery” began, each and every year the internet and TV channels are filled with stories about how strong the consumer is and [...]

A Brief History of ‘Money’; Part 3 Quotation Marks of Dimensional Expansion

By |2016-11-25T18:37:15-05:00November 25th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Part 1 is here. Part 2 is here. From the point of the Great Crash forward the interbank market mostly ceased to exist. Having first learned the hard way about money and liquidity, the federal funds market as well as the trend for recirculating borrowed reserves largely died out. Banks overall carried massive reserve balances far in excess of what [...]

A Brief History of ‘Money’; Part 2 Disaggregation

By |2016-11-25T18:36:06-05:00November 25th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Part 1 is here. Having used monetary policy and proved its ability to manage big things and even force onto the monetary system and the economy big changes, the Federal Reserve grew in esteem and prestige so that what followed was the hardening assumption that monetary policy could be used similarly for all circumstances. It was not just the burgeoning class [...]

A Brief History of ‘Money’; Part 1 The Historical Foundation For QE

By |2016-11-25T18:33:35-05:00November 25th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One of the biggest intellectual impediments to understanding where we are in the arc of monetary evolution is Positive Economics. As Milton Friedman described it in 1953, it was essentially the doctrine of trying to explain a lot knowing very little. In such a simple description it sounds ridiculous, but in the reality of complex systems growing only more complex [...]

The 2014 Economy Lingers On Under The Hope For Something Different

By |2016-11-23T12:18:39-05:00November 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For the month of July 2014, total durable goods orders exploded higher in a fit of Boeing. The growth in aircraft orders in percentage terms was so large as to be meaningless. On a seasonally-adjusted basis, total durable goods (using the latest benchmarks) went from $236.3 billion that June to $290.8 billion for July. Coming as it did in the [...]

Repo On The African Plain

By |2016-11-22T17:48:37-05:00November 22nd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

That the repo market, as noted yesterday, has been beset by a persistent collateral shortage is relatively uncontroversial. Where once large blocks of MBS tranches were central to interbank flow and funding, their absence is still a fact of operation though that repudiation was a very long time ago. Even with that backdrop, however, it doesn’t explain a whole lot [...]

Haven’t We Done This Before?

By |2016-11-21T19:13:40-05:00November 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

It is an apparent contradiction to where we can describe a desperate money supply situation yet stock prices, in particular, are at all-time highs or at least outwardly unconcerned about all of it. This isn’t anything new, however, as noted last week where we may be witnessing the third or fourth iteration of the same repeating cycle. It was, after [...]

It’s Not Just Supply But Also Distribution

By |2016-11-21T18:00:23-05:00November 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

With money market reform (2a7) more than a month in the rear view, LIBOR rates continue to rise regardless. Three-month LIBOR jumped to 91.622 bps Friday, up from 88.4 bps to begin the month of November. The 1-year maturity is now well over 160 bps, up more than 100 bps going back to November 2014. Since 2a7 is behind us, [...]

Where Friedman Meets Rothbard

By |2016-11-21T13:32:26-05:00November 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One of the most significant pieces of legislation ever argued and turned into law was the Banking Act of 1935. Maybe even more than the Emergency Banking Act of 1933, the legislative basis for Executive Order 6102 and the end of gold inside the United States, the 1935 law codified what were in 1933 more properly observed as experiments. The [...]

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