covered interest parity

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32-04:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the difference between repo and federal [...]

The Basis For The Changing Basis

By |2017-03-28T12:13:18-04:00March 28th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It is simply the nature of modern Economics to get most things backward. Positive Economics particularly in the form of econometrics has been like a declaration of ignorance, where Economists have formally decided to try and understand as little as possible. If you know anything about statistics you know why, for the one thing that bogs down statistical equations and [...]

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