It’s interesting what the eurodollar futures curve has done today. Over the past several weeks, of course, the curve has collapsed though with much more focused buying at the front end of it. That’s understandable given the common scenario being priced in – that the Fed will reluctantly be forced into sizeable rate cuts very soon. In fact, the current [...]
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. If everyday folks don’t want [...]
Even I’ve become numb over the years to some of the blatant mischaracterizations. Looking at any small positive number for whatever small economic account and declaring it the mark of a strong economy is standard procedure nowadays. But it’s the brazenness with which “they” are now attempting to discount the sudden reappearance of the minuses. I’ve said all along that [...]
The real question is why no one says anything. They can continue to make these grossly untrue, often contradictory statements without fear of having to explain themselves. Don’t even think about repercussions. Even in front of politicians ostensibly being there on behalf of the public, pedigree still matters more than results. It’s actually worse than that since all that I’m [...]
In the middle of 1919, the United States was beset by a great many imbalances. Having just conducted a wartime economy, almost everything before then had been absorbed by the World War I effort. With fiscal restraint subsumed by national emergency, inflation was the central condition. Given that the Federal Reserve was by then merely a few years old, no [...]
It was announced yesterday that former New Jersey governor and one-time head of MF Global John Corzine won’t be allowed anywhere near clients in the futures business. Though a lifetime ban, the man is already 70 years old and the damage done. Perhaps there is some more comfort in the $5 million fine levied against him in addition to the [...]
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 [...]
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 [...]
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 [...]
Japan fell back into recession again in Q3, expected this time, which is actually being charitable to Abenomics and especially QQE. To even believe that this monetary insanity has produced even marginal benefits, it has to be given “credit” of at least mini-recoveries in between these “technical recessions.” It is a problem far worse than that, as even a technical [...]
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