201707.19
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The Plural of Anecdotes Is Beige

As noted before, the Federal Reserve’s Beige Book collection of local bank district anecdotes are fascinating for all the wrong reasons. What is revealed is not the state of the economy, but rather the state of how policymakers perceive or often wish the economy was at various points. If the 2007 Beige Books are a…

201707.13
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All Conundrums Matter

Since we are this week hypocritically obsessing over monetary policy, particularly the federal funds rate end of it, it’s as good a time as any to review the full history of 21st century “conundrum.” Janet Yellen’s Fed has run itself afoul of the bond market, just as Alan Greenspan’s Fed did in the middle 2000’s….

201707.03
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Some Global Odd & Ends

When it comes to central bank experimentation, Japan is always at the forefront. If something new is being done, Bank of Japan is where it happens. In May for the first time in human history, that central bank’s balance sheet passed the half quadrillion mark. It should be unsettling where a trillion is a rounding…

201707.03 5

Questions

We often have discussions in the office that consist primarily of asking questions. Sometimes they are questions we don’t think people are asking enough, sometimes questions we are sick of hearing and most often questions which we can’t answer. Not questions that only we can’t answer but rather ones that no one can answer based…

201706.29
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The Mother Of All Bait’n Switches

In light of light inflation measurements, central bankers have no other choice but to step up their rhetoric. Mario Draghi took the mantle earlier this week and has been joined at various points by others. The message they are sending is one that is purposefully muddied. There isn’t left to them any other choice. There…

201706.26
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Weird Obsessions

People often ask why I care so much about China. In some ways the answer is obvious, meaning that China is the world’s second largest economy (the largest under certain methods of measurement). Therefore, marginal changes in the Chinese economy are important to understanding our own global situation. But it goes much deeper than that….

201706.23
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Central

The Phelan Act of 1920 sounded simple in principle. It authorized the various Federal Reserve Banks, at that time twelve district branches operating independently, to charge progressive interest rates on the rediscounting activities at their respective windows (the discount rate was the interest charged to obtain collateralized funds from the various reserve banks). Private banks…

201706.16
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Haunting Yellen

I wouldn’t put it in the category of LBJ “losing Cronkite”, but it is at least a measure of amplified pressure (or just any pressure). This week has been utterly embarrassing for the Federal Reserve, a central bank that refuses to define clearly what it is attempting to do. It leaves questions even for who…

201706.12
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American Expectations, Chinese Prices

The Federal Reserve Bank of New York has for the past almost four years conducted its own assessment of consumer expectations. Though there are several other well-known consumer surveys, FRBNY adding another could be helpful for corroborating them. Unfortunately for the Fed, it has. The latest update for May 2017 suggests a considerable decline in…

201705.15
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Less Than Nothing

As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs. It has been this way…