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Money And Inflation; In Evidence

By |2016-08-03T18:38:19-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of [...]

Money And Inflation; Japanese Evidence

By |2016-08-03T18:39:28-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Offering the longest track record of balance sheet policy, the Bank of Japan should have been a cautionary tale for the central banks that have since followed. Unfortunately, ideology at the center of monetary policy in all jurisdictions leaves no room for objective interpretation such as this. Economists and policymakers (redundant) believe QE works, full stop. When it doesn’t, such [...]

Money And Inflation; European Evidence

By |2016-08-03T18:40:13-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The ECB’s experimentation with balance sheet expansion, both as a matter of bank “reserves” and overall balance sheet size, encompasses at least two distinct episodes. The first began in earnest in May 2010 with the initial concerns being limited to Greece and eventually PIIGS nations, finally exploding in later 2011 as a full-blown crisis (and far more than euros, it [...]

Money And Inflation; US Evidence

By |2016-08-03T18:41:08-04:00August 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Yesterday’s publication of PCE and Personal Income also included the monthly update for the PCE Deflator, the Federal Reserve’s stated preference for measuring inflation in the economy. The June 2016 figures for the deflator were also negative in terms of both short and longer term perspectives. The year-over-year change in the index was just 0.88%, down slightly from 0.94% in [...]

It Was All A Dream

By |2016-08-02T16:31:15-04:00August 2nd, 2016|Markets|

Last Friday the Statistics Bureau of the Japanese Ministry of Internal Affairs and Communication reported some more bad news for Prime Minister Abe and really Bank of Japan chief Kuroda. Month-over-month, the consumer price index was down again, leaving it 0.48% less in June 2016 than June 2015. This was the third consecutive month of increasingly negative year-over-year CPI estimates. [...]

What Is Truly Left of the ‘Recovery’

By |2016-07-28T17:04:42-04:00July 28th, 2016|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Oil prices are like an unfolding train wreck, as it is nearly impossible to look away now.  Day after day, not only are spot prices down but the entire WTI curve is now moving lower in almost perfect unison.  Prices have dropped six days in a row, more than $4, and at just above $41 seems a much different world [...]

The ‘Dollar’ May Only Ever Rhyme

By |2016-07-26T11:21:39-04:00July 26th, 2016|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It isn’t just that oil prices are falling, that is only one dimension of the full oil spectrum concentrating in the spot market. The more interesting and important information is contained within the whole WTI futures curve. As “dollar” funding pressure has built up since the front month peak on June 8, it has steepened the curve into deeper contango; [...]

The Helicopter Has Already Been Tested And, Surprising Nobody But Economists, It Failed Spectacularly

By |2016-07-19T11:42:21-04:00July 19th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Most of what passes for modern monetary policy is nothing more than one assumption piled upon another (and then another, and so on). Taken for granted for so long, rarely are these unproven precepts ever challenged to justify themselves to the minimal standard of internal consistency, let alone prove discrete validity by parts. The latest is “helicopter money”, another sham [...]

Little More Than Sentiment(ality) To Asian ‘Dollars’?

By |2016-07-18T11:53:14-04:00July 18th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The Chinese yuan fell again in Monday Asian trading, breaking below 6.70 for the first time. Not surprisingly, the tone to broad early trading in Europe and the US was slightly negative on what would be negative “dollar” factors. I have surmised for some time that Japanese banks have been the primary “dollar” supply for Chinese “dollar” needs, so it [...]

Magic Number Bias

By |2016-07-11T11:33:39-04:00July 11th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

As an outsider, it is difficult to gain the pulse of Japanese politics. Viewing it all only from an economic or financial perspective is immediately too narrow. There is far more than just Abenomics at stake, though Prime Minister Abe used the crutch of Abenomics’ failure so far as somehow a benefit. There are other factors, perhaps more important factors, [...]

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