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monetary contraction

‘Nowhere To Go But Up’ Survives Because The Fed Refuses To Be Honest About Its Assessment of the Output Gap

By |2017-04-04T19:05:42-04:00April 4th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve under Ben Bernanke committed several unforgivable mistakes during his tumultuous tenure, but cumulatively they could be easily summarized as “they really don’t know what they are doing.” Time and again whoever followed monetary policy and the conventions built upon it were led either off a cliff or somewhere just less dramatic. Federal Reserve actions are at best [...]

Global PMI’s ‘Languish’

By |2016-10-03T12:42:22-04:00October 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

From the orthodox binary view, PMI’s aren’t making any sense. Convention currently dictates that the economy must be growing, and where not moving unambiguously toward recession. Translating those expectations into these sentiment surveys means that under expectations for the former PMI’s should be not just above 50 but increasingly so, while the recessionary condition should measure nothing above 50 and [...]

Trapped In Low Growth By Ineptitude

By |2016-08-08T17:40:52-04:00August 8th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The mainstream, dominant view of monetary policy remains as if it were “accommodative” or “stimulus.” Low rates and/or balance sheet expansion are treated as one and the same in terms of economic effects. The mountain of economic evidence since the end of the Great Recession, however, argues that that view is backward; starting with the observation that the Great Recession [...]

Economics of the Second Wave

By |2016-07-26T16:04:18-04:00July 26th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is a core fallacy at the heart of monetary policy (actually there are many, but I'll keep it to just this single instance for the sake of brevity), one that was exposed by Milton Friedman himself, though indirectly and quite accidentally related to how he proposed an alternate scenario for the Great Depression. His view was that the Fed by [...]

Second Wave A Second Time, The Second Part

By |2016-07-25T18:24:49-04:00July 25th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

What happened in the period between 2007 and 2011 was the same that happened in 1930 and really 1931. The monetary “miracle” of the 1920’s was predicated on the same sets of inequalities and imbalances; revealed afterward in not just the crash that unwound the core processes but really in the lack of recovery that followed. We need only turn [...]

Second Wave A Second Time

By |2016-07-25T18:09:38-04:00July 25th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It seems as if the FOMC still doesn’t know what to make of itself. In June, the May payroll report released earlier that month clearly spooked them; not even Esther George bothered to dissent in favor a rate increase. Since then, the world seems so much better. The media tells us with every new economic release how “strong” the economy [...]

The ‘Costs’ Of Beyond The Cycle

By |2016-07-13T18:01:57-04:00July 13th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

We have to acknowledge that economic statistics are imperfect even under the best conditions. But that doesn’t mean we shouldn’t try to measure comparative circumstances where conditions are less than ideal or conventional. In terms of a business cycle, we think of recession as negative GDP; to the point that conventional “wisdom” actually believes two consecutive quarters defines one. Not [...]

The Warning Embedded Within The Interest Rate Fallacy

By |2016-06-28T18:28:57-04:00June 28th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On November 4, 2010, then-Federal Reserve Chairman Ben Bernanke wrote his infamous oped for the Washington Post “welcoming” the world to a second round of quantitative easing. The very fact that there was a second iteration belied the whole point of “quantitative”, but the mistakes about “easing” have proven far more problematic. There wasn’t anything new or unusual in his [...]

Politics of the Monetary Noose

By |2016-06-27T12:05:06-04:00June 27th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In June 2015, Pew Research Center conducted a poll of citizens in European countries in order to gauge public sentiment of the European integration project. They found what they thought was a rebound in favorability. The survey conducted in 2013 appeared then to have been the low point, with the 2014 update finding an uptick in support. By last year, [...]

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