In the late 1990’s, economists attempted to get reacquainted with something that they previously believed was an artifact of long ago history. The plight of Japan during that decade had revived fears of deflation and depression. Some economists, those daring enough to challenge entrenched notions, began even to contemplate whether or not it could happen here. Writing in the New [...]
As usual, everyone is focused on the wrong part of the FOMC statement. There is already a lot being made about the one sentence inserted as “hawkish” sentiment that puts the economy, supposedly, back on its fruitful, “full employment” track. In a clear sigh of relief undoubtedly in relation to the scary May payroll report, the July 2016 FOMC statement [...]
The IMF released the first 2016 edition of its World Economic Outlook (WEO). Titled Too Slow For Too Long, it seems as if the institution has finally caught on to the fact that the global recovery never really was a recovery. Throughout the report you get the sense that they are starting to figure out what is going wrong but [...]
Someone emailed me this article published at Yahoo!Finance that purports the Fed’s tightening is going to send stocks soaring, the DJIA mentioned specifically heading toward 25,000. The way in which this thesis was derived is the object of inquiry, starting with the belief that QE4 (QE5 by my reckoning) is forthcoming. This is not due to the Fed realizing its [...]
Economists had noticed by the mid-1970’s that what they thought were steady money relationships with the economy had broken down. This divergence was not slight; how could it be given that the era still stands today as the Great Inflation? Ostensibly, a great deal of research on the topic was devoted to monetary policy implications which is a direct assault [...]
Dealer banks are accomplishing their withdrawal from FICC and the eurodollar necessities of dark leverage in the typical corporate fashion. For one, there is attrition as past derivatives trades simply runoff or mature. Second, banks have been engaging in what are called compression trades to an enormous degree, the money dealing equivalent of synergy. Finally, dealers have been studious and [...]
Economics is a not a science. It tends to emulate the appearances by which outwardly hard sciences project in terms of rules and especially mathematical complications, but it does not conform. Karl Popper observed in 1972 that, “Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory [...]
The central bank monolith is revealed to fracturing. The most evident appearance of that was the Bank of Japan’s recent surprise, where the vote to increase QQE was 5-4. But it has been more than Japan where divergences in policymaker positions are apparent. That includes, of course, the ECB, though not due to the Germany/not-Germany divide that has been a [...]
I have said this on many prior occasions, and it bears stressing and focused repetition, that there is an ongoing and troubling change blowing in the academic winds of economic orthodoxy. It is troubling because there seems to be no challenge to these “best and brightest” that are essentially trying to excuse their own systemic failure. The lack of recovery [...]
Recently there has been a slight increase in interest over the money supply figures, particularly M1; nothing too major but some perceptible chatter. Going back in the weekly data, you find that the growth rate suddenly jumps in early February. For anyone searching for inflation, which includes practically the whole of the orthodoxy, this might seem like a sign of [...]
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