For as long as there have been people, there have been great people who have spent their time thinking about money. For as long as money has existed, the reasons to commit so much to studying its beautiful and horrific effects have been obvious. It’s really only been the last half century when ignorance had become the preferred position.So much [...]
The term “balance sheet recession” is one that had come up more often a little more than half a decade ago. At the same time everyone at the Fed, especially Bill Dudley, was wondering why QE had kept coming up (way) short of every one of its goals, some of them began to speculate about this other thing. If the [...]
Flash PMI’s for September 2020 around the world add more evidence to the possibility of a global slowdown during the economy’s all-important rebound quarter. Q2 was the big downturn, and so it always going to be Q3 where the bounce back would be sharpest. While that has definitely been the case, concerns are mounting for what might follow in Q4. [...]
Working with my colleague Joe Calhoun (mostly him), we’ve come up with what we think is a list of questions that quite naturally arise from this week’s discussions of bank reserves, some specific and technical, the monetary system, some theoretical, some practical, and the (much) wider economic consequences which follow from those. 1. When the bank buys a Treasury note/bond/bill [...]
If we are going to see negative nominal Treasury rates, what would guide yields toward such a plunge? It seems like a recession is the ticket, the only way would have to be a major economic downturn. Since we’ve already experienced one in 2020, a big one no less, and are already on our way back up to recovery (some [...]
According to the US Energy Information Administration (EIA), crude oil production fell below 10 mbpd during the final week of August 2020. Hurricane Laura had looped through the Gulf of Mexico, forcing the widespread shutting down of drilling and pumping activity throughout the offshore oil patch. It was the first time total American crude supply had dropped below that level [...]
Wait, wait, wait. Hold up. The Federal Reserve just concluded its near two-year long Grand Strategy Review. The purpose, in its most basic component, was to figure out why inflation hadn’t shown up in the manner everyone at the Federal Reserve spent years promising even though the unemployment tumbled to 50-year lows. The labor market was so tight, inflation was guaranteed. [...]
Since the unnecessary destruction brought about by GFC2 in March 2020, there have been two detectable, short run trendline upward moves in nominal Treasury yields. Both were predictably classified across the entire financial media as the guaranteed first steps toward the “inevitable” BOND ROUT!!!! Each has been characterized as the handywork of master monetary tactician Jay Powell. There is some [...]
You can (and should) read the entire text of Richard Clarida’s speech delivered today (via webcast) for the Peterson Institute for International Economics. The Federal Reserve Vice Chairman’s remarks are a perfect example of the unnecessary gobbledygook that Economists like him reach for when clarity is warranted. You’d think after being unable to meet their definitions for their statutory mandate on [...]
If you have to work overtime just to catch up to where you were supposed to be, you haven’t done a good job. It’s really that simple. And in the context of inflation, therefore legitimate economic growth as distinguished from fake booms, that’s really all bond yields are.The lower rates go, and the longer they stay lower, the more they [...]
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