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interest rate fallacy

Yield Caps = Toddlers

By |2020-07-08T17:42:59-04:00July 8th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve has cut its QE purchasing pace, and yet the US Treasury Department doesn’t seem hampered by a shortage of bidders for its record-setting note auctions. Far from “too many” Treasuries, prices are once more unequivocal how there aren’t enough. With or without Powell, the auction record is clear and, unlike those constantly talking up the BOND ROUT!!! [...]

Don’t Low Rates On Junk Bonds Mean Fed-fueled Credit Bubble? No. Precisely The Opposite.

By |2020-07-07T19:37:31-04:00July 7th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Despite what we’ve all been taught, and what gets reinforced in the media, it’s not really that difficult to get people to see the interest rate fallacy at least where it all starts. Central bankers say that low rates are stimulus when this runs contrary to every bit of historical experience as well as evidence. Yes, they are lying to [...]

Stocks Haven’t Been Moneyed

By |2020-05-18T19:57:09-04:00May 18th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Why didn’t 1987 turn out to be 1929 redux? Alan Greenspan was deathly afraid this would be the case, and in turn he made everyone else unnecessarily upset along the same lines. Especially Congress. The fact that both stock market crashes occurred during the month of October, though, actually ends the similarities. That plus clueless Federal Reserve officials.Why the one [...]

There Was Never A Need To Translate ‘Weimar’ Into Japanese

By |2020-05-13T17:26:47-04:00May 13th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

After years of futility, he was sure of the answer. The Bank of Japan had spent the better part of the roaring nineties fighting against itself as much as the bubble which had burst at the outset of the decade. Letting fiscal authorities rule the day, Japan’s central bank had largely sat back introducing what it said was stimulus in [...]

Everyone Knows The Gov’t Wants A ‘Controlled’ Weimar

By |2020-05-06T19:37:25-04:00May 6th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There are two parts behind the inflation mongering. The first, noted yesterday, is the Fed’s balance sheet, particularly its supposedly monetary remainder called bank reserves. The central bank is busy doing something, a whole bunch of something, therefore how can it possibly turn out to be anything other than inflationary?The answer: the Federal Reserve is not a central bank, not [...]

Weimar Thirties Didn’t Happen Because It’s What You Don’t See

By |2020-05-05T20:33:28-04:00May 5th, 2020|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was an absolutely mad scramble. Banking difficulties in the Fed’s sixth district, the Atlanta branch, had sparked an irresistible wave of panic which spread throughout the Eastern seaboard. By December 1930, it had reached the streets of New York City – the world’s monetary capital. On December 11, customer withdrawals had left the Bank of the United States with [...]

Just Who Was The Intended Audience For The Rate Cut?

By |2019-09-04T17:26:07-04:00September 4th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way back to last year’s rate [...]

Europe Comes Apart, And That’s Before #4

By |2019-05-29T11:33:09-04:00May 29th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed with last year’s survey. For [...]

Central Bankers Follow Bonds, Then Insist They Aren’t And That Bonds Agree With Them

By |2019-05-24T13:04:09-04:00May 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When central bankers use the word “financial” in an economic context, they mean exclusively stocks. Maybe that’s somewhat appropriate given how bonds are so often treated as monetary equivalents. Then again, if that is the case in the official view, how does anyone reconcile bonds with anything? Economy or money? The hard answer is that officials don’t really care about [...]

The Forced Exile Of Bond Vigilantes

By |2019-04-08T15:40:25-04:00April 8th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Japan is the very model of fiscal irresponsibility. If ever there was a bond vigilante, surely they would have a Japanese address. At the end of what was the Bank of Japan’s 133rd fiscal year, on March 31, 2018, Japan’s central bank reported total assets of ¥528,285,679,854,140. Of which, ¥448,326,107,324,120 was Japanese government bonds (JGB). Officials became increasingly confident these [...]

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