Financial Anarchy

By |2015-09-21T12:32:23+00:00September 20th, 2015|Economy, Federal Reserve/Monetary Policy, Investing|

The Federal Reserve left interest rates at 0 after their 2 day policy meeting this week. Less concerning, they lowered the forecast for future rates. We have red and green street lights. Why? Because society finds it beneficial that people using our streets aren't speeding through an intersection from both directions at the same time. We [...]

Raise the Rate and Stop Punishing Savers

By |2015-09-08T18:07:24+00:00September 7th, 2015|Federal Reserve/Monetary Policy|

For the past 7 years we've listened to the so-called "experts" bemoan the "extraordinary" Fed policies. They called them dangerous, untested, experimental. Now all of a sudden there is a change of heart? Don't raise the rate?? It is too risky?? It would be irresponsible and dangerous?? The markets and the economy couldn't possibly bear an interest rate above [...]

The Depressive Tale of Nominal Yields

By |2014-09-08T17:36:07+00:00September 8th, 2014|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It is easy to get carried away with modern finance, diving into the immense flourishing of finance that has taken place. Conceptions have become far more complex, sometimes unnecessarily so, leading to impairments in distinguishing forest and trees. In credit markets, we focus narrowly on spreads and curves because that is where the “action” seemingly [...]

The Dustbin Of Post-Panic History: QE Finally Joins The ‘Stimulus’ Bill

By |2014-07-09T15:52:49+00:00July 9th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

The FOMC policy statement confirms without much doubt that there has been a major shift in conditions and outlook. To reiterate in what cannot be overstated, the purpose of implementing QE was to create economic conditions that conformed to the historical understanding of economic growth. If not so much 1995, Bernanke’s FOMC wanted to return [...]

Home Construction Not Buying Supply Explanation

By |2014-06-17T11:14:29+00:00June 17th, 2014|Economy, Federal Reserve/Monetary Policy, Markets, Real Estate|

When home sales rose M/M (slightly) in April for the first time in 2014, the NAR theorized it as the turnaround signal. Their reasoning for it was strange in the context of basic, intuitive economics (meaning non-textbook). Rising prices on too few available homes for sale was supposed to signal more construction, as this shortage [...]

Low Inflation Taper Theory

By |2014-04-15T16:50:10+00:00April 15th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

There was considerable attention given to Janet Yellen’s appeal toward “optimal control” language in prior speeches and toward her confirmation. The idea is such that the newly committed 2% inflation target does not need to be a “rule.” Under optimal control, the FOMC may tolerate an inflation rate above that target if it allowed unemployment [...]