Tag Archives

Archive of posts published in the tag: Federal reserve

A Financial Warning Shot

The bailout of the overnight repo market by the NY Fed has raised a lot of questions. Why was the financial market unable to respond without Fed help? What caused such an unpredictable surge in demand that caused rates to double overnight? Such conditions are ripe for theories and I have mine.

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The New Challenge of a Growing Economy

Most do not realize that we have not yet paid the bill for the recession and the Obama spending. Obama depended on the Keynesian multiplier to stimulate the economy. It failed because too many other friction costs counteracted it; including higher taxes, increased regulations, and a generally unfriendly business climate in DC. Even without these friction costs, the benefit of the multiplier is limited. 

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Prosperity and Inflation

from Steve Forbes, The Fed Needs A New Leader–And New Policies, Too: Yellen openly and unapologetically made clear that our central bank still hews to the discredited theory that prosperity causes inflation. “The economy is operating relatively close to full…

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The Greenspan Put

The Man Who Knew by Sebastian Mallaby is an excellent biography of Alan Greenspan, but it may have greater value in understanding the power and limitations of the Federal Reserve itself. Greenspan has been accused of being an ideologue by…

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Misunderstanding Money

from Steve Forbes at Forbes Magazine,  Reckoning for Biggest Wrecker of U.S. Economy: Economies aren’t machines that can be calibrated, like automobiles. They are billions of people making decisions numerous times a day. The idea that central planners, whether they’re…

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The Buyer of Last Resort

So there we have it. The unicorn buyer of last resort will be the Fed. The “lender of last resort” for the financial system, the governmental guarantor for all the big banks and other “systemically important financial institutions,” the backup…

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Pre-Progressivism

Henry Oliner 2016 01 21 In the campaign leading up to William McKinley’s campaign of 1896 the two hottest topics in political debate was tariffs and currency.  Consider them as prominent as health care and immigration are today. Tariffs and…

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Creating Zombie Businesses

from John Mauldin’s Thoughts from the Frontline excerpts: By encouraging a reach for yield in riskier investments because interest rates are abnormally low, the Fed has created an environment in which far more risk is being taken than is normal and…

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A Liquid State of Inaction

More than  few from the opposition have criticized corporations for sitting on too much cash.  Companies are not in the cash holding or cash management business.  Especially in today’s environment of near zero return on short term holdings, one should…

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A Demand for Security

Scott Grannis writes in his blog Calafia Beach Pundit (highly recommended) – Money Supply and Panic Update – 9/9/11. Excerpt: And what does all this tell us? One: If the supply of dollars is not rising faster than the demand for…

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A Victim of Our Own Success

Monetary policy seeks to promote economic growth through the proper management of the currency. The trick is to create enough money to provide growth without losing control of inflation. This is no small task. We are a nation addicted to…

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Conspiracy Theories

Mistakes are undramatic. We all make them, but many would prefer the drama of sinister motives and conspiracy theories  to the realities of bad judgment and human error. It makes for better headlines and fodder for book titles. Conspiracy theories…

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Mission Creep at the Fed

The most misunderstood aspect of the success of the Reagan led supply side revolution was the monetary aspect. The idea adapted from Robert Mundell’s theory was that the Fed should focus ONLY on monetary matters and that fiscal policy should…

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The Limits of the Federal Reserve

Kevin Warsh writes in the Wall Street Journal, The New Malaise and How to End It. I have contended that the Fed under Bernanke is committed to doing whatever it takes to stimulate the economy, but that any benefit of…

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A Tale of Two Market Crashes

From Thomas Sowell’s Intellectuals and Society “In short, many things that the Federal Reserve, Congress and the two Presidents did (during the market crash of 1929) were counterproductive.  Given these multiple failures of government policy, it is by no means…

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What Did Not Cause the Financial Collapse

With the clarity of time we can look back at the brink of the collapse that hit us just prior to the last national election.  In the midst of the collapse we were stunned and angry, and tended to blame…

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Fannie Mae : The Federal Reserve for Housing

“Fannie and Freddie played the political game even more fiercely than their opponents, spending millions of dollars on armies of lobbyists on Capitol Hill. Each company was a revolving door for the powerful in Washington- both Republican and Democrat. Newt…

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