My entire premise was to make this mockingly simple. Econometrics demands mathematical precision yet always comes up empty because its calculations, no matter how elegantly complex, proceed from the falsest of subjective assumptions. It won’t matter how awesome the computing power if the thing you’re trying to compute doesn’t work or act the way you believe (because everyone says so [...]
60.1 Quantitative Easing 20 Year Anniversary!———Part 1 Summary———On March 19, 2001 CNN described quantitative easing by the Bank of Japan as "inject[ing] a large amount of money into the Japanese economy." It wasn't large, it wasn't money, and it never got to the economy. In two decades nothing has changed; not in Japan - not anywhere. ———Episode 60 Intro——— Jeff [...]
One other fascinating, corroborating angle to the short run picture comes at us from Europe, specifically Germany. As illustrated yesterday, there’s a whole bunch of market prices/indications from around the world which have keyed in on February 24-25 as a possible turning point. The most obvious candidate which may have triggered it would be February 25th’s major US Treasury selloff. [...]
There is, or at least can be, value in treating economic variables in the way econometrics does for the purposes of understanding generalized behavior. The problem for Economists, these statisticians, is that they’ve turned stylized lessons drawn from regression analysis into literal rules defining their worldview. By 1957, Milton Friedman had already been busy publicizing just those. Positive Economics was [...]
Federal Reserve Chairman Jay Powell rarely gives media interviews. Most of his interaction with journalists takes place in the carefully controlled – and credentialed – environment of post-meeting press conferences. One notable exception was last May when the Fed’s head guy visiting with 60 Minutes so that he could, pardon the expression, lie his ass off. Today, March 25, 2021, [...]
59.0 The Best Podcast Intros of Making Sense, Season 1———Episode 59 Intro———March 23, 2020 is a day that no financial market participant will forget. It was the day that America's S&P 500 put in its low and stock prices began their climb to "what looks like a permanently high plateau." More importantly, it was the day that Making Sense debuted. [...]
To paraphrase the great man Michael Scott: I’m not superstitious but I’m a little stitious. Something like premature celebration, or not counting chickens before the embryos finish their time in their eggs. Don’t spike the ball at 5 yard line (let alone the 30). In January 2014, Central Banking magazine handed out its first annual awards. After a tumultuous few [...]
In theory, it goes like this: QE or any sort of large-scale asset purchase (LSAP) undertaken by a central bank is needed during times of trouble in order to reduce interest rates in general. Buying bonds seems like it would lower yields, and lower yields mean more accommodative credit, therefore a boost to the real economy.So simple, straightforward, and intuitive, [...]
58.3 Izabella Kaminska on Green Bitcoin, Privacy & NFTs ———Part 3 Summary——— Izabella Kaminska, editor of Alphaville - the Financial Times blog, talks: bitcoin free-market green energy, non-fungible tokens, cryptocurrency's role in the monetary order, intraday interbank liquidity, central bank command-economy green agendas and more! ———Episode 58 Intro——— Welcome to Making Sense. Jeff Snider and I are joined by a [...]
There is a bit of a benefit from all this SLR “cliff” business, though tangential in nature. It is another test of the “too many” Treasury hypothesis, the idea that a lot of the problems in funding markets like repo had been caused by the government’s fiscal profligacy (especially following December 2017’s TCJA “tax reform”). With foreigners selling UST’s, and [...]
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