For the last several years, the US recovery following its experience with the global 2015-16 downturn has been lacking in several key dimensions. Reflation #3 in the real economy has reflected the lack of momentum and altitude in the snapback across the eurodollar system. As such, of all the reflation episodes this last one was upside down; it was by [...]
While still a professor of Economics at Princeton, future Federal Reserve Chairman Ben Bernanke was also a Research Associate for the NBER. In 1999, in his capacities with the latter organization, Bernanke advocated for widespread adoption of inflation targeting. At that time, only a few central banks had experimented with it and there wasn’t much evidence for its effectiveness. Publishing [...]
More than any conundrum in the bond market, the Federal Reserve has one on its hand much closer to home. Its home, anyway. The effective federal funds rate (EFF) has been stapled to IOER for each of the last fifty trading days. No variation whatsoever. EFF had converged with IOER back in October. A lot of ugly things began to [...]
There is much more chicken to each hawk than any of the birds would care to admit. What I mean by that is fairly straightforward, or it should be. Alan Greenspan was resolute. Right or wrong (the latter, trust the curves), after taking federal funds down to 1% officials pushed the rate right back up to 5.25% without pause. At [...]
Over the last decade, the US economy has been experiencing “residual seasonality.” It has begun each year unusually weak. For Economists expecting it take off in each and every one, this is more than a thorny contradiction. When it happened again in 2015, at the worst possible moment for the mainstream view, they had finally had enough. The Bureau of [...]
While Western markets breathed a sigh of relief that US GDP didn’t confirm the global slowdown, not yet, what was taking place over in Asia went in the other direction. There has been a sense, a wish perhaps, that if the global economy truly did hit a rough spot it would be limited to just the last three months of [...]
A month behind schedule, Q4 GDP sure did disappoint. I don’t mean that it was disastrously weak, rather it came in right down the middle benefiting neither camp. The BEA’s not preliminary but not quite second revised GDP estimate for Q4 2018 was 2.55617% (seasonally adjusted compounded annual rate) above Q3. Not strong enough to dispel every growing worry, at [...]
What gets them into trouble is how they just can’t help themselves. Go back one year, to early 2018. Last February it was all-but-assured (in mainstream coverage) that the US economy was going to take off. The bond market, meaning UST’s, was about to be massacred because the overheating boom would force a double shot down its throat. Not only [...]
Early in May 2013, the word “taper” exploded into the mainstream. It was everywhere, scarcely an article written or news story pieced together which hadn't included the term (even though Ben Bernanke never actually said it). The so-called tantrum spread like wildfire simply because of what it represented, the very thing everyone had been waiting for. Confirmation at last the [...]
The obsession with inflation is grounded in historical fact. This is true both of our recent “conundrum” as well as broader circumstances surrounding slow burning structural changes. As to the former, last year the global economy was supposed to take off, concurrently signaled by accelerating inflation rates due to what are always claimed to be tight labor markets. The worldwide [...]
Stay In Touch