Throughout the 1990’s, calculated productivity in the US skyrocketed in what was taken then as a sign of monetary and economic genius, the “maestro” as it was. By the incomplete measures we have, that certainly seemed to be a plausible case. Starting in 1997, the BLS’s first measure for economic productivity, output per hour, surged. The consequence of that productivity [...]
Personal Income and Spending continue to suggest only further weakness. While there is a whole lot of caution necessary when analyzing this data due to its susceptibility to large revisions, there is still only further deceleration on both sides of the consumer. Nominal Disposable Personal Income (DPI) was up just 3.4% year-over-year in September 2016, below the 3.8% average of [...]
As I argued earlier, the 2-year change in the CPI (or PCE Deflator) is a useful assessment of not just inflation but money in general. It verifies in no uncertain terms what we suspect about “stimulus.” It is not just rare but practically unheard of where the inflation rate drops and then stays there. Yet, inflation has done so now [...]
The headline CPI accelerated to 1.46% year-over-year in September, the highest calculated inflation rate for this index since October 2014. That was up from 1.06% in August and seemingly quite different than the -0.04% last September. To many, that looks like and is believed to be progress, an end to the drag of the dollar and oil. In many ways [...]
When Alan Greenspan raised rates more than a decade ago, he just commanded that they be raised and the markets dutifully obeyed. The myth was unchallenged that the Fed could, if it wished, flood the market with bank reserves to reduce rates or contrarily starve it of reserves to raise them. The events of 2007-09 were essentially direct defiance to [...]
Last April, former Fed Chairman Ben Bernanke wrote a series of blog posts for Brookings that was intended to explain one of the biggest contradictions of his legacy. If quantitative easing had actually worked as he to this day suggests that it did, why wasn’t the bond market in clear agreement? In order to try to reconcile the huge discrepancy, [...]
Though I highly doubt he will admit it, he’s just not the type, even Ben Bernanke knows on some level that bond market is decidedly against him, or at least his legacy. Economists have a funny way of looking at bonds, decomposing interest rates into Fisherian strata. To monetary policy, interest rates break down into three parts: expected inflation over [...]
As noted earlier today, the bond market is not truly a mystery or middle. In very simple terms that even Alan Greenspan might be able to understand, rising inflation and economic opportunity are reflected in higher interest rates and a steeper yield curve; full stop. The bond market, however, does not possess a crystal ball and thus must rely on [...]
Alan Greenspan is confused - again. The man who admitted to the world a decade ago he didn’t know much if anything about interest rates is now trying to change that reputation by suggesting yet again interest rates are set to rise. In testimony before Congress in February 2005, the then-Chairman of the Federal Reserve actually said: For the moment, [...]
For some reason Alan Greenspan’s opinions are still taken seriously. No one single person has done more to damage the economic long run that his Keynesian training told him would never matter. We are living in that increasingly desolate long run, and yet somehow to the media to some nontrivial extent beyond it he has maintained credibility. What is most [...]
Stay In Touch