It is a basic element of logic that if A = B and B = C, then A must also equal C. In terms of action, if I do a thing and that thing always leads to a predictable outcome, not seeing that outcome causes one to question whether or not one actually did that thing. In other words, A [...]
In April 2009, the new Obama administration created somewhat of a political controversy when it was originally reported by the Wall Street Journal that the US was providing $2 billion or more to fund offshore drilling – in Brazil. To many on the “right”, that seemed quite hypocritical given the public stance on all things oil. My interest is entirely [...]
In the late 1990’s, economists attempted to get reacquainted with something that they previously believed was an artifact of long ago history. The plight of Japan during that decade had revived fears of deflation and depression. Some economists, those daring enough to challenge entrenched notions, began even to contemplate whether or not it could happen here. Writing in the New [...]
Back in early July, Bloomberg published a rather curious article that sounded like it was written from within the People’s Bank of China - or any other global central bank for that matter. The most prominent correlation over the past year had been CNY and everything else; or, as I wrote earlier in the year, CNY down = bad. The [...]
By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of [...]
Offering the longest track record of balance sheet policy, the Bank of Japan should have been a cautionary tale for the central banks that have since followed. Unfortunately, ideology at the center of monetary policy in all jurisdictions leaves no room for objective interpretation such as this. Economists and policymakers (redundant) believe QE works, full stop. When it doesn’t, such [...]
The ECB’s experimentation with balance sheet expansion, both as a matter of bank “reserves” and overall balance sheet size, encompasses at least two distinct episodes. The first began in earnest in May 2010 with the initial concerns being limited to Greece and eventually PIIGS nations, finally exploding in later 2011 as a full-blown crisis (and far more than euros, it [...]
Yesterday’s publication of PCE and Personal Income also included the monthly update for the PCE Deflator, the Federal Reserve’s stated preference for measuring inflation in the economy. The June 2016 figures for the deflator were also negative in terms of both short and longer term perspectives. The year-over-year change in the index was just 0.88%, down slightly from 0.94% in [...]
It might be expected that monetary policy would fail to achieve its goal in attempting to manage the economy when it cannot even meet its own basic technical requirements. The main lever of Fed policy continues to be the federal funds rate even though it is entirely irrelevant, and has been for a long time. There is much more to [...]
Looking back it almost sounds like a completely different world. In the end, however, the world hasn’t changed, perceptions have. On May 10, 2012, German newspaper Spiegel reported that Bundesbank’s (Germany’s central bank) chief of its economics department, Jens Ulbricht, testified in the German parliament that German inflation was likely to be, “somewhat above the average within in the European [...]
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