Europe has not been left out of the “reflation” trend, with some seemingly good news having been reported recently. Inflation has ticked up to the highest in three years. The Harmonized Index of Consumer Prices (HICP) for the Euro Area was 1.1% in December 2016, year-over-year, the first measure above 1% since September 2013. It is easy to see oil [...]
When US exports were reported a few months ago to have risen (slightly) in August 2016, it was widely expected that that increase was the start of many to follow. It was, after all, the first positive number on the export side since the end of 2014 after more than a year and a half of nothing but contraction. In [...]
The whole monetary issue as it pertains to the eurodollar system can be succinctly summed up as balance sheet capacity. In pure monetary terms, that is an enormous distinction. What counts as money is not what almost everyone still thinks it is, though those view should have been shifted almost a decade ago in August 2007. Money is instead “money”, [...]
Since the ECB began the Public Sector Purchase Program (QE) in the middle of March 2015, it has purchased (through the end of November 2016) almost €1.2 trillion in securities from the financial sector. In addition to that, the central bank has bought €46.2 billion in corporate bonds, and €148 billion of covered bonds in a third iteration in that [...]
While certain markets continue to dream of the economy that might be, we continue to be stuck with the economy that continues to be nothing like it. Last week the Census Bureau reported that exports fell slightly year-over-year in September 2016 after rising slightly in August for the first positive number in two years. On the import side, marginal US [...]
The end of the week finds the initial release of “flash” PMI readings across much of the world. In what will be surprising only to economists and policymakers, the commonality is “slowing.” It is never good to find universal deceleration, of course, but especially so in the second half of 2016. To begin with, whatever rebound there was in the [...]
Speaking yesterday in Reno, Nevada, San Francisco Fed President (and CEO) John C. Williams delivered remarks on the normalization of monetary policy. So as not to put the cart before the horse, Williams noted that first the economy must do so before the FOMC can even consider the same for their self-assigned tasks. I’ll start with a quick overview of [...]
Under traditional “rules”, devaluing of a currency is supposed to bring about a measurable, even obvious increase in the export sector of the country undertaking the manipulation. The Japanese have been notorious for believing in the paradigm, and not just in the past four years under QQE and the whispers of it. Some people still believe that China is merely [...]
In early 2005, the US Senate began debating a bill seeking to impose a broad 27.5% tariff on Chinese exports to the United States. Congress was emotionally moved by the supposed problem of pegging the yuan to the dollar, then at about 8.28 CNY for every USD. In reality, the problem wasn’t so much dollars as “dollars”, meaning that because [...]
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 [...]
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