According to Jon Hilsenrath at the Wall Street Journal, the FOMC is starting to use the ephemeral idea of “headwinds” to argue in favor of persistent monetary intrusion. He offered several examples, most of which sound like this: New York Fed president William Dudley said in an interview with the Wall Street Journal this month that “persistent headwinds” to growth [...]
It is somewhat of a fair criticism that playing armchair quarterback years after events unfolded amounts to lazy or devalued analysis. Picking apart assessments with the full benefit of hindsight is seemingly unfair to the participants and targets of any reproach. It also may appear to be irrelevant to spend so much time when current events demand more attention and [...]
The day after Lehman Brothers failed, the FOMC gathered to discuss how to conduct monetary business in the wake of the turbulence that decision created. Every single participant was willing to roll the dice on standing pat for two very big reasons. First, they felt that had been aggressive enough to counteract any downside, and that being aggressive in that [...]
It may come as a surprise to some, but that is exactly the sentiment that central banks have been expressing for years; decades even. The economists at the Federal Reserve, ECB, BoE, BoJ and elsewhere see themselves as scientists, the equivalent of nuclear engineers sitting inside the control room of a nuclear reactor. They have gauges and math telling them [...]
Despite the obvious disinterest from pretty much everyone in the media, I still find tremendous relevance and value in the 2008 FOMC. The entire year was spent in a comedy of errors that should make even the most ardent monetarist shameful. This is not to say that I would have preferred more diligent and swift action on the part of [...]
Despite now two doses of QE taper and much more confirmation that the FOMC will be committed to that course, gold prices have not collapsed. Conventional wisdom has been uniform in believing QE as inflationary, and thus a positive for gold prices (despite the trajectory since 2011). Removal of QE should have been, if this thinking is correct, a negative [...]
THOMAS HOENIG, “Mr. Chairman, I have thought about this considerably because I think we have come to a time in our history when we have institutions that clearly ought to be and may in fact be too big to fail. I think we tend to react ad hoc during the crisis, and we have no choice at this point. But [...]
As late as September 2008, the FOMC’s primary concern remained inflation. There were caveats and characterizations abounding through the conversation, but each time they kept coming back to uncomfortably high inflation and the extrapolations of that through their models. The old Philips Curve dies hard, and even with the financial turmoil already rotting through the entire edifice, policy discussion was [...]
Ask and ye shall receive. Only a few days after noting how curious it was that the 2008 FOMC meeting transcripts had not yet been posted, today they arrived. Unfortunately for me, it means I will be stuck reading through (yet again) the arrogant slop of all-too-comfortable monetary mystics. At the September 16, 2008, FOMC meeting, the day after Lehman’s [...]
It is a definitive facet of the modern central bank that mystique is often more precious than actual skill or competence, including specific knowledge of the economy or markets (or both together). Such an aura is predicated solely on the plausibility that the central bank actually possess such. Removing that veil, as has been done in some measure since 2007, [...]
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