The yield on the 10-year US Treasury closed at around 1.68% today, but judging by the haughty commentary surrounding global bond markets you would be forgiven if you thought it was 2.68%. Since the low in July around 1.37%, that +30 bps apparently seems like it to many people. Going back to the end of QE2, the idea that rates [...]
The Federal Reserve’s Labor Market Conditions Index (LMCI) fell to contraction again in August. After rebounding in July for the first positive reading of 2016, the LMCI dropped to -0.7 in the latest update. As usual, revisions have reshaped the levels of indicated problems throughout the past two years, but overall the trend remains. From this view of the labor [...]
Just a little over a year ago, the Institute for Supply Management (ISM) released its purchasing manager index for the services sector for August 2015. Though the level was down slightly from July, coming amidst the immediate aftermath of the “shocking” financial quakes starting in China and spreading to markets all over the world, the 59.0 non-manufacturing PMI was welcome [...]
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 [...]
Most of what passes for modern monetary policy is nothing more than one assumption piled upon another (and then another, and so on). Taken for granted for so long, rarely are these unproven precepts ever challenged to justify themselves to the minimal standard of internal consistency, let alone prove discrete validity by parts. The latest is “helicopter money”, another sham [...]
On November 4, 2010, then-Federal Reserve Chairman Ben Bernanke wrote his infamous oped for the Washington Post “welcoming” the world to a second round of quantitative easing. The very fact that there was a second iteration belied the whole point of “quantitative”, but the mistakes about “easing” have proven far more problematic. There wasn’t anything new or unusual in his [...]
On June 14, the 10-year German bund yield traded briefly below zero for the first time. It was an inauspicious record but one that defines the contradictions at the center of all this economic and monetary controversy. On the one hand, that is what central banks tell us they are after especially with QE, to reduce interest rates even at [...]
When former Dallas Fed President Richard Fisher stepped down last March after a decade in that role, the New York Times (of course) wrote his professional obituary under the headline Richard Fisher, Often Wrong But Seldom Boring. Fisher had apparently viewed his own philosophical root and career at the Fed as something of an updated Paul Volcker, not surprising given [...]
Orthodox economic theory assigns recession to some exogenous “shock.” Without it, an economy is supposed to grow indefinitely along its trend or potential baseline so long as NAIRU (non-accelerating inflation rate of unemployment) is maintained. As you can imagine, economists and policymakers spend most of their time on that latter part which is one reason, though more so ideology, that [...]
Monetarism, at its core, is relatively quite simple. It would have to be, standing upon ground of nothing much more than generic concepts for almost every important economic factor. But all of it can be distilled into the idea of money supply; given “enough”, the economy will thrive. That view includes some of the worst of conditions so long as [...]
Stay In Touch