Orthodox monetary theory tells us that central banks matter, a lot. Monetary policy is supposed to be the difference in everything from economy to currency. If one central is doing one thing and another central bank something different, it is presumed the only necessary information to infer what markets and therefore economies might do in response. The Federal Reserve is [...]
You can understand to some small degree economists’ collective confusion about inflation. They believe in wage dynamics, where a recession through mass layoffs creates slack and thus depresses wages. The recovery in a period of robust growth re-employs those unfortunate workers, and after enough time when that slack is reduced or even eliminated wages accelerate again (increased competition for labor). [...]
In April 2011, the European Central Bank’s staff and Governing Council were all optimistic. They had suffered through the panic and Great “Recession” and then the relapse in 2010 that birthed the term PIIGS. Despite all that and with considerable effort on their part (especially the purchasing of bonds), they thought there was reason to be quite optimistic. Inflation by [...]
In October 2015, Federal Reserve Vice Chairman Bill Dudley admitted that the US economy might be slowing. In the typically understated fashion befitting the usual clownshow, he merely was acknowledging what was by then pretty obvious to anyone outside the economics profession. Dudley was at that moment, however, undaunted. His eye was cast toward the unemployment rate and that was [...]
Brexit, Trump’s election, even the Bank of Japan rumored to be thinking helicopter. Last year was the year of thinking differently and therein was hope. No matter how many times some markets and especially media blindly accepted the “stimulus” or “recovery” judgments of economists over the years, by 2016 and the near-recession globally that accompanied a “rising dollar” that nobody [...]
The mainstream media is about to be presented with another (small) gift. In its quest to discredit populism, the condition of inflation has become paramount for largely the right reasons (accidents do happen). In the context of the macro economy of 2017, inflation isn’t really about consumer prices except as a broad gauge of hidden monetary conditions. Therefore, if inflation [...]
It is often said that the market for US Treasuries is the deepest and most liquid in the world. While that’s true, we have to be careful about what it is we are talking about. There is no single US Treasury market, and often differences can be striking. The most prominent example was, of course, October 15, 2014. In truth, [...]
In the midst of revisions season, everything is up for re-evaluation. Some end up as big changes, others mere footnotes. A lot has been revised (lower) about the past few years, particularly surrounding the substantial downturn at the end of 2015. Inflation rates are not among that list. The PCE Deflator has been given only mild benchmark revisions in contrast [...]
The entry of the United States into World War I placed a heavy financial burden on the government. The scale of such encumbrance was at the time almost unthinkable, and today is incomprehensible. Federal government expenditures in 1916 were all of $734 million, with $125 million financed by the new income tax authorized a few years prior by the 16th [...]
The TIC data for May was inconsistent. It has been that way for several months, and importantly describes what I think is the operative “dollar” condition. Though the data is several months old already, we can tell by certain real-time prices and indications that the difference between 2016 and 2017 is very clear in some parts, and none in others. [...]
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