Category Archives: Federal Reserve

Wolf Richter: Bank Regulator OCC Details Crazy Risk-Taking, Blames Fed

Yves here. Former Fed Chairman William McChesney Martin famously said that the job of the central bank was “to take away the punch bowl just as the party gets going.” That line of thinking went out of fashion under Alan Greenspan. Now we have the perverse spectacle of the most bank-cronyistic regulator, the Office of the Comptroller of the Currency, berating the Fed for spiking the punch via overly accommodative monetary policy.

The Fed’s Ever-Burgeoning Market Manipulation Support

A set of articles in the Financial Times puts a nasty spotlight on what mission creep, or more accurately, mission leap, at the Fed. The central bank is moving unabashedly into price-setting, and stealth or formally backstopping, of more and more markets

Central Banks Goose Stock Markets

If central banks start pulling the rug out in the form of stopping, or even slowing down stimulus – heaven forfend they raise rates – it could be a rocky ride for the rest of the year for stocks.

Wolf Richter: Fed’s Bullard Calls Out Ignoring Bubbles Developing “Under Our Noses,” So What About Now?

Yves here. It’s been astonishing to see members of the Fed in denial about their own handiwork, so when St. Louis Fed President James Bullard berates his fellow central bankers for their abject refusal to notice pre-crisis bubbles, it’s an all too rare departure from their usual insularity and willful blindness.

The Federal Reserve Versus Hyman Minsky (and Deflation)

How the Fed has gotten itself caught in its own underwear by ignoring Hyman Minsky and in persisting in the clearly failed strategy of super lax monetary policy rather than calling for more government spending.

Philip Pilkington: Why Thomas Piketty is Wrong About Inflation and Interest Rates

Thomas Piketty’s views on inflation and interest rates are decidedly un-Keynesian and wrong to boot.

Randy Wray: What are Taxes For? The MMT Approach

MMT argues that “taxes drive money” in the sense that imposition of a tax that is payable in the national government’s own currency will create demand for that currency. Sovereign government does not really need revenue in its own currency in order to spend.

Richard Alford: Not Only Are Economists in Policy Roles Bad at Forecasting, They Also Do a Poor Job of Allowing for Error

Understanding the odds and possible impact of forecasting error should be a important element of policy design. But it isn’t!

Andrew Ross Sorkin, Timothy Geithner, and the Three Card Monte Model of Propaganda

Truth be told, I had really wanted to ignore Andrew Ross Sorkin’s artfully packaged Timothy Geithner puff piece in the Sunday New York Times magazine. But it makes for a useful study in a not-well-recognized propaganda technique, three card monte.

Why QE May Have Done Net Damage

Quantitative easing has been a controversial policy even among the financiers who benefitted from it.

Is the Strong Dollar the Real Cause of the Collapse of US Manufacturing and Secular Stagnation?

Yves here. I managed to miss this VoxEU post from last month, and it is still timely. It argues that economists have generally been using the wrong measure of relative dollar strength to assess how the level of the currency played into the loss of manufacturing jobs and insufficient internal demand, now better known as “secular stagnation”.

Richard Alford: Has the Fed Learned Monetary Policy Lessons from the Financial Crisis?

Yves here. This post is a devastating critique of current Fed policy. But Alford sets his stage carefully before delivering his conclusions, so don’t be deceived by the tone of the early sections.

Philip Pilkington: The Yield Curve and Recessions – Against US-Centricism

One of the nicest stylised facts in applied economics is that if the Fed inverts the yield curve it will cause a recession. But how applicable is it?

Bitcoin is Not a Currency

Bitcoin is not a currency any more than gold bars or collectable baseball cards are. And that has serious implications for this “innovation”.