Category Archives: Federal Reserve

Charles Plosser, the Fed’s Inflation Hawk

The president of the Philadelphia Fed, Charles Plosser, is tough on inflation. He is not a member of the FOMC until 2008, and is breaking rank with the official Fed view in expressing his worries about the risks of permissive monetary policy. Plosser argued prior to the Fed rate cut that a reduction wasn’t necessary; […]

Rate Cut Gives Little Relief to Commercial Paper Market

Despite the lift the Fed’s rate cut gave to the stock and corporate bond markets, the commercial paper market remains in distress. While CP outstandings are still falling, which is not good, particularly given this month’s maturing CP is much greater than last month’s, the level of decline is not as severe as during the […]

Has the Repudiation of the Dollar Begun?

The Fed’s unexpectedly large cut to the discount rate said loud and clear that its priority is domestic growth, not preserving the value of the depreciating dollar. Yet as we have pointed out, the dollar’s status is a tremendous asset for the US, not to be squandered. It gives us the ability to borrow in […]

Fed Policy Too Expansive on Its Own Terms

In an interesting Brookings Institution paper (hat tip Greg Ip at the WSJ Economics Blog), former Federal Reserve economist Douglas Elmendorf looks at the question of whether monetary policy in the run-up to the credit contraction was too loose. However, he argues that the impact wasn’t great enough to have caused the housing bubble: Let […]

Bernanke’s Bind

A great deal of ink has been spilled on yesterday’s 50 basis point cut in the Fed funds rate and parallel reduction in the discount rate. I am very time stressed, so this quick reaction will (hopefully) be followed by a more thoughtful piece in the next day or so. First, even though I think […]

The Journal Tells Us Now A Rate Cut Will Have Little Impact?

If one didn’t know better, it might be possible to think that a page one story today, “Too Much Hope May Be Pinned On Rate Cut.,” was a decent piece of journalism. But to reach that conclusion, you need to overlook a few things. First, the story is late. Those who were early to recognize […]

Krugman Savages Greenspan’s Revisionist History

Alan Greenspan made the mistake of resorting to a tired and increasingly ineffective move from the Bush playbook. Specifically, tell a big lie long and loudly enough, and quite a few people will come to believe you. But in Greenspan’s case, this tactic may be backfiring. Greenspan seems to have forgotten that some of the […]

Greenspan’s Novel Housing Bubble Theory

One of the salient differences between Greenspan’s and Bernanke’s tenure as Fed chairman (at least so far) was Greenspan’s skill at playing to his audience, which was the financial press, Congress, and market participants. With the publication of his memoirs next week, Greenspan will be performing for a larger crowd, although it will be dominated […]

The Real Difference Between Greenspan and Bernanke

Bloomberg has a good piece today contrasting Bernanke’s and Greenspan’s problem solving styles. But reading it set off a flash as to where their real difference lie. We’ll review Bloomberg’s take and then mine. The Bloomberg piece, “Bernanke Spurns Greenspan Quick Fix, Seeking Data, Deliberation,” is a flattering bit of reporting. It tells us that […]

Bank of England’s Tough Position Absent From the Wall Street Journal

One of our forms of recreation is keeping an eye on how coverage of certain news stories in the Wall Street Journal is curiously different than elsewhere. We’ve noted before that the WSJ tends to put a happy face on economic and market news (its company reporting is considerably more evenhanded). The latest reporting disparity […]

Scary Words From Martin Wolf: End of Global Imbalances

Martin Wolf, the Financial Times’ highly regarded chief economics editor, has a particularly sobering article today, “Challenge of rescuing world economy,” and Wolf is a serious sort to begin with. Wolf uses a couple of less widely discussed presentations from the Fed’s conference at Jackson Hole as his point of departure. He contrasts one by […]

Thomas Palley on "America’s Distorted Expansion"

Economist Thomas Palley has a very interesting post today on our current economic conundrum, and he traces the problems to blind faith in globalization rather than permissive monetary policy or out of control financial innovation. Palley starts from an earlier point than most do, noting that our recent expansion has been unbalanced. He sees the […]

Robert Reich Uses the R Word

Robert Reich’s latest post, “The Way to Prevent the Looming Recession.” argues that monetary policy won’t prevent the coming recession and therefore policy makers need to consider tax cuts: With the economy heading for recession, all eyes are on Ben Bernanke and the Fed, and the question everyone is asking is how much the Fed […]

Foreign Investors Abandoning US Treasuries

The rally in Treasuries, due primarily to a flight to quality by US investors, has masked a troubling trend: a retreat from Treasuries by foreign investors. Today’s Bloomberg story quotes investors openly discussing their disenchantment with the dollar. This is more significant than it might appear. First, this selling of Treasuries is almost certain to […]