Archive for the ‘Quantitative Easing’ Category

Notes From Underground: Yellen Dethrones Bernanke

October 20, 2014

Last Friday, Chair Yellen delivered a speech at the Boston Fed’s Conference on Opportunity and Inequality. The present Fed Chair has frequently opined on the social and economic problems of income equality and I have been very critical of her wading into the waters of social and fiscal policy for many of the previous 80 years issues of wealth inequality have been dealt with through fiscal and social action. I don’t have a moral issue with Yellen’s outlook on wage inequality but I do not think it is the purview of the Federal Reserve Board to use its financial authority in placing the issue into the public domain. The FOMC has enough on its list of responsibilities without taking on the role of advocate for workers of America. Yellen’s dinner table and social engagements is a fine arena for her moral views but she dreads into very dangerous waters when using the political power of her office.


Notes From Underground: Who Fears the Repo Market?

September 11, 2013

Is the repo market more important than the Fed’s tapering? According to Manmohan Singh and his paper, “Collateral and Monetary Policy,” an IMF Working Paper, it seems that the Fed’s efforts to pare down its vast balance sheet will be much more significant for the markets. This work by Singh is critical to dealing with the issue of money and its velocity, or the lack of velocity of money that has kept the inflation rate down (despite all the predictions of rampant price increase due to the huge liquidity creation by the FED). The FED‘s vast $3.5 trillion balance sheet has kept high-grade collateral from providing the lubrication to the credit/repo markets.


Notes From Underground: Is It Possible To Win BEN STEIN’S Money? (BEN Bernanke + Jeremy STEIN)

July 7, 2013

The unemployment data from the U.S. and Canada were very much on target. After last month’s robust employment data, there was a small decrease in Canadian jobs and nothing outstanding in terms of manufacturing hiring so nothing to see north of the border. The U.S. nonfarm payrolls were slightly higher than expected but the average hourly earnings, which were more powerful, rose 0.4% (or 10 cents an hour). Increased wages are needed to sustain consumer demand so this was a positive factor in the data. Also, the April and May NFPs were both revised higher, making the markets believe that a September tapering of asset purchases is on the schedule. The U.S. BOND MARKETS were sold aggressively, sending yields on the long-end of the curve soaring.