President Donald Trump has had his issues with his own hand-picked Federal Reserve Chairman Jerome Powell. At one point there were even discussions about Trump attempting to demote the chairman if not “firing” him for failure to keep interest rates low enough to finance the massive budget deficits. The Covid pandemic, coupled with 2019’s Powell pivot, seems to have satisfied the President’s lust for negative REAL YIELDS as Powell is no longer the object of Twitter derision. (more…)
Posts Tagged ‘financial repression’
Notes From Underground: Waiting for Godot, or Waiting for Jerome?
September 15, 2020Notes From Underground: Venturing Into the Global Morass
August 25, 2020As we get back up to speed, here is another FRA podcast, with Barry Ritholz, David Rosenberg and myself. Enjoy the discussion as we prepare for the the coming volatility of the election season. Pandemics, recessions, elections, oh my.
Notes From Underground: It’s An Infamnia
May 21, 2015As we come to the Memorial Day holiday, the markets are still focused on Greece; the Fed’s desire to raise rates (or not); the ECB and its new policy of front loading its bond purchases to deal with the low volume of the summer months; China’s slowing growth; and the regular array of global macro concerns from politics to the continued role of central bank liquidity programs and the continued impact of QE on global asset prices. Tonight, the Bank of Japan will announce its interest rate decision and it seems that Governor Kuroda will keep the present policy in place: NO RATE CHANGE AND NO INCREASE IN ASSET PURCHASES.
Notes From Underground: “And all My Words Come Back To Me In Shades of Mediocrity” (Paul Simon)
December 3, 2013This reference is to Janet Yellen’s testimony in her Senate confirmation hearing as the chairman-to-be cited the benefits of the Fed’s policy of über low rates for the average household. While many Senators challenged the negative effects of the Fed’s policy for savers–financial repression in the words of Carmen Reinhart–Yellen noted that people were not just savers but also consumers. Thus, Fed policy may harm the return on savings, but households may receive the benefit of lower home and auto loans and the Fed’s QE policy may have had the ripple effects of getting their college graduate a job. So financial repression was a very difficult outcome to measure against the broad economic outcomes.
Notes From Underground: Bernanke and Yellen Are in Lockstep With Policy
March 4, 2013Friday night Chairman Bernanke delivered a speech on long-term interest rates at the Annual Monetary/Macroeconomics Conference sponsored by the San Francisco Federal Reserve. The basis of his remarks was that the Fed would continue to maintain its robust monetary accommodation because any early extraction may result in the economy slowing and thus the Fed would have to move to extend the period of aggressive Fed action. It is always important to remember that Ben Bernanke is the main ’37er in the realm of preventing an economic relapse to the deflationary impact of deleveraging. When I say that Chairman Bernanke is a ’37, it refers to the pledge the chairman made to Professor Milton Friedman at the esteemed economist’s 90th birthday party. Bernanke said the Fed made a huge mistake by tightening rates and reserve requirements in 1937 while the U.S. Treasury was instituting an austerity budget at the behest of Secretary Andrew Mellon. It has been Bernanke’s belief that the Fed’s actions coupled with a badly flawed fiscal policy sent the U.S. back into a very severe recession.
Notes From Underground: The Fed’s Dilemma
January 7, 2013The Fed’s policy has painted itself into a proverbial corner. A ZEROHEDGE piece shows that in the age group of 16-55 there has been a loss of 2.7 million jobs during the previous few years, while in the 55-69 age group there has been a gain of 4 million jobs. This has been a recurrent theme of Notes From Underground during the last two years. The FED‘s policy of financial repression has resulted in an outcome that its beloved models failed to predict. The baby boomers haven’t been able to retire because their saving plans have been undermined by the zero interest rate policy. Zerohedge shows that debt-ladened college graduates are unable to find jobs and thus are struggling to repay education loans. Recent college grads are forced to live at home and are not creating new households.
Notes From Underground: Paging Dr.Bernanke … The Stress Tests Results Have Arrived
March 12, 2012Tuesday brings the release of the FED’S FOMC STATEMENT. Will it see its shadow or will the light be blocked by an extended period of darkness? Since the January 25 statement that announced the FED‘s intentions of holding rates at ZERO until mid-2014, the employment situation in the U.S. has improved, Europe has been “RESOLVED” and China has lowered reserve requirements. In the same time frame the S&Ps HAVE GAINED ALMOST 4%, while 10-year notes are virtually unchanged in price. Let us all bask in the success of Chairman Bernanke’s PORTFOLIO BALANCE CHANNEL. What now?
Notes From Underground: Weena, Is It All Clear?
March 11, 2012The unemployment numbers were much as expected and the most solid news was that the employment participation rate increased to 63.9% to 63.7%, which didn’t cause the overall jobless rate to increase. It has been discussed in this BLOG that the best news for the financial markets would be for job growth to pick up, with an uptick in the UNEMPLOYMENT RATE AS WORKERS RETURN TO THE JOBS POOL AS A SIGN OF IMPROVED CONFIDENCE. This number provided some of that but still not enough returnees to bump the rate higher for the higher rate will make the FED‘s FOMC January 25 statement that much more relevant.
Notes From Underground: Yesterday Don’t Matter If It’s Gone
March 1, 2012Wow! Wednesday’s market reaction to words not said was extraordinary. The LTRO went very much as expected and the selloff in the EURO was in step, but the reaction of the GOLD and SILVER to unspoken words was quite unusual. Many questions were raised as to the market reaction. The GOLD sell off is rational if the premier haven was elevated simply on the belief of further easing by the FED.
Notes From Underground: U.S. Treasuries, A Fixed Market That Is Badly Broken
January 10, 2012One of the most important elements to the purpose of the financial markets is to be an indicator of flawed policy. If money is too loose, the BOND VIGILANTES will assure policy makers that it is time to tighten by pressuring BOND YIELDS higher. As Bill Clinton’s attack dogJames Carville so elegantly stated: “I want to be reincarnated as the bond market because it intimidates everyone.” The huge FED QE PROGRAM has temporarily castrated the BOND market as FED INTERVENTION means that the BOND VIGILANTES lack the fortitude to signal the markets. Even the EUROPEANS have momentarily silenced the market by the huge liquidity pump via the LTRO program with another LTRO coming at the end of February.