The stock market swung wildly this past week, with the final result the S&P 500 down 3.1%, and the Nasdaq 100 down 3.9%. Everybody knows a major reason why: The Federal Reserve is winding down its aggressive monetary stimulus, and now the question is will they increase interest rates, and if so, how soon? QE3 is […]
Archives
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The Fed giveth, and the Fed taketh away? Is a bursting stock market bubble going to be the October Surprise?
11 Oct 2014
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John Cochrane is a tremendously talented economist and professor of finance @ Chicago’s Booth School of Business. He’s probably forgotten more arcane financial reasoning than I know; but that doesn’t stop us from critically examining his thinking. In today’s WSJ, Mr. Cochrane cheers the Fed’s balance sheet expansion as a good thing for the economy. […]
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We’ve had tons of economic news worth highlighting over the last month, but Christmas offered much more fun than writing blog posts. So here is a quick review of several economic issues that will continue to be issues in 2014. First up is the Senate confirmed Janet Yellen as the first female Federal Reserve Chair […]
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Common Sense Economics
05 Nov 2013
Alan Greenspan was being interviewed about his new book The Map and the Territory in Time magazine recently and responded to the question, “Knowing what you know now, what would you have done differently during your time as chairman of the Fed?” His response was in part, “I always knew debt was important. If I […]
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Yesterday Barack Obama nominated Janet Yellen to become Chairwoman of the Board of Governors of the Federal Reserve. Borrowing from Stanly Kubrick’s classic film Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb and with apologies to Slim Pickens, this is how I perceive Yellen’s nomination (and subsequent Senate confirmation) will impact […]
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You say “Really? Are you just an anti-Fed nut case?” Well, I’m certainly anti-Fed, and my wife won’t confirm or deny #2. But let me make my case. As economist Russ Roberts likes to say, economists often tell “stories” that we think reflect reality. These stories are backed by a particular theory and often have […]
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There is little doubt the Fed’s easy money policy, and especially the deliberate QE of buying long term instruments, has resulted in speculative flows investing in those assets. As we related last week, the Fed’s discussion of tapering has resulted in immense turmoil, as speculators are wondering if capital needs to be redeployed away from […]
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Many critics of Austrian economic theory on the causes of business cycles suggest that the lack of significant CPI-based inflation shows the Austrians are all wrong. Yet, as I have argued earlier, CPI inflation is NOT what Austrians are concerned with. Rather the central banks artificially lowering interest rates leads to malinvestment and a distortion […]
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A few months ago the big revelation to gold bugs was Germany wanted its gold back from the Federal Reserve. What’s the world coming to when central banks don’t trust each other? Further, with central banks net buyers of gold for the last few years, something seems afoot in the global currency markets. In perhaps […]
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CNBC reports today that the Federal Reserve is increasingly considering income inequality as a consideration for monetary policy. The basic idea seems to be that monetary policy ought to be kept easy as long as those in the lower income groups are unable to gain jobs. As CNBC reports Some on the FOMC, they said, […]
Bert Wheeler
Jeff Haymond
Marc Clauson
Mark Caleb Smith
Tom Mach