In the aftermath of the Great Financial Crisis in 2008 which brought money markets to a standstill, central banks embarked on a voyage of discovery with a series of formerly unorthodox actions.  Zero Interest Rate Policy (ZIRP), in which central banks pegged the short term interest rates under their control at zero or below.  Quantitative […]

Is more like the recipe for cotton candy than for say a pot roast.  Delicate and prone to collapse at the first sign of stress, the first whisp of breath on it.  Put it in your mouth and it just melts away.  As opposed to a pot roast with vegetables, hearty and hale, and leaves […]

OK.  Mercantilist is probably not the right analog, but it does share some elements of what is occurring in the world as shaped by Amazon.  Mercantilism is a State policy and Amazon is not a State…yet.  Mercantilist states seek to accumulate specie through positive policies enabling foreign trade, or at the very least substantial market […]

There is one number that will determine the fate of the world and its financial markets.  In the United States, that number is the Core PCE inflation number, or at least expectations of what that number might be in the future.  This number or its expectations will determine the posture of the Fed.  Analogous numbers […]

Asher Edelman had an astonishing interview on CNBC Fast Money this afternoon.  In it he claimed that Reagan’s Executive Order 12631 which established the Working Group on Financial Markets resulted in the fabled Plunge Protection Team which he called the Plunge Protection Group, reporting only to the President.  Comprised of the heads of the SEC, […]

In discussing the neutral level of the Federal Funds Rate after today’s Federal Open Market Committee meeting, Janet Yellen returned to her oft stated idea that there is research indicating that the neutral level of Fed Funds is 0% in real terms.  So if the Fed’s preferred level of inflation, PCE is at, lets say, […]

There was a time back in Donald Trumps cherished clean American past when representatives of our government would go out of their way to distance themselves from any notion that anything they do is intended to affect markets directly.  It was considered bad form to interfere with markets as we considered our nation the worlds […]

Recently some commentators (Blu Putnam at CME and Mike Shedlock at Mish) have started using a couple of words I have been thinking for a long time with respect to our economic overlords at the Fed. Those two words are linear thinking. I am surprised that for such supposedly smart people – I mean they […]

The most interesting tidbit to me in Janet Yellen’s post-FOMC press conference yesterday was when she was discussing the neutral real rate of interest (net of inflation) for an American economy running at trend growth near full employment.  She cited that there is some research that suggests that that rate is now zero percent.  Now […]

Today I watched the Fed Chairwoman in her semiannual testimony before the US House of Representatives.  The highlight, I think, was in the back and forth with her over the issue of Interest on Excess Reserves (IOER).  Representatives on both sides expressed their concern over what they perceive as subsidies to the big banks.  These […]

Just now I was watching CNBC and in a recap of what is going on this MLK day, Sara Eisen was talking about China.  She said “We are watching to see if the officials can stabilize the currency, as a sign that they are still in control of the economy and the markets”.  Think about […]

The Fed likes to do things in a cute way, calling the ways in which they affect things “channels”.  Too cute by half I would say, much like the SCOTUS with its thresholds and tests, but that is a discussion for another day.  It is now indisputable in my opinion that the Fed is one […]

In a reversal of the usual course of events, the more interesting day of Humphrey-Hawkins testimony the last two times it has occurred has been day two in the House of Representatives.  Usually House members, who by and large merely reveal their stunning levels of ignorance of anything economic through their questioning and statements, have […]

Anyone paying attention has by now noticed that these are not your father’s markets.  Stocks go one way, up.  Commodities swing wildly up and down as the “stock guys” wax and wane over their love of this or that market (for the second time this year it is Ag markets – after all everyone knows […]

Stock markets rallied hard on Friday after the Bank of Japan (BoJ) threw the kitchen sink of Central Bank Keynesian bullshit at their bond and stock markets, as well as ours. In order to allow their great pension monster GPIF to move a large sum in the hundreds of billions of dollars out of JGBs […]

The recent testimony by the Fed Chair in Congress was very troublesome the more I think about it.  Pressed by Jeb Hensarling, the House Financial Services Committe Chair, about weekly meetings with the Treasury Department, she repeated over and over how independent the Fed is and how important that is.  Well, if she is taking […]

The talking heads on the business shows are agog at the collapse of Copper prices this week as Chinese export data fell hard.  It should be no secret that China’s leaders are trying to deftly deflate a credit bubble there before it brings their whole economy down – and with it potentially the Communist Party.  […]

During the financial implosion of 2008-2009, the Fed was faced with the insolvency of most if not all of the large institutions it exists to service. Recall that the creation of the Fed grew out of the experiences of bank runs in the late 1800s and early 1900s, specifically the Panic of 1907. During that […]

I grew up with a lot of rich people.  You could tell what the mothers of these peopple thought by watching how they reacted to different people or actions.  One would never do such things as picking your nose or farting or spitting or swearing.  These were the types of things that coarse and vulgar […]

The chart below of the Japanese Yen has finally started looking like the sleeping trade of the century, the widow-maker, the great unwinding of the Japanese economic system may be starting to occur.  Japan is a wealthy country despite the crash in 1990 and resulting chronic deflation.  GDP per capita is multiples of that in […]