FedCoin Revisited

– November 19, 2020

“We don’t know whether the Fed would take steps to eliminate cash or impose negative rates on FedCoin balances. We don’t know how it would go about intermediating funds. But such speculations should make one thing clear: there are risks. At the least, we should develop strong institutional checks before permitting the Fed to plow ahead.” ~ Nicolás Cachanosky

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The Complexity of Monetary Policy and the Effectiveness of the Fed’s Commitment to a Higher Rate of Inflation

– November 19, 2020

“A better policy would be to bring greater clarity to the structure and effects of the Fed’s policy framework so as to improve the quality of investor expectations. So long as investors feel that they might as well be reading tea leaves to predict Fed policy, the Fed will struggle to anchor investor expectations of nominal and real income growth.” ~ James L. Caton

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Jerome Powell

Filling Fed Vacancies Would Leave Biden with Few Options to Replace Powell

– November 18, 2020

“Biden’s only other play would be to lean on historical norms. Fed Chairs rarely stick around to serve out their terms as mere Governors when they are not reappointed to the top spot. Janet Yellen resigned in 2018, when Trump replaced her as Chair with Powell, despite having nearly six years left on her term as Governor. Biden might hope Powell will follow suit.” ~ William J. Luther

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Not All Government Spending is Stimulus

– November 18, 2020

“Relief spending would be a much-needed blessing for many Americans. But paying people not to work does not stimulate the economy.” ~ Thomas L. Hogan

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The Fed Has A Commitment Problem

– November 12, 2020

“The whole point of a central bank is competently administering monetary policy. Right now, the Fed is failing at this basic task.” ~ Alexander W. Salter

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Does Anyone Trust the Fed?

– October 29, 2020

“Until the Fed acts to build trust and credibility with the public, its policy of Average Inflation Targeting will have little effect on inflation or economic activity.” ~ Thomas L. Hogan

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QE Goes Global

– October 25, 2020

“In a fiat currency world the limits of central bank balance sheet expansion remain unclear, but, as the world economy recovers from the largest economic shock in generations, those limits will become clear. For the large, DM, central banks, these EM limits will be noted with care. Japan has been the petri dish of global monetary policy for the last two decades; now it is the turn of EM central banks to test the willing suspension of disbelief of global financial markets.” ~ Colin Lloyd

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Average Inflation Targeting Risks Further Politicizing the Fed

– October 15, 2020

“Perhaps the Fed’s move to average inflation targeting won’t make much of a difference. But it nonetheless risks further politicizing the Fed. To the extent that it means the Fed will engage in even more credit allocation and Congress will take a more active role in guiding those credit allocation discussions, there is cause for concern.” ~ Nicolás Cachanosky

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federal reserve, fall

What Should the Fed Do Now?

– October 1, 2020

“As cities and states ease their lockdowns and restrictions, the Fed should continue to support the recovery with accommodative monetary policy. As Powell described, ‘A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.'” ~ Thomas L. Hogan

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Debt or Taxes

– September 30, 2020

“At the present juncture, developed country government bond yields are more likely to fall than rise. Fiscal spending will be financed by deferred taxation, the repayment of today’s (and probably tomorrow’s) obligations will be bequeathed to our children and grandchildren. Digital taxes, taxation on wealth and financial transaction fees may creep higher at the margins, along with higher taxes on higher earners, but debt is the least painful solution to the fiscal needs of the present.” ~ Colin Lloyd

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federal reserve

The Fed Can Generate Higher Inflation

– September 24, 2020

“A lack of concern for fiscal discipline by both the U.S. Treasury Secretary and a call for persistent, near zero rates by the Chairman of the Federal Reserve suggests that the Federal Reserve and the U.S. Treasury will act in concert to make the new inflation target a reality. It is not a question of whether the inflation rate will pass 2 percent, but when.” ~ James L. Caton

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same thinking

Meet the New Fed, Same as the Old Fed: Jerome Powell’s Inflation Revelation Falls Flat

– September 9, 2020

“If it’s serious about a 2% inflation target, the Fed will have to do better than a pep rally. We were promised meaningful change; what we got was the same old song and dance.” ~ Phillip W. Magness & Alexander W. Salter

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