Topic: Monetary Policy

Crisis, Financial Markets, Monetary Policy

Has the Discount Window Mystery been Solved?

– March 10, 2023

“We won’t know for another twelve or fourteen months whether Silicon Valley Bank (or any of the other banks being thrown overboard today) were the ones borrowing at the Fed’s discount window. But it is increasingly likely that whatever firm(s) it was, exigency was the driver.” ~ Peter C. Earle

Central Banking, Inflation, Monetary Policy

The Fed Isn’t Powerless

– March 10, 2023

“Responsible students of monetary policy must vigorously resist the ‘powerless Fed’ myth. All it does is absolve central bankers of responsibility for what, on the basis of good theory and mounting evidence, is primarily their fault to begin with.” ~ Alexander William Salter

Government, Inflation, Monetary Policy

There’s No Such Thing as a Wage-Price Spiral

– March 8, 2023

“The recent uptick in inflation is worrying, and the Fed needs to get a handle on the situation before higher inflation expectations become entrenched. But the Fed doesn’t need to take a sledgehammer to labor markets to ease the economy’s pricing pressures.” ~ Alexander William Salter

Financial Markets, Inflation, Monetary Policy

Understanding Inflationary Finance

– March 8, 2023

“Providing revenue to the state is one of the reasons (and, perhaps the primary reason) governments worldwide monopolize the issuance of high-powered money.” ~ Bryan Cutsinger

Economic History, Government, Monetary Policy

The Tooth-Fairy Economics of Slavery Reparations

– March 7, 2023

“If the US government tried to implement the reparations program that the 1619 Project espouses, we would get huge increases in both taxes and inflation. Yet the key economist advising on this proposal denies that any taxes would have to increase.” ~ David R. Henderson and Phillip W. Magness

Financial Markets, Inflation, Monetary Policy

More Interest Rate Hikes Ahead

– March 6, 2023

“Fed officials will likely continue tightening, and to a greater extent than previously projected. Their overreaction will not undo the damage of acting too late. It will make matters worse.” ~ Nicolás Cachanosky

Environmentalism, Financial Markets, Monetary Policy

ESG as an Artifact of ZIRP

– March 5, 2023

“Although it is unlikely to disappear completely, the ESG fad is probably past the crest of its popularity. It’s time again for firms to focus, singularly and completely, on the inestimable task of making money.” ~ Peter C. Earle

Financial Markets, Inflation, Monetary Policy

Persistently Pesky Price Pressures

– March 4, 2023

“Although it may be difficult, the Fed must persevere. Elevated aggregate demand remains the best explanation for ongoing inflation. There is no reason for the Fed to ease its policy.” ~ Alexander William Salter

Financial Markets, Inflation, Monetary Policy

Inflation Surges in January

– February 27, 2023

“How high rates will ultimately go depends on how inflation evolves over the next few months — and how quickly the Fed reacts to restore confidence in its longer term-inflation projections. The January PCEPI release marked a step in the wrong direction.” ~ William J. Luther

Economic History, Government, Monetary Policy

The Federal Reserve Accountability Act in Light of 333 Years of American Experiments

– February 17, 2023

“By making the Fed so much more controlled by Washington, and removing even the appearance of private-sector influence, the proposed amendment could fatally weaken the Fed’s political legitimacy.” ~ Dror Goldberg

Government, Monetary Policy, Unemployment

Joblessness and the Fed

– February 15, 2023

“Without a symmetric response to deviations from the target, the Fed’s so-called average inflation target will not produce 2 percent inflation on average. Instead, it will tend to produce inflation that exceeds 2 percent. That’s a far cry from price stability.” ~ Alexander William Salter

Currency, International, Monetary Policy

The Tragedy of the Monetary Commons

– February 4, 2023

“While relatively well-functioning governments have managed to find mechanisms that mitigate the problem, it seems unlikely that Argentina and Brazil will be able to prevent a tragedy of the monetary commons given their history of money and fiscal mischief.” ~ Bryan Cutsinger