Tag Archives: Monetary Policy

By Marc Chandler(This post originated at Marc to Market) The idea that monetary and fiscal policy can and ought to be used to ameliorate the business cycle, to avoid the kind of boom/busts that lead to social instability and radical ideologies is a rather modern notion, and it remains somewhat controversial. Many now see it as hubris that policymakers can tame the business cycle. However, for those who subscribe, the general understanding is that policy ought to be counter-cyclical. In a...

Ed Harrison on Ray Dalio on bonds.Credit Writedowns Ray Dalio: We are already in a bond bear market right nowEdward Harrison

By Marc Chandler (originally posted at Marc to Market) The investment climate is being shaped by two powerful forces.  First is the very accommodative policy stance. This includes the United States, where despite delivering the fifth rate hike in the cycle, adjusted by headline CPI, remains negative. As the balance sheet has begun being reduced, financial conditions in the US are easier now...

In August 2014, I wrote this post arguing that harsh austerity during the Depression caused Hitler's rise to power. At the time, my argument seemed controversial, at least in Germany. There, it is not the austerity of 1930-32 that is blamed, but the debt-driven hyperinflation of a decade earlier. Germans remain terrified of both inflation and debt to this day.I am certainly not the only person to identify a causative link between austerity and Hitler. Here is Paul Krugman slapping down...

Forecast.Credit Writedowns As the Fed meets, expect expansion through 2018, but problems thereafterEdward Harrison

What’s really puzzling Claudio Borio, however, is that the market euphoria, or “ebullience” as he terms it, has continued as the Federal Reserve has proceeded with its tightening. While Borio acknowledges the BoJ has left its accommodative policy unchanged and the ECB may have “at least relative to expectations”, he notes that the Fed is the “issuer of the dominant international currency and its sway on markets remains unparalleled”. In Borio’s view this has led to a paradox, as he...

Federal Reserve Chair Janet Yellen said Tuesday that the central bank should continue to use interest payments on member bank reserve balances as its primary means of affecting short-term interest rates, rebuffing calls to return to more conventional monetary policy tools.... American BankerFed interest payments to banks are here to stay, Yellen says John Heltman

Remarks by Mr Stephen S Poloz, Governor of the Bank of Canada, to the CFA Montreal and Montreal Council on Foreign Relations, Montreal, Quebec, 7 November 2017. Bank of International SettlementsStephen S Poloz: Understanding inflation - getting back to basics

Ed Harrison looks at inversion historically.Credit Writedowns Why the flattening yield curve doesn’t worry me yetEdward Harrison

Make no mistake, yesterday’s increase in interest rates was a big deal. Painful as it might be for a good share of the population, the real point is that the Bank is signalling the end of a particular phase of monetary policy. Since 2010 the counterpart to self-defeating austerity policies has been expansionary monetary policies. These have inflated assets - enriching the already-rich, while failing to stimulate wider economic recovery. Yesterday the Bank of England’s Monetary...