Friday , February 21 2020
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Tag Archives: Monetary System

How the Fed aims to prevent the next financial crisis using the Standing Repo Facility

At first, I called this post “More on Quarles and the introduction of a standing repo facility”. But that’s not a sexy title is it? That’s because repo isn’t a sexy topic. I think it’s important though. If we have a liquidity crisis though, everyone will be talking about it – because that’s where the financial meltdown would occur. And because repo rates spiked dramatically in September, there’s already a decent amount of buzz in financial circles about it. But repo is very much in...

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This jobs report is a game-changer regarding monetary policy. Here’s why

It’s been a while since I had a public post on Credit Writedowns. So I thought now would be a good time to post given Wednesday’s Fed rate decision and presser and today’s jobs report. I think this one-two punch is a big deal. And that’s because it forces the market back to a focus on the Fed’s tightening bias from its focus on weak data forcing the Federal Reserve to cut. Thoughts below The narrative Before I get to the data, let me spell out how to think about the market and the...

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The Fed overtightened. Now it’s behind the curve. Recession awaits

Sorry for the alarmist post title. But the Fed has completely bottled it. I’ve been warning for some time that it could go this way. And now, we are in in the endgame. First, the Fed overtightened through 2018. Then, forced at gunpoint by financial markets into a retreat this year, it has been very slow to recognize the tightening financial conditions. Now, it is so far behind the curve that a major recession is  breathing down our necks. Let me put this all together below. And...

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