Are these 170 signatories really “leading economists?” Are they even economists?
But the real problem is that the Fed has not understood why banks are holding all those reserves. There are two reasons. First, there is incredible risk aversion caused by the random, frequent regulations and lawsuits emanating from the Obama administration. Second, there is the small matter of loan demand. Banks are holding reserves because they don’t see demand for loans whose return is worth the risk. The only way loan demand will increase is for the economy to ascend to a decent growth rate. Until that happens, the Fed should just give up.
Copyright law does not protect sightings. However, copyright law will protect your photo (or other depiction) of your sighting of Elvis.
But never fear – the Feds want their money back! Oh, wait, just kidding. The Feds want money back all right. About $800,000.
The average duration of unemployment in 2014 is still higher than it was in 2010. I’ve written a great deal over the years about the decrease in the labor force participation rate and its implications for the U.S. economy. But, frankly, this took me by surprise. Anyone who still thinks the U.S. economic “recovery” is real should check their privilege.
The Fed has spoken. The new target rate for the Federal Funds rate will gradually rise to between 0.25 and 0.50 percent. I wrote extensively about this yesterday. It will be interesting to see whether the folks at the Board of Governors can make this rate increase stick.
So why raise interest rates? The only explanation I can think of is signaling. By raising interest rates the Fed believes they can send a signal to markets about the Fed’s confidence in the economic recovery. The Fed is playing a monetary policy confidence game.
According to NPR, at one point alpacas were selling for “tens of thousands of dollars” per animal. A recent ad on craigslist offered 30 of them for $3,000. Now that’s a bubble!
Not, mind you, because the Fed will raise interest rates any time soon. No, the geniuses at the Federal Open Market Committee and the Board of Governors seem to be leaning in a different direction: NIRP. … Better get used to seeing those initials. They stand for negative-interest-rate policy. That’s right. The Fed thinks they can drive nominal short-term interest rates below zero.