Why the Fed Cut Rates at the December FOMC Meeting
Those two facts explain the Fed’s decision to cut the target Federal Funds rate by 25 basis points to a range of 3 1/2 to 3 3/4 percent. Continue Reading →
Tag Archives: monetary policy
What’s Going On at the Fed?
An “upheaval” at the Fed. On July 30, Vice Chair Michelle W. Bowman dissented from the FOMC’s July decision to not change interest rates. Continue Reading →
Monetary Policy 2025: What Should the Fed Do?
It’s a good guess that more tariffs will be imposed. The average price level will rise. What should monetary policy 2025 look like? Continue Reading →
Sanity Returning to Monetary Policy
Jan 17 the Fed signaled the return of sanity to monetary policy. They withdrew from NGFS which wants to green central banking Continue Reading →
Stephen Moore, Herman Cain, and President Trump Are Wrong About the Gold Standard
President Trump was considering nominating Stephen Moore and Herman Cain to serve on the Board of Governors of the Federal Reserve system. All three men support a return to the gold standard for U.S. monetary policy. Here’s why they’re dead wrong. Continue Reading →
Hey, Janet, How’s That Interest Rate Increase Working Out?
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. Continue Reading →
Monetary Policy as a Confidence Game
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. Continue Reading →
I Was Wrong About ZIRP
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. Continue Reading →
Advent of the Southern Euro
I don’t think ECB will force Greece out of euro; I think it will have to devalue if it wants to reopen its banks ever. Continue Reading →
Bitcoin in Argentina
Another pair of startups is using bitcoins as an intermediate currency in foreign exchange transactions. Today the intermediate currency is the U.S. dollar. Continue Reading →