Archive for Federal Reserve
The Vacuity of Scott Sumner’s Approach to Monetary Policy
My latest at Mises CA, sparked by Scott responding to Tyler Cowen on “causality.” The punchline: …I want to point out an odd feature of Sumner’s worldview, which partly explains why it is (arguably) vacuous as an “explanation” of recessions. For the sake of argument, suppose Janet Yellen announces next Monday: “I have been reading the […]
Read moreYellen and the End of QE3
Although it has been dubbed “surprisingly hawkish” by the financial press, the Fed’s announcement today fulfilled its original plan to wind up QE3 asset purchases this month. Going forward, the Fed will continue to reinvest the principal on its maturing bonds, but it won’t add assets on net to its balance sheet. In my view, […]
Read moreOne More Point on Krugman vs. Gross on QE2
I’m like Columbo. I notice just a slight turn of phrase that other investigators would consider innocuous, yet I realize it shines a spotlight on the killer. Remember: Krugman is now saying that Gross et al. were wrong about QE2 because they suffer “liquidity trap denial” (his actual term lately). That is, these people were […]
Read moreTheory and Evidence That QE Pushes Down Long-Term Interest Rates
Thanks to Keshav for the Krugman link I used in the first half of this Mises CA post… Incidentally, if you thought, “Well duh, of course interest rates stayed low, because the Fed did Operation Twist and then QE3!” then you should really read this one. It’s not as open and shut as you’d like […]
Read moreCan the Central Bank Control Interest Rates?
I argue yes, within limits. The weird thing is that I think everybody in this dispute agrees on the caveats, we just summarize the reality in totally opposite ways (i.e. “yes” vs. “no”).
Read moreKrugman’s Gross Mistake
The title is the best part of my latest Mises CA, but I think I raise a decent issue in the text too. The conclusion (but I really do handle some of the nuances in the post, so critics please read the whole thing first): Bill Gross made a very public prediction that Treasury rates […]
Read more“Stable Prices”: A Lesson in Fed-Speak
There is a lot to say about Janet Yellen’s remarks today about the Fed’s latest meeting, but I wanted to highlight something that always bothers me in these affairs. From the Bloomberg article: Yellen and her Fed colleagues are debating how much longer to keep interest rates near zero as they get closer to their […]
Read moreFun Facts About Mortgages
==> Currently the Fed holds about $1.7 trillion in mortgage-backed securities. The ostensible purpose of this massive bond-buying was to prop up the mortgage market, which props up the real estate market, which ultimately provides relief to struggling homeowners who are underwater. ==> The total outstanding mortgage debt on one- to four-family residences is $9.9 […]
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