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Tag Archives: Alan Greenspan

Strike 1: Gold; Strike 2: Dollar; Strike 3: Inflation Expectations

When people accuse the Federal Reserve of anything when it comes to inflation, they say the central bank is cooking the books to hide it. Back in 2000, for example, monetary observers were aflutter as policymakers shifted away from the CPI and to the PCE Deflator as their ultimate standard for broad consumer price behavior. The bastards, the latter widely known for its much slower pace than the former. In late 2005, one of Alan Greenspan’s final acts as Chairman was to announce he was...

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Yield Caps = Toddlers

The Federal Reserve has cut its QE purchasing pace, and yet the US Treasury Department doesn’t seem hampered by a shortage of bidders for its record-setting note auctions. Far from “too many” Treasuries, prices are once more unequivocal how there aren’t enough. With or without Powell, the auction record is clear and, unlike those constantly talking up the BOND ROUT!!! that never happens, honest. Yesterday, it was the 3-year maturity. An astonishing $46 billion was sold, new high, with a...

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There Was Never Going To Be A ‘V’ Because The Bowl Was Always Empty

What was stupidest about the past few months was how it was these guys who everyone was depending upon to make it all go just perfectly moving forward. Worse, those geniuses being held up as competent economic stewards practically reran the 2008 playbook line by line. What that said, more than anything, was that they had come up with zero new ideas. Nada. Zip. A full decade to think about it and just more of the same.Of course, Janet Yellen said this could never happen again. Not in our...

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Ring, Ring, Hündchen

They really do seem to love Jay Powell’s announcement effect, these Germans. Magic words, no relation to what’s actually done only what’s said. Confirming in every way what I wrote yesterday, the psychology of money-less monetary policy being acted out exactly according to the plan. Central bankers do, those trained by Economics schools respond in predictable fashion.Pavlov is in awe of Greenspan’s perpetuated ability.It does make sense, no matter how grossly unattractive and intellectually...

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Stocks Haven’t Been Moneyed

Why didn’t 1987 turn out to be 1929 redux? Alan Greenspan was deathly afraid this would be the case, and in turn he made everyone else unnecessarily upset along the same lines. Especially Congress. The fact that both stock market crashes occurred during the month of October, though, actually ends the similarities. That plus clueless Federal Reserve officials.Why the one was and the other wasn’t is a matter of money; thus, the confused personnel of the central bank. If there’s one thing...

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The Big Picture’s Going To Need More Than Magic Words

What connects March 2020 with February 2008 as well as the Crash of ’87 all then with the Great Contraction which initiated the Great Depression? If you said economic and financial chaos, you’d be partly right. There wasn’t really much or any of that in 1987, though there was with the other three. People including politicians and central bankers don’t seem to be aware of the difference. For those who grew up on the old Sesame Street cartoons, one of these things is not like the others. But...

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Weimar Ben Didn’t Happen, So Now Weimar Jay?

Anna Jacobson Schwartz often gets buried under the mountains of study Milton Friedman conducted on his own. Contrary to what some, perhaps many, might think, Friedman didn’t write A Monetary History by himself. Anna Schwartz was his co-author for what would become one of the most important volumes of economic scholarship of the entire 20th century.Pretty much every central bank in operation today lifts its policies directly from the book’s pages. Quantitative easing sounded new and radical...

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The Unpossibly Pure Signal

If a central bank controls the money supply, then it can, in theory, control inflation. And if it accomplishes this feat through the use of a short-term money rate, then what part of bond yields would lie beyond its power? None.That’s what bond yields are, after all, in theory the carrying forward of inflation expectations into the future built upon the foundation of short-term money rates. Since the Fed, for example, moves the federal funds rate around at will, and other money rates (used...

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The Greenspan Moon Cult

Taking another look at what I wrote about repo and the latest developments yesterday, it may be worthwhile to spend some additional time on the “why” as it pertains to so much determined official blindness, an unshakeable devotion to otherwise easily explained lunar events. The short version: monetary authorities as well as the “experts” describe almost perfectly risk averse behavior among the central money dealing system in outbreaks like September’s repo – but then bend over backward...

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History Shows You Should Infer Nothing From Powell’s Pause

Jay Powell says that three’s not a crowd, at least not for his rate cuts, but four would be. As usual, central bankers like him always hedge and say that “should conditions warrant” the FOMC will be more than happy to indulge (the NYSE). But what he means in his heart of hearts is that there probably won’t be any need. Three should do the trick nicely. And a lot of people, from what I can tell, believe him if not simply because he’s already stopped. The last two FOMC meetings have now passed...

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