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Tag Archives: Federal Reserve/Monetary Policy

Some Seriousness In The Silly Beige

I confess to following the Beige Book lately for mostly entertainment purposes. It was always an exercise in intellectual vanity, an opportunity for Fed Presidents to cram into it their own biases. But to see the FOMC just abandon the LABOR SHORTAGE!!! like they have, that’s not strictly about amusement; though it is to some degree morbidly satisfying just how obviously lacking in conviction they’ve been. The economy was in danger of overheating, they said. The latest volume for July 2019...

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Housing: Going Wrong In The Few Things That Were Going Right

It certainly doesn’t feel like a bubble. We’ve heard about home prices in many cities skyrocketing like there has been one, still there does seem to be something different. If it is a bubble, it sure isn’t the same as the last one, the big one fifteen years ago. Much is missing this time around. For one thing, prices are disconnected from volume. For all the talk of a boom in the economy the housing sector never joined in. Not really. I wrote last year that a truly booming economy is one that...

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Not A Paradox Nor A Conundrum: TICked at Powell

It seems a paradox, at least like it is backwards. The financial media doesn’t help because good editorial standards rely upon the opinions and beliefs of credentialed people who have no idea what they are talking about. If you hold high office in some central bank, we are to assume you are competent about monetary issues. It’s all given a gloss of geopolitics, too, which isn’t helpful. The dollar destruction people are also onboard with how interest rates have nowhere to go but up. If the...

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Ticked About TIC: The Accidental Discovery of Perhaps The Big Bottleneck

From October 2000 to July 2001, the Treasury Department conducted a special survey of users of its Treasury International Capital (TIC) data. Nearly two decades ago, it had become apparent (to some) just how important international dollar flows were to the overall economic and financial landscape. And not just those of the United States. TIC was created ostensibly to aid in balance of payments accounting; the old idea that money was (nearly) fixed so the only thing which mattered was...

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Nastier Number Four: A Broader Industrial Base On The Wrong Side

There’s always weakness even in the most booming of economies. Even in the real booms, not the 2017 hysteria kind, not all cylinders will be firing. What makes them real, however, is when the vast majority are. The concept behind globally synchronized growth was a valid one, it just never came out in practice. The impression has been incorporated into various data points over the years. These are quantitative measures designed to relay information about this idea of broadness. If so many...

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Globally Synchronized, After All

For there to be a second half rebound, there has to be some established baseline growth. Whatever might have happened, if it was due to “transitory” factors temporarily interrupting the economic track then once those dissipate the economy easily gets back on track because the track itself was never bothered. More and more, though, it appears at least elsewhere that the track was bothered. Whether China, Singapore, or Germany, a nastier number four is taking shape particularly since last...

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Poring Over Poor Singapore’s Far Nastier Number Four

You aren’t going to find the worst economic quarter in Singapore’s modern history in either 2008 or 2009. It was actually posted in 2010. During the third quarter of that year, GDP declined by a whopping 11% annual rate. While that’s the biggest contraction still on record, initial government estimates thought it was closer to -20%. Singapore’s Monetary Authority wasn’t worried, however. Officials often complain about lumpiness in their numbers, and in the city’s case it was actually true for...

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What Has Markets Spooked? Probably Something To Do With That Huge Offshore Dollar Hole

Like a shark smelling blood in the water, I don’t care that the blood is in the water from leaking out of what will be a dead horse, if it isn’t deceased already. I pretty much intend to beat on it one way or another. The issue isn’t just fed funds, it’s why anyone cares about that market at all in 2019. The answer, as even FRBNY admits this week (the dead horse), is how the monetary world is much more complex than you’ve ever been told. It’s not just a matter for correcting textbooks. In...

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The Lying Statistics Behind Globally Synchronized Growth, And What It Could Mean For The Globally Synchronized Downturn

Numbers really don’t tell us much all by themselves. Context always matters. That’s why 19th century British statesman Benjamin Disraeli claimed there are three kinds of lies; lies, damned lies, and statistics. Numbers employed in isolation are either misleading or useless. In the 20th century, Darrell Huff wrote in his classic How To Lie With Statistics: Averages and relationships and trends and graphs are not always what they seem. There may be more in them than meets the eye, and there may...

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Much More Than Rate Cuts On (Dis)Inflation

Things have changed, obviously. Chairman Powell and the rest of the FOMC, the majority anyway, have come around to rate cuts. Where they were hawkish in December, noncommittal as late as May, they’ve been spooked into them over the last month or so. As it stands, the first one is less than three weeks away. It’s not so much the lack of inflation any longer. No one should ever forget the 2018 story, the inflation hysteria which raged throughout much of last year and ended in a pile of confused...

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