Donald Luskin, chief investment officer at Trend Macrolytics, said: “Trump is holding the Fed accountable, and as the man who appoints Fed governors, that is entirely appropriate.” (CNBC)
Category Archives: Federal Reserve
What Would It Take to Implement Cain’s Gold Standard, Interest-Rate-Wise?
Stabilizing the price of gold in US dollars requires adjusting the interest rate (akin to how the exchange rate is managed). Herman Cain’s call for a return to the gold standard would imply that the Fed funds rate would have to be about 15 percentage points higher than it was in January 2000 in order to keep the dollar’s value stable at January 2000 levels — a rate 18 percentage points higher than actually recorded in March 2019.
Stop Stephen Moore
From being appointed to the Fed. Here is a non-exhaustive recounting of Moore’s reign of error.
Glenn Rudebusch on “Climate Change and the Federal Reserve”
It doesn’t get much more real than this, when the Fed has to take into account the implications of global climate change. Glenn D. Rudebusch, senior policy advisor and executive vice president at the Federal Reserve Bank of San Francisco, lays out the issues in this letter.
Inversion!
Of the 10yr-3mo spread.
The Fault Is … in Ourselves
Or more correctly, in Mr. Trump. As reported by Bloomberg, Mr. Trump has said:
“a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, we have a gentleman that likes a very strong dollar in the Fed.”
“International Spillovers of Monetary Policy: Conventional Policy vs. Quantitative Easing”
That’s the title of a fascinating new paper with important policy implications.
Continue reading14 Months, 8 Months, 16 Months
That’s the amount of time between 10 year-3 month yield curve inversions and the beginning of the subsequent NBER-dated recession (these are the three recessions in the Great Moderation period). This is shown in Figure 1.
Measuring monetary policy shocks
What are the effects on the economy when the Fed raises interest rates? This is a key question in empirical research, but is notoriously hard to answer. The reason is that when the Fed raises interest rates, it usually does so in anticipation of a stronger economy or rising inflation. If we look at what happens to inflation or output following an interest rate hike, it is impossible to distinguish the effect of the Fed’s actions from the effects of the changing fundamentals that led the Fed to act in the first place. New research by a graduate student at UCSD may have finally solved this problem.
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Guest Contribution: “Trade War is Not a Reason to Ease Money”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate on November 26th.