Inflation – clear and present danger?

Food, fuel, and $/import prices present a triple negative supply shock. Now gold pushing $900 as LIBOR falls, commercial paper issuance increases, and ‘market function risk’ subsides. Downside risks to GDP are still not trivial. Consumer income and desire to spend it may be problematic, and banks and other lenders may further ...Read More

Saudi production up a tad

Saudi production increased marginally for January, and all indications are net demand is holding up at the higher prices. While this bodes for continued price hikes, markets may have likely sold off on the news, believing the higher production is a sign of a proactive supply increase that will drive prices down. ...Read More

Ron Paul statement

“The Fed needs to stop printing money to buy US government securities.”-Ron Paul Ron Paul on the monetary system, as he calls for a return to the gold standard. This is one of his numerous nonsensical, inapplicable rhetorical outbursts on the monetary system on national television. The lack of media criticism, by ...Read More

Fed’s Lockhart: economic outlook

He is currently leaning towards cuts, but watching carefully for signs of improvements in market functioning and output, and aware of the risks of his inflation forecast being wrong. Fed’s Lockhart: Economic Outlook From Atlanta Fed President Dennis P. Lockhart: The Economy in 2008 Looking to 2008, I believe the pivotal question—the ...Read More

The upcoming fiscal policy changes

Another possibility is the Fed doesn’t want to cut rates due to inflation risks, and might see a tax cut as sufficient potential support for demand to allow them to not cut rates and instead address the inflation issue. This would be based on the mainstream notion (not mine) that monetary policy ...Read More

Re: Fannie/Freddie risk

All that matters is their ability to keep buying new paper or, if they can’t, whether someone else steps in to buy it. That helps sustain aggregate demand. The rest is just rearranging of financial assets. On Jan 6, 2008 1:29 PM, Russell Huntley <[email protected]> wrote: > > > > The Baltimore ...Read More

The subprime mess

On Jan 5, 2008 9:40 PM, Steve Martyak wrote: > > > > also…. > > 9/4/2006 > Cover of Business Week: How Toxic Is Your Mortgage? :. > > The option ARM is “like the neutron bomb,” says George McCarthy, a housing > economist at New York’s Ford Foundation. “It’s ...Read More

Fed communications

If conveying information is considered important for market function, why not just say it clearly and directly in a targeted announcement? Kohn Says Fed Is Trying to Signal When Views Shift `Materially’ 2008-01-05 11:15 (New York) By Scott Lanman and Steve Matthews (Bloomberg) Federal Reserve Vice Chairman Donald Kohn said the central ...Read More

Re: banking system proposal

Dear Philip, Yes, as in my previous posts, bank stability is all about credible deposit insurance. I would go further, and have all regulated, member banks, be able to fund via an open line to the BOE at the BOE target rate. That would eliminate the interbank market entirely, and let all ...Read More

Re: fed mandate discussion

On 03 Jan 2008 20:05:33 +0000, Prof. P. Arestis wrote: > Dear Warren, > (snip) > > One point is this: some more extreme people would argue that low inflation > is both a necessary and sufficient condition for optimal longterm growth and > employment. Dear Philip, Agreed, and we will soon ...Read More