Category Archives: Federal Reserve

Why Should Banks be the Only Ones with Accounts at the Fed?

Should everyone with a Social Security number have an account at the Fed?

Ilargi: QE, The People And The Damage Done

A report issued by McKinsey Global Institute last week on the real world impact of QE warrants more scrutiny than it has gotten so far.

Krugman, Following Summers, Endorses Asset Bubbles

We have now passed the event horizon into a world run by Dr. Pangloss. In a Sunday afternoon post, Paul Krugman enthusiastically endorses an IMF presentation by Larry Summers which depicts asset bubbles as necessary and desirable. And that means they both agree they should not only continue, they should be encouraged.

Ilargi: Deflation, A Stock Market Crash And Then Christmas

Yves here. I know I should write about Janet Yellen’s confirmation hearing, but I can’t stand to do it. Plus I am confident you’ll enjoy this piece more.

Richard Alford: On Grading the Bernanke Fed

We are certain to hear more and more appraisals of Bernake’s tenure as Fed chairman as he approaches the end of his term. But will they use good benchmarks? We suggest measuring his performance against his claims for the Fed’s objectives and what he said the central bank could accomplish. Not surprisingly, we find that he came up short.

Has QE Stimulated Credit?

Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….

Governments Need to Take the Reins Back From Central Banks and Deal with Economic Imbalances

Macrobusiness flagged a short interview with Ann Pettifor, a highly-regarded international finance expert who is the Director of Policy Research for Macroeconomics on the ABC program The Business. Pettifor argues that economists are responsible for the bias today to over-rely on monetary policy to solve problems that can only be addressed by government spending. Leaning too heavily on monetary policy to try to address weak growth simply generates asset bubbles.

Markets Enter Blowoff

You know something is going wrong when the heads of the largest fund manager in the world and the largest bond management firm simultanously scream ”bubble”.

Fed Gives Middle Finger to Congress, Commodities Customers, and Public, Proposes to Allow More Banks to Participate in Commodities Business

Nothing like watching a captured regulator like the Fed use a public hue and cry to execute a big bait and switch. Here the ploy is to change rules to further disadvantage the parties making complaints. But it takes finesse to make the finger in the eye look plausible and reasonable, so that when the well-understood bad effects show up later, the perp can pretend to be mystified.

Reps. Alan Grayson and John Conyers Call for End to Bank Welfare, Tough Rules on Bank Capital

Congressmen Alan Grayson and John Conyers have published a well-thought-out proposal on bank equity, with the objective of assuring that when banks do stupid things (which they do with great regularity, even before the era of casino banking, they’d embrace some new fad and run off the cliff together, like lemmings), they have enough capital to absorb losses. And that means a lot more capital than regulators are demanding they have now.

So I urge you to co-sign their letter (full text below) at http://nobankwelfare.com/.

The Fed’s Exit Problem: Symptom of Paradigm Breakdown?

Yves here. This Real News Network interview with Yilmaz Akyüz, chief economist at the South Centre and former director and chief economist at UNCTAD, focuses on the conundrum of the Fed’s need to exit from QE from an international perspective, and layers in the further complication that China is not going to keep up its investment spending at the same level. Akyüz argues that “….we have problems at the end of the crisis which are as big as the ones during the crisis, and these problems are largely due to mismanagement of the crisis, particularly in the U.S. and Europe.”

But I’m not sure it’s as simple as mismanagement.

Whistleblower Suit Confirms that the New York Fed is in the Goldman Protection Racket

On Thursday, a former bank examiner at the Federal Reserve Bank of New York, Carmen Segarra, filed a suit (embedded at the end of this post) against the New York Fed and several of its employees alleging, among other things, improper termination. The complaint is a doozy and some of the additional details supplied by Segarra to ProPublica make an already ugly picture look even worse.

Dan Kervick: Yellen Needs to Tell Politicians to Stop Passing the Buck to the Fed

By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives

Evan Soltas is hoping that President Obama’s appointment of Janet Yellen signifies a new administration commitment to jobs and economic growth.

Unfortunately, Soltas seems to be one of those folks who is convinced that our failures over the past five years have much to do with a monetary policy that has been insufficiently “accommodative”. That’s just another version of the “if you only have a hammer, every problem looks like a nail” thinking. If you think the Fed has to fix the economy, sure, you’d think the Fed hasn’t done enough. But the Fed isn’t in a position to pull us out of this ditch, and Yellen should quit enabling the idea that it can.

Calling on Yellen: Time for a Modest, Dull Fed

Most of the news accounts of Obama’s nomination of Janet Yellen as the next Federal Reserve Chairman focused either on what type of monetary stance she was likely to take or on biographical details.

But some writers have used the upcoming changing of the guard at the Fed to look at the bigger question of the Fed’s role, particularly now that it has continues to intervene in financial markets to an unprecedented degree, a full four years after the worst of the financial crisis had passed.

Will the Fed Ever Taper?

Overnight market action shows that nobody really has a clue about the Fed taper any longer.