permanent zero

Greetings to you all on Christmas Eve. I think the big deal today is not America or Europe, but Japan. The incoming Japanese Prime Minister is threatening to strip the Bank of Japan, the central bank, of its independence. What Mr. Abe said…

Quick post here to continue the theme of Christine Lagarde doing a complete makeover of the IMF. Yesterday, the Financial Times reported on an IMF staff paper that accepted capital controls as a necessary evil in specific cases, a sharp…

After embarking on a third round of easing last year that only involved extending the length of its zero rate policy and changing the Fed's Treasury portfolio duration mix, the Fed has recently started QE3 with an even more aggressive tone.…

Two years ago, I noted that the steep yield curve produced by the Fed's policy accommodation would give way to a flatter and more treacherous yield curve environment as a weak recovery continued. The Fed would see the weak recovery as a…

University of Chicago Professor Raghuram Rajan, one of the few mainstream economists to predict the financial crisis, has written a very good article at Project Syndicate questioning central bank monetary policy. His main point is that…

I was on BNN's headline yesterday (video here) talking to Howard Green and Brian Milner about the IMF and China. Fed Chairman Bernanke's defense of QE and zero rates was a big piece of that conversation. I believe Bernanke's defense is…

I was looking at Tim Duy's latest post on monetary policy and asking myself the same question he asks about normalizing the interest rate cycle. Here's what Tim wrote about getting off the zero bound: "it is perfectly reasonable to…

Here are some quick thoughts on QE3. Central banks around the world are taking the lead on reflation where fiscal agents refuse to do so. And the policy stances have become increasingly aggressive. Right now, every major central bank is…

Due to the continued high rate of unemployment, the Federal Reserve today took an aggressive policy stance that is being dubbed QE3. The Fed will purchase $40 billion mortgage bonds per month and extend the maturity of its holdings of…

The Federal Reserve Board issued the following statement in conjunction with the FOMC's decision to begin an aggressive round of quantitative easing. Information received since the Federal Open Market Committee met in August suggests that…