Dog Brothers Public Forum

HOME | PUBLIC FORUM | MEMBERS FORUM | INSTRUCTORS FORUM | TRIBE FORUM

Welcome, Guest. Please login or register.
May 26, 2016, 09:36:30 PM

Login with username, password and session length
Search:     Advanced search
Welcome to the Dog Brothers Public Forum.
94915 Posts in 2312 Topics by 1081 Members
Latest Member: Martel
* Home Help Search Login Register
+  Dog Brothers Public Forum
|-+  Politics, Religion, Science, Culture and Humanities
| |-+  Politics & Religion
| | |-+  Money, the Fed, Banking, Monetary Policy, Dollar & other currencies, Gold/Silver
« previous next »
Pages: 1 ... 17 18 [19] Print
Author Topic: Money, the Fed, Banking, Monetary Policy, Dollar & other currencies, Gold/Silver  (Read 151104 times)
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #900 on: February 22, 2016, 04:51:39 PM »

Velocity May Be Picking Up To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/22/2016

One of the reasons the current economic expansion has been a Plow Horse rather than a Race Horse is the lack of monetary velocity, which is how fast money circulates through the economy.

Velocity has been slow for a lot of reasons, including banks rebuilding capital after 2008-09, Dodd-Frank, and the Federal Reserve paying interest on bank reserves, a new policy it started in 2008. Another key reason is that banks have operated as if they assume the huge expansion in the Fed’s balance sheet will eventually be retracted, so why lend it out?

But it’s starting to look like velocity is reviving. In the past year, “core” consumer prices, which exclude food and energy, are up 2.2%, versus a 1.6% gain in the twelve months ending January 2015. Yes, the overall CPI is up only 1.3% in the past year, but these prices were actually down 0.2% in the year that ended January 2015. Moreover, oil prices are not going to fall forever. Once they stop falling – and there are signs that we are at or near the bottom already – inflation for overall consumer prices will accelerate as well.

Meanwhile, core producer prices were up 0.4% in January, the largest increase for any month in more than a year. Put this together with consumer price data and continued Plow Horse real economic growth, and it’s consistent with an acceleration in nominal GDP growth (real GDP growth plus inflation). That’s significant because nominal GDP growth has been oddly tame recently, up only 3.4% annualized in the past two years, versus 3.6% in 2012-13 and 4.1% in 2010-11.

Yes, we’ve had temporary accelerations of inflation before, earlier in the expansion, but what makes it different this time, what signals that it’s more likely to persist is the acceleration in wages as well. In the past six months average hourly earnings are up at a 2.9% annual rate, the fastest pace for any six-month period since the expansion started.

In addition, the growth in the M2 measure of money – mostly currency, deposits in checking accounts, and savings accounts – increased at an 8.2% annual rate in the past three months, the fastest pace since the end of QE3 back in 2014.

Although velocity has shown signs before of accelerating, we think this time it’s for real. It looks increasingly likely that the Fed is going to significantly delay rate hikes. It might not raise rates again until June or maybe even December again, just like last year. In turn, that sends banks a signal that the Fed isn’t going to reduce the size of its balance sheet anytime soon. Instead, it’s more likely the Fed will just let time do their work for them, keeping the balance sheet enlarged and letting natural growth in the economy very gradually reduce the balance sheet relative to GDP.

All of this is yet another reason why the recent selloff in US equities is likely to be temporary and there’s likely to be a major correction in Treasury bond prices ahead, with yields rebounding higher for the rest of the year.

In addition, as central banks in Europe and Japan continue to experiment with negative interest rates, the US dollar may weaken as negative rates abroad lead to financial compression among foreign financial institutions and increase the appetite of Europeans and the Japanese to hold raw cash balances rather than put their money in banks.
Logged
G M
Power User
***
Posts: 13598


« Reply #901 on: February 26, 2016, 10:13:42 AM »

http://www.cnbc.com/2016/02/26/deutsche-bank-its-time-to-buy-gold.html

Don't forget the other metals.
Logged
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #902 on: February 29, 2016, 02:48:13 PM »

Currency Mayhem To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/29/2016

With both the European Central Bank (ECB) and the Bank of Japan moving to a Negative Interest Rate Policy (NIRP), conventional wisdom says the US dollar will continue to strengthen. After all, the Fed is tightening while everyone else seems to be working overtime to ease policy.  But this thinking may have it exactly backward. The experimental monetary policies of quantitative easing (QE), zero interest rates (ZIRP), and NIRP have a spotty record at best. There is little evidence they have worked. After all Japan has been doing QE since 2001 – so where are the fruits?

Moreover, it’s very possible that negative interest rates will increase cash hoarding and thereby slow money growth. And if money growth slows in Europe
and Japan, while it accelerates in the US, then the dollar may actually weaken, or at least not strengthen in any significant way.

As a result, hedging European or Japanese investments for currency risk could be a costly mistake. In addition, it would be another mistake to underestimate the earnings potential of multinational US corporations due to potential currency losses.

So, how can this make sense? First, the Federal Reserve is in the midst of an incredible monetary experiment that has never been done before.

From 1913 to 2008, when the Fed wanted to raise interest rates it reduced the amount of outstanding reserves by selling bonds to banks. But this time it really is different; banks have more reserves than they know what to do with. So instead, the Fed is offering to pay a slightly higher interest rate on current bank reserves. But it’s a weak tool at best. Though the Fed has withdrawn some reserves from the banking system, there are still over $2 trillion in excess reserves system-wide.

In other words, the banking system is still awash in a massive amount of liquidity that can be turned into loans and an increased money supply. And as the Fed has lifted rates, both the M2 money supply (all deposits at all banks) and bank loans and leases have accelerated. In the three months ending in February, M2 has grown at a 6.9% annual rate versus just 5.6% in the past 12 months, while overall loans and leases have accelerated to a 9.8% growth rate in the past three months.

At the same time, there is a shortage of safes in Japan as consumers try to get cash out of banks where they may be charged interest, instead of receiving interest, in the future. At the margin this is happening in Europe as well. When people hold more cash, banks have fewer deposits, so the idea that these negative interest rates will force banks to lend and expand the money supply is suspect.

The big mistake investors are making is believing that central banks can actually manage economic growth. It’s not true and, in fact, the conventional wisdom is causing investors to make big mistakes with what we can only call very simplistic monetary analysis. Don’t always take things at face value.
Logged
DougMacG
Power User
***
Posts: 7914


« Reply #903 on: March 05, 2016, 10:00:53 AM »

Speaking of business textbooks, where did these policies come from?  Zero Interest Rate Policy was an accusation I have been making against the Fed since interest rates were artificially set below 3%, 2% and 1%.  I didn't know they could actually go to zero except in a fraudulent come-on. Now it's a widely recognized acronym.  In fact, the danger of having interest rates so low, like 2%, was that the Fed runs out of tools, is unable to lower them further.  My bad!  Now think of negative interest rates across an entire continent or the globe.  We have effectively canceled the concept of savings (Crafty has been on this as well), we have repealed the time value of money and the removed most powerful force in the world, the power of compound interest.  My grandfather sat me down when I started investing and showed me how 7% starts turning into real gains if you let it work over multiple years.  But like the living constitution judges of today knowing more than the Founding Fathers, the people 'managing' our money supply think they know more than everyone that came before them.  FYI to these new know-it-alls, there isn't a monetary trick that makes up for running your fiscal policy at accumulated deficits of at least 24 trillion before it would even be possible to turn it around if you started today.

Wesbury is right on this, just a little too low key about the dangers.  This is insanity and bad policies have bad consequences.  Why would we expect anything else?

Japan is running out of safes and the US is trying to ban currency.  What could possibly go wrong?

...The experimental monetary policies of quantitative easing (QE), zero interest rates (ZIRP), and NIRP have a spotty record at best. There is little evidence they have worked. After all Japan has been doing QE since 2001 – so where are the fruits?
...
So, how can this make sense? First, the Federal Reserve is in the midst of an incredible monetary experiment that has never been done before.

From 1913 to 2008, when the Fed wanted to raise interest rates it reduced the amount of outstanding reserves by selling bonds to banks. But this time it really is different; banks have more reserves than they know what to do with. So instead, the Fed is offering to pay a slightly higher interest rate on current bank reserves. But it’s a weak tool at best. Though the Fed has withdrawn some reserves from the banking system, there are still over $2 trillion in excess reserves system-wide.

In other words, the banking system is still awash in a massive amount of liquidity that can be turned into loans and an increased money supply. And as the Fed has lifted rates, both the M2 money supply (all deposits at all banks) and bank loans and leases have accelerated. In the three months ending in February, M2 has grown at a 6.9% annual rate versus just 5.6% in the past 12 months, while overall loans and leases have accelerated to a 9.8% growth rate in the past three months.

At the same time, there is a shortage of safes in Japan as consumers try to get cash out of banks where they may be charged interest, instead of receiving interest, in the future. At the margin this is happening in Europe as well. When people hold more cash, banks have fewer deposits, so the idea that these negative interest rates will force banks to lend and expand the money supply is suspect.

The big mistake investors are making is believing that central banks can actually manage economic growth. It’s not true and, in fact, the conventional wisdom is causing investors to make big mistakes with what we can only call very simplistic monetary analysis. Don’t always take things at face value.


Logged
G M
Power User
***
Posts: 13598


« Reply #904 on: March 05, 2016, 06:42:28 PM »

ZIRP is a giant flashing DANGER sign that the system has been distorted beyond reason. Act accordingly.
Logged
ccp
Power User
***
Posts: 5448


« Reply #905 on: March 14, 2016, 12:59:59 PM »

I am not sure if this the right thread.  Could go under fascism threat or political rants:

BONGINO: THE PLOT TO STEAL THE ECONOMY

By: Dan Bongino | March 14, 2016

Janet Yellen Jacquelyn Martin | AP Photo

I’ve written a couple of books and I’ve even co-written a movie script, but nothing I have ever written tells a story as diabolical as the one I’m going to tell you here. Let’s pretend you are a socialist in training and you are looking to take over the economy, using government force and bureaucratic expansion as your weapons of choice. How would you do it if you wanted to conceal your intentions? Well, it’s already being done and here’s how.

They don’t call Japan’s decade of economic troubles the “lost decade” because it was a time marked by booming economic growth.

The first step in the economic takeover is to use taxpayer money, or taxpayer subsidies, to reward your crony friends through purchasing interests in PRIVATELY held businesses. How is this happening you ask? The European Central Bank recently followed Japan’s poor example and decided to expand its asset portfolio by purchasing corporate bonds. Take a moment to think about this. The European Central Bank is using its Euro-Zone monopoly power over money to buy stakes in non-government assets? How do they decide which businesses get to take part in this central bank largesse?

The opportunities for corruption and influence peddling here are myriad as government interference in the private economy typically ends poorly. They don’t call Japan’s decade of economic troubles the “lost decade” because it was a time marked by booming economic growth. Whenever government tries to pick economic winners and losers, it usually picks the losers, while the political winners continue to get re-elected because their campaign coffers are filled with business lobbyists eager to get their snouts in the tax-payer-funded trough.

The second step, after you have used taxpayer money to buy off private businesses, is to ensure that you can tax the private economy at confiscatory rates and use the taxpayers’ money to buy off more businesses and more votes. Also, you must ensure that there are no exit ramps to avoid this taxation. How is this happening you ask? It’s happening through two mechanisms. The first mechanism is the move towards negative interest rates. Negative interest rates are predicated on the idea that charging consumers for idle money in their bank accounts will “stimulate” the economy by incentivizing them to spend it. This farce of a policy is really a scam to ensure that big-government types and wanna-be socialists run up big government debts through their nanny-state spending plans and that the debts they run up are devalued over time. High interest rates make the money you hold worth more. But it also makes debts more difficult to pay off as the value of that debt goes up and up. This is one of the core reasons that big-government types love inflation and low interest rates. The bills can be delayed as they debase the currency and pile on the debt, which is then slowly inflated away.

Once you’ve used taxpayer money to buy off companies, and run up enormous government debts with devalued currency, you have to make sure your citizens can’t escape with their money before the pending collapse. How is this happening you ask? It’s happening through a global “war on cash.” Through capital controls, and the influence of misguided economists, governments such as Sweden have been actively promoting electronic payments in lieu of cash. When cash disappears the only way to acquire goods is through electronic transactions which, conveniently for the government, can all be monitored and taxed. And when the negative interest rates grow to punishing levels, and you begin to lose larger and larger amounts of money every day your money sits in your electronic bank account, there is nowhere for you to go because cash will be illegal to have or difficult to use.

What a deal huh? Take our money and give it to your crony business friends. Then spend all of our tax money on your big-government agenda. Then run up huge debts which will never be paid off because you are debasing the currency. And, finally, make sure the angry citizens cannot escape by pulling their money out of the failing system and moving to cash. Genius… if you’re a diabolical big-government, wanna-be socialist intent on destroying the lives and futures on hundreds of millions. Someone should write a movie script.

(Dan Bongino has also endorsed Ted Cruz for president.)
- See more at: https://www.conservativereview.com/commentary/2016/03/plot-to-steal-the-economy#sthash.gnsZUjaE.dpuf
« Last Edit: March 14, 2016, 04:52:25 PM by Crafty_Dog » Logged
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #906 on: March 14, 2016, 04:53:38 PM »

" But it also makes debts more difficult to pay off as the value of that debt goes up and up. This is one of the core reasons that big-government types love inflation and low interest rates. The bills can be delayed as they debase the currency and pile on the debt, which is then slowly inflated away."

 huh huh huh
Logged
objectivist1
Power User
***
Posts: 920


« Reply #907 on: March 14, 2016, 06:15:58 PM »

I think what the author is trying to say is that the REAL VALUE of a currency-denominated debt is reduced by inflation.  Thus - if you have a debt of say, $1,000 - and let's say the inflation rate over 10 years (when the debt is due) is cumulatively 100%, then you would be paying back that $1,000 debt with dollars that have an actual value of only $500.  Thus, the lower you keep interest rates (even to zero) and the higher the inflation rate - the faster the actual value of the debt decreases.
Logged

"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #908 on: March 15, 2016, 08:02:46 PM »

y Anne Stevenson-Yang and
Kevin Dougherty
March 14, 2016 12:17 p.m. ET
12 COMMENTS

After initial declines in the Chinese market to start the year, the past few weeks have seen signs of what some would call a rebound. Lending in China rose by 67% in January, iron-ore prices initially rallied by 64% and housing sales in the top four markets surged. The yuan gained back half of the nearly 7% it had lost against the dollar since November, sending hedge funds that had shorted on the currency running for cover. And yet there remains no sign of life in the underlying Chinese economy.

More than $800 billion in credit that had been pushed into the economy in January failed to boost production or increase sales. Producer prices remained negative, dropping 5.1% in January-February, while the manufacturing PMI fell to 48 in February from 48.4 in January, indicating worsening contraction. That’s because the rally was the result of a coordinated government effort to restore confidence in the China Dream of limitless growth at home and glory abroad. The market, apparently, isn’t so easily convinced.

From hiding capital outflows to propping up real-estate values, manipulating futures markets and squeezing short-sellers of the yuan, Chinese authorities have been trying to bring back the old, quasisuperstitious belief in Beijing’s omnipotence. But the political desperation behind these efforts betrays a different story: that an impending currency crisis is a signal of the dream’s undoing.

That’s why in China getting money out of the country is now the major preoccupation of both families and corporations. Risk-averse individuals are trading out of the wealth-management products they used to buy for 10% yields and moving their money to safety in the U.S., Australia, Canada and Europe. Chinese companies are making extravagant bids for overseas assets such as General Electric ’s appliance division, the equipment maker Terex Corp. , the near-dead Norwegian web browser Opera, the Swiss pesticides group Syngenta, technology distributor Ingram Micro and even the Chicago Stock Exchange.

In the first six weeks of 2016, Chinese firms committed to spending $82 billion on such acquisitions. Last year saw nearly $1 trillion in capital outflows, including a decline of $512.66 billion in the foreign reserves. Although no one is sure how much of China’s reserves are liquid and available, it’s safe to say that, at this rate, China can’t afford capital flight for more than another year.

One way to stem the crisis would be through depreciation. That would be sound policy for the people of China, but it’s a dreaded last resort for a leadership that wants, more than jobs for its people, to bolster buying power and save political face overseas. Yet history shows that holding the line on the currency is a losing strategy. Tightened liquidity causes more pain to the economy and simply delays the inevitable.

National leaders, when faced with a disorderly adjustment, will inevitably resist markets, promise major structural changes (which are then slow to materialize), inject liquidity into financial markets and insist that everything is under control. But these measures rarely work and in fact have never worked when imbalances are as severe as they are in China today.

In other countries, currency crises usually followed a sudden and irreversible loss of confidence. The Asian Tigers were booming and then fell apart rapidly. Same in Russia. China faces the added difficulty of having little institutional memory and few tools to manage the economy in a time of capital scarcity. And there is no sign that capital-outflow pressure will ease.

And so a painful adjustment will be unavoidable: Property values will decline by an estimated 50% from the current reported average of $142 per square foot in tier-two cities, roughly equivalent to the national average in the U.S., where incomes are much higher. (Current price-to-income ratios in China are generally over 20, while the U.S. averages about three.) Excess industrial capacity will shut down. People will lose their jobs.

But Beijing still has a choice: Either let the yuan take some of the pressure of adjustment, or let all of it fall on the domestic market. Placed in such stark terms, a currency adjustment seems inevitable.

A likely depreciation of at least 15% against the U.S. dollar would take the renminbi back to where it was on the eve of the global financial crisis, before speculative capital inflows flooded into China and drove up the currency’s value. This would be a “reset event” globally. All forecasts for inflation/deflation, interest rates, currency crosses, growth and commodity prices would have to be ripped up and recalculated. It would likely lead to an emerging-markets crash. As a percentage of global gross domestic product, China today is nearly twice the size of Asia (excluding Japan) in 1997.

Commodities, emerging-market equities and multinationals with exposure to China have already started to realize significant losses. Soon major corrections will reach other assets boosted by the Chinese economy, such as property values in Hong Kong and Singapore. When this unfolds, U.S. government bonds may be the world’s only safe haven. The end of the China story is at hand.

Ms. Stevenson-Yang is co-founder of J Capital Research Ltd. Mr. Dougherty is chief investment officer of KDGF Asset Management.
Logged
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #909 on: March 15, 2016, 08:18:15 PM »

second post:

WTF?!?

Crime Scene: Who Stole $100 Million From Bangladesh’s Account at the New York Fed?
Breach sent $81 million to accounts in Philippines, $20 million to Sri Lanka
Bangladesh’s central-bank governor, Atiur Rahman, center, at a news conference Tuesday. He resigned after money was stolen from the country’s account at the New York Fed. ENLARGE
Bangladesh’s central-bank governor, Atiur Rahman, center, at a news conference Tuesday. He resigned after money was stolen from the country’s account at the New York Fed. Photo: A.M. Ahad/Associated Press
By Syed Zain Al-Mahmood
March 15, 2016 10:42 a.m. ET
147 COMMENTS

DHAKA, Bangladesh—Someone using official codes stole $100 million from Bangladesh’s account at the New York Fed over a recent weekend. Authorities in four countries are still piecing together what happened.

The breach funneled $81 million from the country’s account at the New York Federal Reserve to personal bank accounts in the Philippines. Another $20 million was directed to a bank in Sri Lanka.

In scenes that would be right at home in Hollywood, the unknown criminals sent 35 transfer requests through the Swift interbank messaging system, a Bangladesh Bank official and an official of the Ministry of Finance have said. Whoever made the requests had the necessary codes to authorize Swift transfers and put in the payment requests on a weekend, the officials said.


The incident has led to recriminations, with Bangladesh’s finance minister accusing the Fed of irregularities, and questions being raised about the quality of security in the South Asian country. In an early sign of fallout from the breach, Bangladesh’s central-bank governor, Atiur Rahman , resigned Tuesday.

Mr. Rahman had come under fire from senior ministers who said he didn’t tell the government about the theft fast enough. Although the theft took place Feb. 5, Bangladesh Bank, the central bank, didn’t make a public announcement until last week. The country’s finance minister, Abul Maal Abdul Muhith, said he learned of the heist from news reports.
Advertisement

On Tuesday, Mr. Rahman, who had been the governor of Bangladesh Bank for nearly seven years, said he was taking moral responsibility for the loss of the money. Two deputy governors of Bangladesh Bank were relieved of their duties, Mr Muhith said. He didn’t clarify why they were removed. The officials couldn’t be reached for comment Tuesday.

The Fed declined to comment Tuesday. It has said it is working with Bangladesh to investigate the incident and said none of its systems were compromised.

Interviews with several officials at Bangladesh’s Finance Ministry and its central bank depict a well-planned international caper spanning at least four countries.

The breach began on a quiet Friday last month, when a series of payment instructions arrived at the New York Fed seeking the transfer of nearly $1 billion out of the Bangladeshi account.

The transfer requests, which the Fed says were fully authenticated with the correct bank codes, asked to move the money to private accounts in the Philippines and Sri Lanka and appeared to come from the Bangladeshi central bank’s servers in the capital, Dhaka.

But Friday is the weekend in Bangladesh and the central bank’s offices were closed. By the time officials at Bangladesh Bank returned to work, five requests moving about $100 million had gone through. Further transfers totaling roughly $850 million were blocked after the Fed raised a money-laundering alert, a spokesman for Bangladesh Bank said. The fact that the money was being wired to personal bank accounts in the Philippines rang alarm bells.

The $81 million that did leave the bank for the Philippines ended up in the account of a local businessman before making its way to at least two local casinos, the executive director of the country’s Anti-Money Laundering Council, a government task force, said at a hearing at the Philippine Senate on Tuesday.

Julia Bacay-Abad, executive director of the Anti-Money Laundering Council, said the money had apparently been used to buy gambling chips. The council’s investigation ended at the casino’s doors, however. Gambling facilities aren’t covered by the Philippines’ Anti-Money Laundering Law.

“Manila has returned only $68,000 of the money which was left in the bank accounts,” said a Bangladesh Bank official close to the investigation. “Whoever planned it had thought well ahead.”

The $20 million transferred to Sri Lanka went to the account of a newly formed nongovernmental organization, according to the officials in Dhaka. The Sri Lankan bank handling the account reported the unusual transaction to the country’s central bank under that country’s money-laundering laws, and authorities reversed the transfer.

Swift uses a multilayered process to authenticate the financial institutions that are sending and receiving millions of messages each day between one another. A spokeswoman said the messaging system’s core services hadn’t been affected, and said Swift was working with Bangladesh Bank “to resolve an internal operational issue at the central bank.”

Cybersecurity experts say the theft of money from the New York Fed shows the vulnerability of emerging economies like Bangladesh, where the rapid growth of the banking system has outpaced regulations and security systems.

Bangladesh foreign-currency reserves touched a record $28 billion in February. Nearly a third of those are held in liquid form in bank accounts at the Fed and the Bank of England, according to Bangladesh Bank officials.

—Cris Larano in Manila and Katy Burne in New York contributed to this article
Logged
Crafty_Dog
Administrator
Power User
*****
Posts: 36836


« Reply #910 on: March 16, 2016, 12:31:25 PM »

Grannis:

http://scottgrannis.blogspot.com/2016/03/inflation-is-alive-and-well.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FtMBeq+%28Calafia+Beach+Pundit%29

====================================================================
The Consumer Price Index Declined 0.2% in February To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 3/16/2016

The Consumer Price Index (CPI) declined 0.2% in February, matching consensus expectations. The CPI is up 1.0% from a year ago.
“Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) declined 0.3% in February but is up 0.3% in the past year.

Energy prices declined 6.0% in February, while food prices increased 0.2%. The “core” CPI, which excludes food and energy, increased 0.3% in February, above the consensus expected 0.2% rise. Core prices are up 2.3% versus a year ago.
Real average hourly earnings – the cash earnings of all workers, adjusted for inflation – remained unchanged in February and are up 1.2% in the past year. Real weekly earnings are up 0.6% in the past year.

Implications: The Federal Reserve needs to pay close attention to today’s inflation report, which shows the ongoing split between energy prices and prices in the rest of the economy. While February’s headline reading for overall consumer prices posted the consensus expected decline of 0.2%, the details of the report show accelerating inflation. The cause of the decline in consumer prices in February was a 13% drop in gasoline prices, which fell to the lowest level since January 2009. Energy prices as a whole (gas plus everything else) didn’t fare much better, falling 6%. However, the “core’ CPI, which excludes food and energy, rose 0.3% in February. Core prices are up 2.3% versus a year ago, the largest gain since the last recession. In the past three months, core prices are up at a 3% annual rate. These data are a sign that monetary velocity is picking up (the speed that money circulates through the economy). It’s also why the Fed can be confident inflation is moving back toward it’s 2% target. As soon as energy prices stop falling, and that may have started in March, the headline CPI is going to move back toward the core CPI. The increase in the core CPI in February was led by housing rents and clothing. Owners’ equivalent rent, which makes up about ¼ of the CPI, rose 0.3% in February, is up 3.2% in the past year, and will be a key source of higher inflation in the year ahead. Don’t be taken by surprise by higher inflation in 2016-17. The Fed is still loose and is likely to stay that way for the foreseeable future. Although it’s unlikely, there is still a small chance the Fed hikes rates today. More likely, the next hike will come in June, with one or two more hikes in late 2016.
« Last Edit: March 16, 2016, 12:33:29 PM by Crafty_Dog » Logged
DougMacG
Power User
***
Posts: 7914


« Reply #911 on: March 28, 2016, 11:14:11 AM »

Another 'Captain F'ing Obvious' moment for anyone reading the forum, now experts are telling us the Fed's wrongheaded policies of a decade ago (and now, still) are major contributors to the bubbles and crashes, then and coming...

http://economicsone.com/2016/02/22/a-firm-conclusion-about-the-role-of-fed-leading-up-to-the-crisis/
http://ftalphaville.ft.com/2016/02/08/2152624/the-bank-of-canada-admits-easy-money-can-inflate-debt-bubbles/
http://www.bankofcanada.ca/wp-content/uploads/2016/02/remarks-080216.pdf
http://www.stanford.edu/~johntayl/Onlinepaperscombinedbyyear/2007/Housing_and_Monetary_Policy.pdf
http://www.stanford.edu/~johntayl/2010_pdfs/Fed-Crisis-A-Reply-to-Ben-Berhttp://www.sppm.tsinghua.edu.cn/eWebEditor/UploadFile//20150602112635392.pdf
nanke-WSJ-Jan-10-2010.pdf
http://www.sppm.tsinghua.edu.cn/eWebEditor/UploadFile//20150602112635392.pdf
http://research.stlouisfed.org/publications/review/08/07/Jarocinski.pdf

Pretty much every economist on earth except Greenspan, Bernanke and Yellen agree on the multi-trillion dollar damage actual Fed policies have dealt on our economy.  And it's still happening. (cf. ZIRP, NIRP)

« Last Edit: March 28, 2016, 01:30:48 PM by Crafty_Dog » Logged
DougMacG
Power User
***
Posts: 7914


« Reply #912 on: April 13, 2016, 11:44:57 AM »

After 7 years we still haven't needed a positive thread for this administration; it all fits nicely into 'cognitive dissonance of his glibness'.  I was quite hard on Jack Lew earlier for his political lying and corruption, all part of the job I'm sure. http://dogbrothers.com/phpBB2/index.php?topic=2177.msg70291;topicseen#msg70291  The IRS targeting scandal non-follow up also falls under his jurisdiction.

Here is a current interview with Lew over a range of topics relating to his job as Treas Sec.  Some of what he says makes sense.  Still it is amazing that someone could be doing their job as Treasury Secretary and not be screaming warnings from the rooftops about how damaging our deficits and to the future of this country.

http://www.theatlantic.com/international/archive/2016/04/jacob-lew-alexander-hamilton-clemons/477924/

Lew: The president and I tend to be very like-minded on the realist approach. If you look at something like Ukraine, in putting together support for [the government there following the country’s 2014 revolution]. The anchor was an IMF program [of $17 billion in urgent support]. It also needed to work with the Europeans [to] put in a significant amount, because [Europe] was right there. But then we went around the world, and we got countries that don’t have immediate exposure to Ukraine or Russia, [including] Canada and Japan. We put together a global effort so that with our loan guarantees, the IMF package, European support and contributions from other countries around the world, we actually helped Ukraine.

I think it gets harder and harder because everyone is feeling fiscal constraints. But I think we have a very powerful ability to cross that moral threshold, where countries know they should [contribute], and then it becomes a budget question of how much you can get them to do. Could we have put together a $25 billion package, or $20 billion [for Ukraine]? We couldn’t. But you put it all together, and it’s the world telling Russia that Ukraine will have a long enough runway to get back on its feet. That’s geopolitically of great significance.

   - A good policy wonk with no principles, vision or moral character.  My guess is that he will be the next Chairman of the Federal Reserve.


On China:
Lew: I think that we have to recognize there are going to be areas where we have overlapping interests; there are areas where [we’re] going to have differences. We’re going to have to make progress in the space where we agree, but [we also have to] put down really hard markers, whether it’s over [the] South China Sea or cyber theft—we can’t just gloss over those issues.

One of the things I have found in my engagements with the Chinese is that they respect the directness of that. It’s not on its face offensive to say, “You do these things that we find unacceptable.” We shouldn’t kid ourselves that just by saying it they will change. We are pulling them along as a global community to a better place. [China’s current economic transition] is one of the hardest economic transitions that any country has ever undertaken; [it’s] one of the biggest economies in the history of the world shifting from a centrally controlled, non-market, top-down structure to something that is more market-driven.

The question is not whether they intellectually understand the importance of that transition. They all understand what they need to do. Are they prepared to live with the bumps that come with making that transition? They are not small bumps. You dislocate millions of people from their manufacturing jobs. You either reposition them in different jobs in different places or provide some support because they are no longer working. Those are huge things to do.

They say the right things, but the proof of pudding is in the eating, and it’s hard. I don’t say that in a condescending way at all. If you asked me to relocate 1.5 million American workers, that would be very hard. But they have no choice because of where their economy was, and where it has to go.

They value the relationship with us. You know this whole communication thing, it’s not natural to them. Being open and transparent is new to them. They don’t intuitively know when they need to communicate. When I get on the phone with some of my counterparts and say, “You can’t surprise the world by doing something like this,” they try actually to do better going forward. But you can see from the way they have moved in the last few months that the learning curve is steep.
Logged
Pages: 1 ... 17 18 [19] Print 
« previous next »
Jump to:  

Powered by MySQL Powered by PHP Powered by SMF 1.1.21 | SMF © 2015, Simple Machines Valid XHTML 1.0! Valid CSS!