Fed Announces Game-Changing Inflation and Unemployment Targets for Monetary Policy

By: Wednesday December 12, 2012 10:45 am

The Federal Reserve adopted an innovative tactic in its latest Federal Open Market Committee report. Instead of merely identifying a target federal funds rate, or giving guidance that rates will remain low for a certain period of time, the Fed now specifically targeted both an unemployment rate and an inflation rate, and said that their [...]

No, Mario Draghi Should Not Be Person of the Year, Because He Failed in His Effort to Break European Sovereignty

By: Monday November 26, 2012 12:30 pm

European finance ministers have yet to make any decisions on the Greek bailouts. In general they have to choose whether or not to continue funding the country’s borrowing and on what terms. Will they forgive another portion of Greek debt (this is unlikely)? Will they allow the country a reprieve from meeting EU budget targets [...]

Bernanke: Economy Still Weak, No Time for Austerity

By: Tuesday November 20, 2012 12:55 pm

Ben Bernanke’s speech on the economy today offered no new information. It was more of an overview on the state of the economy, and it hit on many very familiar themes which Bernanke has expressed for a long time now, including the need to loosen lending standards in a type of reinflation of the housing [...]

Janet Yellen’s Game-Changing Speech for Monetary Policy

By: Wednesday November 14, 2012 12:00 pm

The President opened his press conference by designating the top two priorities as jobs and growth, and then spent the next 60 minutes answering questions about David Petraeus and Susan Rice and tax rates and Benghazi and deficit reduction. And Obama didn’t seek to break out of that constraint and suggest actual near-term job creation [...]

Leading Fed Inflation Hawk Now Thinks Central Bank Not Doing Enough

By: Wednesday October 31, 2012 9:15 am

It wasn’t so long ago that Narayana Kocherlakota, the President of the Minneapolis Federal Reserve, was the leader of the coalition arguing for tighter monetary policy, even in the middle of mass unemployment. He claimed that unemployment was structural in nature, and that we risked runaway inflation with ultra-low interest rates. Just a year or [...]

Talk Rises About Sovereign Debt Cancellation

By: Monday October 22, 2012 6:58 am

It’s an intriguing question: why can’t central banks around the world, practically all of whom have bought up sovereign debt, just cancel it? Countries would get more headroom on their debts, inflation would rise but not necessarily at an unmanageable rate. It would have the effect of hitting the reset button.

Bernanke: No Deficit Reduction Now, Economy Still Needs Support

By: Tuesday October 2, 2012 1:46 pm

Contrast the plans of Congress to give up on job creation and move expeditiously to deficit reduction with the plans of the Federal Reserve to belatedly but nonetheless insistently and with near-unanimous participation engage in the monetary tools at their disposal to boost the economy and lower unemployment. There are serious questions about the beneficiaries [...]

US GDP Data Revised Down in Second Quarter

By: Thursday September 27, 2012 9:00 am

Economic growth for the second quarter of 2012 was revised down sharply to 1.3%, a reminder that economic activity really stalled out in the spring. Thursday’s report underscored that the recovery has proved insufficient to pull down the unemployment rate, which has been stuck between 8.1 percent and 8.3 percent all year. The renewed weakness [...]

Influential Regional Fed President Concedes Need for Monetary Action Against Unemployment

By: Friday September 21, 2012 6:15 am

I don’t know whether this is a positive sign about policymakers recognizing the depth of our economic problems, or a negative sign about the depth of our economic problems. But the President of the Minneapolis Federal Reserve, Narayana Kocherlakota, set a target unemployment rate he would like to see before the Fed raises the federal [...]

Worrying About the Next Recession

By: Tuesday September 18, 2012 1:00 pm

As the economic recovery drags on in excruciatingly slow fashion, one thing should concern the country: we’re in no position to handle another economic shock. Just as a family overburdened by mortgage debt would be ill-equipped to withstand an economic blow like sudden unemployment or a medical catastrophe, a country with a too-high unemployment rate [...]

The Investor-Purchase Housing Bubble Inflates Some More

By: Monday September 17, 2012 10:27 am

Analysts have tried to parcel out whether QE3 will really help the economy. I’ve done the same thing myself. The way almost everyone looks at this is about the impact on housing, specifically mortgage prices. But mortgage rates haven’t changed at all since the announcement of QE3, and if the Fed was trying to influence [...]

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