2011

The Fed could announce a federal funds target of 3% but the tsunami of excess reserves now out there swamps any conceivable demand, so the federal funds rate would be guaranteed to remain stuck at zero. The target would be meaningless.…

Here's a fabulous look into the political economy of oil by Andy Lees. His view is that the era of cheap oil is over. But, more than that, natural resources as a whole are increasingly dear. And a world of dwindling natural resources has…

ECB President Trichet remained hawkish in comments today, noting that inflation is persistently above the target of just below 2%. Yet ECB monetary policy is not base don one pillar but two. The other pillar is money supply. Money supply…

After more than a year since the European debt crisis began, officials have still failed to resolve it. They raised expectations for a “grand bargain” only to crash them on the shoals of political reality. The March 24-25 Summit was to…

BBH CurrencyView The euro is mixed on the crosses and weaker against the dollar. Merkel’s coalition loses a major regional election over the weekend, in a state run for almost 60 years by the CDU or in coalition. The effect should be…

This is from the blog Political Irony (hat tip UMKC). Higher consumer price inflation than we see now will probably result in demand destruction and recession before the Fed reacts. The slack in the economy would mean this becomes a…

By L. Randall Wray Washington's deficit hysteria has morphed into gridlock over expansion of federal government debt limits. It is as if that stupid “debt clock” on Times Square had run out of electrons to keep the numbers racing ever…

By John Mauldin Loose Monetary Policies and Emerging Markets So far we have focused on the United States and other mature, developed economies that have far too much debt. With Japan, the United States, the United Kingdom, and…

Yesterday, Paul Krugman wrote: Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast…

In a recent post I discuss the limitations of neoclassical economics and the strain of behavioral economics that remains tethered to it. I argue that they fail because the market is inhabited by people, heterogeneous and context-sensitive,…