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Commentary
Monetary ease, Grantham on overvaluation and the bubble in bubbles
The macro debate today is about secular stagnation and the correct policy response to deal with it if it exists. With that backdrop, it is interesting to read Jeremy Grantham’s latest quarterly letter to investors, which sounds a word of…
Thresholds versus Triggers
Fed Chair nominee Janet Yellen believes that the Fed will keep rates at zero long after the 6.5 unemployment threshold, according to news reports. Yellen made the comments responding to an inquiry by Massachusetts Senator Elizabeth Warren…
The deflationary forward guidance threshold
In September I wrote that I expected the Fed to establish a lower bound for inflation threshold as one of its next moves. The rationale was two-fold. First, inflation is undershooting and the Fed needs policy space to deal with unwanted…
Lockhart speech signals coming policy shift at the Fed
Earlier today, I indicated that comments by Fed President Dennis Lockhart clearly indicated that the Fed was poised to shift away from quantitative easing and toward forward guidance to guide future Fed monetary policy. But Lockhart gave a…
Are low rates in the eurozone skewing private portfolio preferences?
The German-language media have been voicing concerns over the ECB’s low interest-rate policy and its effect on savings and investment in the euro zone. This makes sense given the state of the economy in Germany and Austria is significantly…
Why an eventual Grexit is still unavoidable
Europe is in the sweet spot right now, with recovery looking like it has taken hold. Greece remains an outlier. The question is what will happen to Greece over the medium- to- long-term. I believe the answer is an exit from the euro zone.…
More on growth in Euroland, the U.S. and the U.K.
I want to pick up where I left off yesterday and highlight the growth dichotomy between Euroland on the one hand and the U.S. and the U.K. on the other. Yesterday I wrote that the risk is to the upside in the U.S. (and the U.K.) if…
Risk to the upside in the U.S. contrasts to Europe
The latest data out of Europe shows the economy in the euro zone continuing to expand and suggests that we are probably in a technical recovery. In Europe, however, the threat to recovery is to the downside, whereas in the U.S. the main…
How’s gold doing?
The chart on gold is not looking very good. And it seems that retail investors have lost interest in the precious metal. Is this a correction within the longer-term gold bull market or is it a new secular bear market for gold? I have some…
The US criticism of Germany’s economic policy is correct
The U.S. Treasury’s semi-annual currency report had surprisingly strong criticism for Germany. The U.S. claims that Germany’s macroeconomic policies are inherently deflationary, creating risk for further crisis. I agree with this criticism…