monetary policy

by Comstock Partners In starting a second round of quantitative easing (QE2), the Fed is gambling on a program that has little potential upside and a substantial amount of risk. In the first round (QE1) the Fed bought $1.7 trillion of…

The Fed may not be able to manufacture new net financial assets, but it can and will create lots of excess cash reserves! (Hat tip Scott F.)

“It’s no use throwing dollars out of a helicopter,” Guido Mantega, the finance minister, said on Thursday. “The only result is to devalue the dollar to achieve greater competitiveness on international markets.” At a joint press…

The QE1, Victoria Harbour 1972 QE's effects and afterthoughts The Fed came out with a plan that was devilishly clever in that it was not geared to the short end but also allowed the banks to continue to benefit from a steep yield…

With the long await Fed decision behind, what are the likely implications of Fed’s new round of asset purchase, dubbed QEII? The Fed’s announcement of $600 bln in assets was not much a surprise but the details within the statement provided…

by Win Thin EM currencies are rallying in the wake of the FOMC decision, with many back to testing or even besting the year’s highs vs. USD from mid-October.  We continue to feel that the conditions favoring EM investment will…

In a famous "Saturday Night Live" skit, Christopher Walken plays a legendary rock music impresario whose advice, his only advice, to a young band is "more cowbell." The actor Will Ferrell furiously pounds away on a…

The Federal Reserve is attempting to reflate the US economy to close the output gap and create jobs. They have decided to purchase medium-term Treasury paper to do so. But monetary policy is a blunt instrument. QE is already having all…

Andy Lees of UBS writes that quantitative easing is having the (designed) effect of diluting and transferring US debt elsewhere. It is already a success. In a morning note he tells us: Yesterday Saudi shifted its oil price target…

Highlights The dollar weakness after the FOMC gave way to a pretty steady and small trading range through the Asian session.  But the dollar experienced a sharp selloff in the European session as investors further increased their…