monetary policy

Judging from recent events, the bond vigilantes are right to suspect that Ben Bernanke is all talk and no action when it comes to keeping long-term rates low. If you recall, I had actually believed the Fed would support bonds because it…

Just over a decade ago, the Bank of England was given full monetary independence from the British government, making it one of the last major central banks to achieve this status. The move was heralded as critical for maintaining…

What are the Swiss doing selling dollars? I don't have an answer to this question. But, I thought I would posit it because a reader tipped me off to a development via the Blog Alea:

News in Japan has been particularly grim. Industrial production has plummeted, exports are in free fall and banks are simply not lending as excess reserves pile up. As a result, Japanese share prices threaten to revisit lows that bring the…

The European Central Bank cut its benchmark rate 50 basis points (0.50%) to 2% because of weakness in the Eurozone. While a cut was widely anticipated, it was not known whether the ECB would cut 25 or 50 basis points. However, the cut of…

Federal Reserve Chairman Ben Bernanke gave a speech at the London School of Economics today in which he outlined the measures the Federal Reserve was prepared to take in order to deal with the financial crisis. Of particular note, Bernanke…

This is the time of year when everyone tends to look back and sum up the year in one way or another. I have been doing much of the same. In keeping with that theme, I have taken a good look through my nearly 1400 posts to get a better…

The U.S. Dollar got more bad news today when the Bank of England (BoE) decided to not follow the U.S. Federal Reserve's lead to a Zero Interest Rate Policy (ZIRP). The BoE was seen as the most likely to follow in the Fed's footsteps as i…

I recently wrote a post about U.S. Treasury securities which have been rising in price as interest rates have come down. In the post, I called the Treasury rise a bubble and I stick by that moniker despite protests from some astute readers.…

To my mind, lowering interest rates in the aftermath of an enormous credit bubble where institutions have just destroyed $1 trillion in capital is wrong. It distorts lending decisions such that yet more money will eventually be lent out…