monetary policy

Weak inflation readings in the US continue provide the Fed with the rationale to maintain securities purchases in what amounts to a "QE trap". With the PCE inflation measure once again below one percent, the FOMC doves fear that "taper"…

Below is the text of a speech delivered on Friday by Federal Reserve Chairman Ben Bernanke on the recent financial crisis and its similarities to financial panics like the Panic of 1907 (which led to the founding of the Federal Reserve in…

Everyone is familiar with the fact that Federal Reserve Chairman Bernanke’s second term as Chairman is drawing to a close. Janet Yellen is widely expected to ultimately be confirmed by the Senate. What is less appreciated is that the…

Consumer price inflation in the Eurozone has been below the target of 2% and falling for quite some time. But until now, the ECB has been sitting on its hands. Inflation some distance below target didn't appear to bother it - most likely…

I've suggested previously that QE could actually be deflationary. I looked at it from several perspectives - collateral effects, the monetary transmission mechanism, distributive effects, even Peter Stella's "deadwood" inhibiting bank…

Over the past couple of years it has gradually become the consensus view that QE has failed because it hasn’t created the economic growth that everyone was hoping for. I find that view overly simplistic and naïve in equal measures. QE - or…

Recently, I wrote a series of posts predicting that the Fed would give up on QE and move toward forward guidance in order to be able to normalize policy. Nevertheless, I have also been saying for quite some time I believe the US zero rate…

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…

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…

When the working age population grows faster than the broad population, demographics become a tailwind as far as economic growth is concerned. Hence, what is likely to become a significant headwind for advanced economies in terms of…