permanent zero

Investors shunning US debt ‘for whatever reason’ presupposes the outcome. I need to see the steps that get us from 2.25% 10-year rates to 4 or 5% without the Fed actively raising rates because the only way rates are going higher is because…

This article explains why quantitative easing had become the monetary tool of choice for the Federal Reserve and what kind of easing the Fed is now employing. Because the Fed feels constrained politically, it is unlikely to repeat…

Written and video statements explaining Minnesota Fed President Kocherlakota's dissent on 9 August 2011

Politically the Fed is constrained. So this is the first salvo in a renewed easing campaign by the Fed. Right now everyone is acting like this isn’t QE. But I told you two months ago that it is.

Standard and Poor’s downgraded U.S. creditworthiness to AA+, becoming the first to remove the triple-A status from the world’s largest economy and largest debtor. Moreover, a negative outlook has been retained. The element of surprise…

A stalemate could mean selective default. However, my sense is that the bonds themselves will be paid first. Other government expenditures will not get paid and that means a hardship for those who expect the money, whether companies doing…

Felix Zulauf spoke to Barron’s Alan Abelson about his thoughts on the European sovereign debt crisis now that Greece has received its second 100 billion euro bailout. Here I discuss what Abelson says about the conversation and why I think…

The Fed is stuck at permanent zero and that means the carry trade is on. If we did have another panic, those swap lines would be handy because the Fed would again become the global lender of last resort.

Last week, when discussing what QE3 could look like I indicated that were the Federal Reserve to start expanding its balance sheet, QE3 will see interest rate caps after a pause and period of reflection. Let me address the differences…

Yesterday, I indicated that the FOMC has already considered offering unlimited quantitative easing to target specific interest rates during the second round of quantitative easing. I believe the Fed will do this in QE3, and apparently Bill…