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    • Thu Aug 7th 11:31 AM | Rating: 0 0
      Commented on:
      FOMC: Forking Over More Currency?
      unthinkable = unthinking
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    • Thu Aug 7th 11:28 AM | Rating: 0 0
      Commented on:
      FOMC: Forking Over More Currency?
      No the answer is the same as in 1966 where REG Q ceilings for the commercial banks were lowered but not for the financial intermediaries (S&Ls).

      The savings-investment process is an abstract reality that conceptually is unfathomable to the unthinkable (Just as Einstein’s early papers were).
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    • Tue Aug 5th 10:37 AM | Rating: 0 0
      Commented on:
      How the Fed Is Being Too Clever
      Just ask economists Richard Anderson & Robert Rasche, (the U.S. leading authorities on the monetary base) -- Is the monetary base "binding"? And it will be answered that high powered money is no longer a base for the expansion of money & credit.

      The effect of tying open market policy to a fed Funds rate is to supply additional, and excessive, commercial bank money & credit creation - when loan demand increases.
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    • Sat Aug 2nd 14:00 PM | Rating: 0 0
      Commented on:
      The Mortgage Market and Incentives
      No, the exchange value of the dollar is largely determined by domestic inflation, the euro-dollar market and the trade deficit in that order.

      The FED's role is as you laid out. But domestic inflation is the FEDs primary responsibility.

      This countries problem stems from the Keynesian macro-economic persuasion that maintains a commercial bank is a financial intermediary. Banks create new money in the lending process & non-banks lend existing money. The volume of bank credit is determined by monetary policy not by the bankers. However the thrifts are dependent upon an inflow of savings.

      The only correct response to the current situation is to get the commercial banks out of the savings business. This solution was partially applied to end the 66 housing crisis. Banks should store their liquidity, not buy their liquidity. It's simply accounting.
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    • Sat Aug 2nd 13:52 PM | Rating: 0 0
      Commented on:
      Interpreting the Economy and Its Direction
      trend rate vs. actual???

      George Santayana said: "Those Who Forget History Are Doomed to Repeat It"? In economics is more accurate to say that those who think economic history reveals eternal truths - are doomed to error.
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    • Sat Aug 2nd 13:39 PM | Rating: 0 0
      Commented on:
      It's All a Matter of Incentives
      Yes, we live in a predatory society
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    • Sat Aug 2nd 13:38 PM | Rating: 0 0
      Commented on:
      What Are the Prospects for Stagflation?
      A more careful reading of my comments reveals that the liquidity preference curve is not the sole factor determining interest rates. Interest rates are determined by all factors operating through the demand for and supply of LOAN FUNDS.
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    • Tue Jul 29th 11:53 AM | Rating: 0 0
      Commented on:
      The "Science" of Monetary Policy
      science is using bank debits, legal reserves and the rates-of-change in monetary flows (MVt)

      these variables make forecasts mathematically infallable

      inflation is a chronic across-the-board increase in prices, and all transactions (prices), clear thru bank debits, regardless (whether average, or segmented) etc.

      go fish
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    • Fri Jul 25th 15:03 PM | Rating: 0 0
      Commented on:
      What Are the Prospects for Stagflation?
      william-king.www.drexe...
      This is still operative:

      In the diagram, we show the QUANTITY OF MONEY on the horizontal axis and the INTEREST on the vertical axis. For example, if the rate of INTEREST is Ra, people want to hold Ma of MONEY, where as if the rate of INTEREST were to go down to Rb, people would increase their demand for monetary assets to Mb.
      The FED can use this relationship, in reverse, to influence the INTEREST RATE. Suppose the Fed sets the total QUANITY OF MONEY at Ma. Then people will try to shift their assets out of the less liquid accounts into liquid money accounts as long as the rate of interest is less than Ra, or in reverse, to buy nonliquid assets whenever the rate of interest is greater than Ra. Since they cannot all shift their assets at once -- the total quantity of assets of each kind is known -- their competition for liquid or nonliquid assets will drive the INTEREST RATE to Ra. We may say that Ra is the "equilibrium interest rate" with a MONEY SUPPLY of Ma. If the FED wants to push INTEREST RATES down to Rb, they would increase the MONEY SUPPLY to Mb.

      There are two points of controversy about this:

      There may be a lower limit to how far the Fed can push the INTEREST RATES down. In the diagram, the DEMAND FOR MONEY (improper use - means the opposite of how it is used) DEMAND FOR MONEY increases without any limit as the INTEREST RATE falls toward Rt. Thus, no matter how much the Fed increases the MONEY SUPPLY, it could never push the INTEREST RATE below Rt. Rt is called "liquidity trap." Some economists have questioned the possibility of a "liquidity trap;" but others observe that the Japanese economic system, in the late 1990's, behaved very much like it was at the "liquidity trap" INTEREST RATE level. In any case, INTEREST RATES can never go lower than zero, and Japanese interest rates in the late 1990's were sometimes so low that the zero lower limit would be relevant.
      The FED can use the LIQUIDITY PREFERENCE relationship to influence INTEREST RATES only to the extent that the relationship is stable, or at least predictable. But some economists believe that it is very unstable and unpredictable -- a source of trouble rather than a means of control. In the fall of 1998, with the collapse of a major "hedge fund," and again just before January 1 2000, the FED believed that there would be bid increases in LIQUIDITY PREFERENCE. Indeed, for a short period in 1998, it seemed as if the U. S. economy had a liquidity trap at an INTEREST RATE of several percent. But because they predicted these changes, the Fed adjusted the MONEY SUPPLY to keep the INTEREST RATES more nearly stable, and they were successful on the whole.
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    • Fri Jul 25th 14:33 PM | Rating: 0 0
      Commented on:
      A Fed Rate Hike Won't Solve the Current Crisis
      The only way the US will curb the trade deficit is to sell higher quality, and lower cost, goods & services (like Hondas). GM, Ford, et al, have a long way to go.
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    • Fri Jul 25th 14:20 PM | Rating: 0 0
      Commented on:
      The SEC's Envious of a Powerful Fed
      I am inclined to the opinion that these decision-making processes (supervision and regulation) should lie entirely with the Board of Governors, and that the Board should be reconstituted to include the Secretary of the Treasury, the Comptroller of the Currency, the Chairman of the Federal Home Loan Bank Board, the Director of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the Securities and Exchange Commission.
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    • Fri Jul 25th 14:15 PM | Rating: 0 0
      Commented on:
      Bill Gross: The Housing/GSE Bill Is Best Way Out of Credit Crisis
      Inflation expectations and the expected volume of federal deficit financing now represent the principal factors determining long-term interest rates. If current projections of federal deficits materialize in this and the next few years, interest rates (both long and short-term) will be driven up sharply by the increased demand for loan funds. Any recovery in the economy will present a “catch 22” situation. An upturn in the economy will add increased private demand for loan funds to the insatiable demands of the federal government. The consequent rise in interest rates will effectively abort any recover.
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    • Fri Jul 25th 14:06 PM | Rating: 0 0
      Commented on:
      Federal Reserve Operations: A Six-Month Review
      www.newyorkfed.org/cha... Funds Rate Charts1/3/2001 eased from 6.5 to 6
      1/31/2001 5.5
      3/20/2001 5
      4/18/2001 4.5
      5/15/2001 4
      6/27/2001 3.75
      8/21/2001 3.5
      9/17/2001 3
      10/2/2001 2.5
      11/6/2001 2
      12/11/2001 1.75
      11/6/2002 1.25
      6/25/2003 1
      6/30/2005 1.25
      8/10/2004 1.5
      9/21/2004 1.75
      11/10/2004 2
      12/14/2004 2.25
      2/2/2005 2.5
      3/22/2005 2.75
      5/3/2005 3
      6/30/2005 3.25
      8/9/2005 3.5
      9/20/2005 3.75
      11/1/2005 4
      12/13/2005 4.25
      1/31/2006 4.5
      3/28/2006 4.75
      5/10/2006 5
      6/29/2006 5.25
      9/18/2007 4.75
      10/31/2007 4.5
      12/11/2007 4.25
      1/22/2008 3.5
      1/30/2008 3
      3/18/2008 2.25
      4/30/2008 2

      Fed Funds Rates. From the time Greenspan changed to an "easy" money policy (1/31/01), until the time it ended (9/18/2007), the expansion coefficient (money multiplier) changed from 49 to 94 (an increase of 92%). I.e, legal reserves are no longer binding. Thus, regardless of the policy formula used, the math projected a much "tighter" monetary policy than what actually took place.
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    • Fri Jul 25th 14:00 PM | Rating: 0 0
      Commented on:
      What Are the Prospects for Stagflation?
      You didn't even read what I wrote. REPORT ABUSE
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    • Fri Jul 25th 13:46 PM | Rating: 0 0
      Commented on:
      What Are the Prospects for Stagflation?
      What makes you think the economics books are correct? I can both read and interpret.
      View article »
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