Category: Federal Reserve

Through the FOMC’s Looking Glass: An Orgy of Transparency

Back in the day, when I was a member of the FOMC (1991-2004) I occasionally had an opportunity to push back against a push for greater transparency surrounding monetary policy. I was usually in the minority in thinking that transparency can be taken too far—that the reduction in flexibility for policymakers and the one-way bet […]

FOMC Forecasts

The first rule of forecasting should be don’t do it. Nothing good comes from it. The second rule, is, if you give a number, don’t give a date; or, if you give a date, don’t give a number. My rule, the third rule, is, if you have to do it, do it often. Much has […]

The Surge in Money Growth: Meaningful or Meaningless?

Something dramatic is going on with the official money supply statistics, but its significance is hard to interpret. For a long time, even as the Federal Reserve pushed short term interest rates to very low levels, the broad measure of money, M2, grew only around 5 percent per year. While a Keynesian focus only on […]

The Fed’s Mandate: Single or Dual?

The question of the Fed’s mandate is back on the table. Chairman Bernanke has been asked to address the question in his upcoming monetary policy report to the Congress. More specifically, in what can only be called a strange quirk of timing, the question is whether the country would be better off if the Fed […]

QE2 = 5.0%

QE2 comes to a formal end this month, and just in the nick of time too, since it’s been flooding the markets with newly printed money, making hyper inflation and a collapse of the dollar inevitable. But, wait a minute! What’s that 5 percent all about? Five percent is the latest estimate of the growth […]

A Meaningless Ratio

I’ve noticed for some time now that some financial TV guests are so eager to trash the Fed that they will say some really strange things in that service. One this morning probably should win the prize. The topic was QE2 and job creation. The guest gave an estimate of QE2 purchases to date and […]

Removing Reserve Bank Presidents from the FOMC: Another Bad Idea

As if the Dodd-Frank monstrosity weren’t bad enough, along comes another bad idea that falls under the category of no good deed goes unpunished. Mr. Frank has now proposed that the Reserve Bank presidents be removed from the FOMC. He apparently wants a more centralized central bank, centralized—guess where?—in Washington, D.C. If he gets his […]

China Chronicles

I recently visited China—Shanghai and Hangzhou—for a too-brief five days. I spoke to investor groups about the U.S. economy and its parallels to and interrelationships with China and answered tons of questions from investors and the press about—guess what?—QE2. Why was the Federal Reserve printing so much money, exporting inflation to China and other countries, […]

Eating Bitterness

My title is a Chinese expression that I read in a recent WSJ China Real Time Report. A synonym is “endure suffering.” That article was about how the Chinese financial system is a stacked deck for the high-saving Chinese earning very low, even negative in real terms, rates of interest on their bank deposits. Their […]

A Rotary Talk

What follows are partial notes for a talk to the Dallas Rotary Club today, March 2, 2011. I guess the subprime origins of the financial crisis don’t need retelling at this point. The ensuing recession began in December 2007 and officially ended (semi-officially anyway) in mid-2009, when GDP started growing again. So, that’s about 18 […]