The Fed

Additional Testing Required

Update 450 — Additional Testing Required:What to Expect from the Fed’s Stress Tests In a month, we will celebrate the 10th anniversary of the signing of the Dodd-Frank Act, which codified annual Federal Reserve stress testing of major financial institutions to see if they can withstand various hypothetical macroeconomic hardships. No one contemplated COVID then, …

Additional Testing Required Read More »

Fed Confronts COVID Surge

Update 448 — Fed Confronts COVID SurgeComplicating Policy Calculus for Congress Fourteen states — including California, Texas, Florida, and North Carolina — all in some phase of reopening, set single-day records this month for new coronavirus cases. A statistical error in the BLS unemployment rate understating the true figure by three percent in May will …

Fed Confronts COVID Surge Read More »

Fed Chair Powell to Congress

Update 440 — Fed Chair Powell to Congress:Spend Much More, Fast, or Risk Depression Approaching Memorial Day, it is now two months ago that Congress approved $2.1 trillion in spending in response to the economic impact of the Coronavirus. About 98 percent of all COVID fatalities in the U.S. have occurred since then.  How have …

Fed Chair Powell to Congress Read More »

Federal Bailout Policy 2020

Update 434 — Federal Bailout Policy 2020: Picking Winners/Losers vs. Sacrificing Jobs The political toxicity of bailouts was perhaps best conveyed by former Republican South Carolina Governor, U.S. Ambassador to the U.N, and Boeing Director Nikki Haley, who quit her Board seat last month, saying “I cannot support a … federal bailout that prioritizes our …

Federal Bailout Policy 2020 Read More »

Fed’s Flurry of Credit Facilities

Update 432 — Fed’s Flurry of Credit Facilities: $6 Trillion Balance Sheet Arsenal Explained The Fed unveiled a panoply of programs this month and last designed to alleviate deteriorating credit access nationwide. The programs range from a backstop for the $4 trillion money-market industry to direct bridge loans for businesses.  Which of these is tried and …

Fed’s Flurry of Credit Facilities Read More »

Unemployment 3.5%, Inflation 2.3%

Update 407:  Unemployment 3.5%, Inflation 2.3%Yet Prime Rate 1.75% — What Could Go Wrong?? What is the optimal interest rate under current economic conditions?  This question has taken on new meaning for Chair Jerome Powell of the Federal Reserve. The current federal funds rate of 1.75 percent looks like an odd spot, given the nation’s …

Unemployment 3.5%, Inflation 2.3% Read More »

Fed Chair Powell Hits the Hill

Update 395 — Fed Chair Powell Hits the Hill:Is it Time for a Third Mandate for the Fed? Fed Chair Jerome Powell testifies this week before the Joint Economic and House Budget Committees to discuss the overall economic outlook. His appearances give members of Congress the opportunity to ask what could and should the Fed …

Fed Chair Powell Hits the Hill Read More »

Laissez-Faire to Less-is-More

Update 381 — Laissez-Faire to Less-is-More: Trump Has a Modern Monetary Theory 4 U Jerome Powell’s bad dream may not last longer than Friday the 13th. But President Trump’s belief that Fed monetary policy should aim for zero interest rates — or we’ll repeal ‘em! — might persist right through the election thirteen full moons …

Laissez-Faire to Less-is-More Read More »

Powell Pivots to a Rate Cut

Update 370 — Powell Pivots to a Rate Cut;25 bps (Bonus Points) for Capital Markets The old joke is that the Fed is there to pull the punchbowl away before the party ends in mayhem and tears.  This afternoon, the Fed re-filled the punchbowl and announced, if you can drink, please do. The first Fed …

Powell Pivots to a Rate Cut Read More »