The Federal Reserve has long been clear on the sequence of events as it innovated the playbook during the Great Financial Crisis. There would be a considerable period between when the Fed would finish its credit easing operations that involved purchasing Treasuries and mortgage-backed securities (MBS) and its first-rate hike. The normalization cycle would be …
During the Great Depression, countries discovered their balance sheets. Fiscal spending helped augment aggregate demand. After the WWII, high income countries have typically run persistent deficits, resulting in the accumulation of debt. During the Great Financial Crisis, central bank balance sheets were discovered. Central banks bought a variety of assets, but especially their own …
If QE was Mostly Placebo, What about the Unwind? Read More »
(summary of presentation based on my book, Political Economy of Tomorrow, delivered to Bank Credit Analyst conference yesterday)Alice laughed. There is no use trying; she said, “one can’t believe impossible things.” I dare say you haven’t had much practice, said the queen. When I was younger, I always did it for half an hour a …
Another Look at Why the Return to Capital is Low Read More »
The ECB’s asset purchase program is constrained by the self-imposed guidelines. As it QE continues, the ECB seems to be bumping against some of these parameters. The situation is thought to be coming to a head shortly, perhaps as early as this week’s ECB meeting. One of the constraints is the country exposure capped at …
Some Preliminary Thoughts on the ECB’s Capital Key Read More »