think

The Scale of Monetary Happiness

Does money really buy you happiness?

QE

Why The Fed Doesn’t Have to “Unwind” QE

One of the more common questions I get is about QE and the Fed’s “exit strategy”.   Many people seem to think the Fed has to unwind its balance sheet before the Fed can raise rates or tighten policy.  So, the concern is that the Fed has a $4.5T balance sheet and when inflation starts to rise they’ll have to…

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FRED on “Spurious Correlations”

This is pretty funny.  From the St Louis Fed.  No comment necessary: “Relationships between macroeconomic time series are not usually straightforward enough to establish with a simple graph. The problem is that almost all time series tend to grow in the long term as an economy grows. So, any measure in nominal terms will grow even more, since inflation rates are…

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Q&A Answers – Part Deux

Here are the rest of the answers to last week’s Q&A.  I hope you find it helpful. jmacdon says: Eddie Elfenbein had a recent post about a model for the price of gold, based partly on Gibson’s paradox. What I don’t understand is why anybody would think there is a paradox. It seems to me that the interest rate should be…

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strategy

Economic Schools of Thought and Market Performance – Part Deux

In a previous post I put together a hypothetical benchmark global portfolio so we could take different economic schools and analyze how they might have helped us navigate the current bull market.  I want to continue the series today.  As a reminder, here’s the benchmark allocation and performance: US Stocks: 20% Foreign Stocks: 20% REITs: 5% Corporate Bonds: 19% US Govt Bonds:…

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rip

The Death of Outside Money

One thing the financial crisis exposed was just how deeply backwards a lot of economic theory was in terms of understanding money.  Most economic schools build their model of the world around outside money or money created by the government and the central bank.  This includes bank reserves, cash and coins.  And they tell us that credit and inside money…

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Economic Schools of Thought and Market Performance

Which economic schools of thought would have helped you perform well in the last 5 years? Which ones would have been a disaster?

money11

Lavoie on Endogenous Money and Effective Demand

Marc Lavoie has a nice paper in the Review of Keynesian Economics discussing Steve Keen’s views on endogenous money. Marc is typically balanced and fair in his views. And he highlights some important points:

train

Rail Traffic: Still Chugging Along

If rail is an indicator of broader macro trends then this continues to point to a strong Q2 rebound in economic growth.

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Q&A -The Answers, Part 1

The answers to last week’s Q&A. I hope this helps….

the-federal-reserve

3 reasons Yellen’s FOMC remains dovish

What makes Janet Yellen and a number of other FOMC members so dovish with respect to monetary policy and in particular the trajectory of rate normalization? A Credit Suisse report sites 3 key factors, which Yellen calls “unusual headwinds”:

learn

Unlearning From Peter Bernstein

By far the best thing I read this week was an article by Jason Zweig. It had nothing to do with current events or risks in the markets. In fact, it was published almost a decade ago for a story in Money Magazine.