Category Archives: fiscal and monetary policy

Bernanke Hits the Panic Button

It feels a long time ago right now, but if I recall correctly, Ben Bernanke was talking in a generally positive way at the end of last week about the effects of a well-targeted fiscal stimulus. Well, so much for … Continue reading

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The Bush Fiscal Stimulus Plan: Looks Good to Me

Bloomberg News has some details of the kind of fiscal stimulus George Bush is looking for: The administration is considering a plan that may include $800 rebates for individuals and $1,600 for households as well as tax breaks to encourage … Continue reading

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Bernanke: A Wise Man at the Fed

Portfolio contributing editor Roger Lowenstein has an excellent profile of Ben Bernanke in the NYT this weekend; it hit the web today. Lowenstein is sympathetic, and admiring, but not uncritical: he says at one point, for instance, that "Bernanke must … Continue reading

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Inflation Expectations: Coming Down

Back at the beginning of the year, I recommended putting in a non-competitive bid for 10-year TIPS at the January auction on January 10. Now that’s happened, I can link to the results: my hypothetical bid would have picked up … Continue reading

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Giving the Poor More Money: Would They be Able to Cope?

Greg Mankiw reacts today to the CBO’s declaration that if you want fiscal stimulus, a temporary increase in food stamp benefits would provide the most bang for the buck. I wonder if we really want to target such cyclical measures … Continue reading

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Bernanke Now Fully On Board the Rate-Cutting Bus

Was Ben Bernanke reading this morning’s New York Times? "Many on Wall Street," wrote Louis Uchitelle, "argue that with the stock market falling, unemployment rising and the economy flirting with a recession, Mr. Bernanke should be dealing with the situation … Continue reading

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Gordon Brown and the Independence of the Bank of England

Willem Buiter is shocked that UK prime minister Gordon Brown, along with his finance minister Alastair Darling, might attempt to have any influence at all over the monetary policy of the Bank of England: I could not believe my eyes. … Continue reading

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Can a President Delegate the Economics Stuff?

John McCain says that he’s "really never understood" economics, and that he might give responsibility for economy to a more financially-literate vice-president. Is that realistic? I think that maybe it is. There are certain areas where a president really has … Continue reading

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Will the ECB Start Buying CDOs?

We know that the Fed has pretty low standards when it comes to the collateral it will accept. But that doesn’t really matter, since the Fed is mainly relying on getting its money back from the banks it’s lending money … Continue reading

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New Fed Window Still Carries a Little Stigma

One way of looking at the Fed’s new Term Auction Facility is that it’s the discount window without the stigma. But stigma, it seems, is in the eye of the beholder, and Dean Baker, for one, still seems to think … Continue reading

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Why is the Fed Discriminating Against Investment Banks?

In ES Browning’s WSJ stocks report today, he mentions something I haven’t seen anywhere else: Traders pointed to several culprits for the stock pullback: warnings from Bank of America and Wachovia of more credit-loss provisions to come, a gloomy-sounding comment … Continue reading

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The Fed’s Collateral Requirements: It’ll Take Anything

The Fed won’t just lend out $40 billion in an attempt to inject some liquidity into the banking system, oh no. It requires collateral. But, as jck says in the comments to my earlier blog entry, it seems as though … Continue reading

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The Fed’s New Facility, Explained in English

When I said this morning that more details of the Fed’s Term Auction Facility would surely emerge over the course of the day, I didn’t expect Steve Waldman to be the person providing them. But I’m very glad he is. … Continue reading

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Greenspan’s Legacy: The Housing Bust

Alan Greenspan accepts little if any responsibility for fueling the housing boom: I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1% rate set in mid-2003 to counter potential deflation, … Continue reading

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Fed: Second Rate Cut in Two Days

Greg Ip has the first best gloss on the Fed’s liquidity-injection announcement: The Fed said today it would create a new "term auction facility" under which it would lend at least $40 billion and potentially far more, in four separate … Continue reading

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Fed, Citi: Mildly Disappointing

It’s obviously a day for mildly-disappointing expected decisions. The Fed has cut by a quarter point, and Citigroup has decided to appoint Vikram Pandit its new CEO. I doubt that many people can gin up much in the way of … Continue reading

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Fed Rate Cuts Might be Here to Stay

Ben Bernanke speaks pretty clearly, for a Fed chairman, and what he said yesterday left few people in any doubt that he’s minded to cut interest rates again at the next FOMC meeting. This is fabulous for equity markets, since … Continue reading

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Inflation Targeting and Accountability

When is an inflation target not an inflation target? When there’s no accountability, says Clive Crook. There is no real pressure on the Fed to hit its supposed "target". When the Bank of England overshoots its inflation target, it has … Continue reading

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The Fed’s Inflation Target: 1.6% to 1.9%

How’s my formula doing, now that the latest FOMC minutes have been released? If you recall, I said that when it comes to the Fed’s inflation target, I=C=H=c=h Where I is the Fed’s de facto inflation target, C is the … Continue reading

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The Fed Gets Its Inflation Target

In the Fed’s latest move towards greater transparency, we will now see three-year forecasts for both core and headline inflation four times a year. Greg Ip notes that this is an inflation target in all but name: The projection for … Continue reading

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Next Rate Move: Up And Down at the Same Time?

Steve Waldman, provocative as ever, resuscitates a 2002 speech by Ben Bernanke, wherein the future Fed chairman notes that the central bank has more tools at its disposal than simply raising or lowering the Fed funds rate. Specifically, he says, … Continue reading

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Second-Guessing the Fed, Already

The lead article in the print version of the WSJ this morning is headlined "Fresh Credit Worries Grip Markets". Naturally, it leads with the Fed angle: The angst in the financial markets stood in contrast to the views Federal Reserve … Continue reading

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Fed Cut Reactions

David Gaffen: "The market the Fed continues to brush off is the currency market… The stock market got what it wanted, which was its candy." Stephen Stanley: "This statement has all the subtlety of a sledgehammer. The FOMC has just … Continue reading

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GDP Report Gives the Fed an Opt-Out From its Rate Cut

The 3.9% growth rate in thrid-quarter GDP is only preliminary, but it is very large, and it does give me a little less certain that the Fed is going to cut rates this afternoon. While housing is indeed dreadful, with … Continue reading

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Fed to Cut 25bp on Wednesday

What was that about Bernanke being unpredictable? The markets might not have known earlier this month what the Fed was going to do at its next meeting, but they’re pretty certain now, with pretty much every house on Wall Street … Continue reading

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