Posts filed under “Federal Reserve”

The Counter-Factual & the Fed’s QE

 

 

The weak recovery is proof that the Federal Reserve’s program of quantitative easement does not work.”

 

You do not understand the Counter-Factual.

That is the only conclusion I can draw from what the very common criticism of the Federal Reserve policies of ZIRP and QE (above), and its inherent analytical error.

The most common version goes something like this: If you do X, and there is no measurable change subsequently, X is therefore ineffective.

The problem with this “non-result result” is what would have occurred otherwise. Might “no change” be an improvement from what otherwise would have happened? Flat, last I checked is better than freefall.

If you are testing a new medication to reduce tumors, you want to see what happened to the group that did not get the tested therapy. Perhaps the control group saw tumors grew; maybe they were metastasizing throughout the body. Hence, a result where there is no increase in tumor mass or spreading would be considered a very positive outcome.

We run into the same issue with QE. In the absence of a functional congress or traditional post-recession Keynesian stimulus, the Fed is the only fgame in town. Neither you nor I truly know what the impact of QE has been.

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Category: Federal Reserve, Philosophy

Yellen on Fed’s Stimulus Campaign

Janet L. Yellen, the Federal Reserve chairwoman, spoke at a news conference after the Fed announced it would reduce its monthly bond purchases because of the economic recovery’s progress.

 

click for video
yellen
NYT, March 19th, 2014

Category: Federal Reserve, Video

If They Will Lend, Someone Will Spend (on Something)

If They Will Lend, Someone Will Spend (on Something) Paul Kasriel March 17, 2014     Upon awakening from my winter hibernation way up here in beautiful northeastern Wisconsin, I have noticed that bank asset managers have been anything but hibernating. Rather, they have been quite busy expanding their loans and securities. As shown in…Read More

Category: Credit, Federal Reserve, Think Tank

Private Credit and Public Debt in Financial Crises

Private Credit and Public Debt in Financial Crises Òscar Jordà, Moritz Schularick, and Alan M. Taylor FRBSF Economic Letter 2014-07 March 10, 2014     Recovery from a recession triggered by a financial crisis is greatly influenced by the government’s fiscal position. A financial crisis puts considerable stress on the government’s budget, sometimes triggering attacks…Read More

Category: Bailouts, Credit, Federal Reserve, Think Tank

How Unconventional Are Large-Scale Asset Purchases?

How Unconventional Are Large-Scale Asset Purchases? Carlo Rosa and Andrea Tambalotti Liberty Street Economics, March 03, 2014     The large-scale asset purchases (LSAPs) undertaken by the Fed starting in late November 2008 are widely considered to be a form of “unconventional” monetary policy. Although these interventions are certainly unprecedented, this post shows that their…Read More

Category: Bailouts, Federal Reserve, Think Tank

Fed Laughter and Housing Prices

Source: Elliot-today     Earlier this week, we discussed the amount of laughter in FOMC meetings as a sign that the Fed was not fully cognizant of the coming financial storm. Today’s chart adds another component to this, overlaying Fed laughs with Case Shiller residential real estate price index, via Elliot-today. Perhaps the best way…Read More

Category: Federal Reserve, Real Estate, Research

Does the Federal Reserve Staff Still Beat Private Forecasters?

Category: Federal Reserve, Fixed Income/Interest Rates, Really, really bad calls, Think Tank

Its all fun & games until someone loses an economy!

Source: Bianco Research This month, 1,865 pages of FOMC transcripts from 2008 were released to the public. Bloomberg studied the transcripts, finding on average about 25 references to laughter per meeting of the Federal Open Market Committee. This was almost half of the 45 giggles per FOMC meeting in 2007. Continues here

Category: Federal Reserve, Hedge Funds, Really, really bad calls

Slides From the Federal Reserve Bank of Dallas

Category: Federal Reserve, Think Tank

Money, Liquidity and Welfare

Category: Currency, Federal Reserve, Think Tank