Posts filed under “Inflation”

2010 Reminder: QE = Currency Debasement and Inflation

One of my biggest complaints about the media is the lack of accountability. People say things on TV in print an on radio, and then . . .  Poof!  No consequences. They influence public perception of issues, affect policy debates, drive legislation.

This is a perfect example of a stern warning of currency debasement and inflation due to QE. Let me point out this was made 3 years ago today — hence, it has been terribly wrong.

I won’t give you advice — but I keep track of who is consistently wrong, whose histrionic forecasts are both silly and wrong. Their future comments are valued accordingly.


e21 Team | 11/15/2010

To: Chairman Ben Bernanke
Federal Reserve
Washington, DC

Dear Mr. Chairman:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in The Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.


Cliff Asness
AQR Capital

Michael J. Boskin
Hoover Institution, Stanford University
Former Chairman, President’s Council of Economic Advisors

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Hoover Institution, Stanford University
Former Associate Director, U.S. Office of Management and Budget

Niall Ferguson
Harvard University
The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
After the Fall: Saving Capitalism from Wall Street—and Washington

James Grant
Grant’s Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GrowPac, Encima Global
Former Deputy Assistant Treasury Secretary

Ronald I. McKinnon
Stanford University

Joshua Rosner
Graham Fisher & Co., Inc.

Dan Senor
Council on Foreign Relations
Start-Up Nation: The Story of Israel’s Economic Miracle

Amity Shlaes
Council on Foreign Relations
The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Management Corporation

John B. Taylor
Hoover Institution, Stanford University
Former Undersecretary of Treasury for International Affairs

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel

Geoffrey Wood
Cass Business School at City University London

(Institutional Affiliations are for Information Only)

See the letter as printed in the Wall Street Journal (PDF)



An Open Letter to Bernanke of Dubious Authorship (November 15th, 2010)

Category: Currency, Inflation, Really, really bad calls

How Columbus Caused Inflation

Click to enlarge Source: Economist     According to the Economist: “Some modern economic historians dispute Smith’s argument that the discovery of the Americas, by Christopher Columbus in 1492, accelerated the process of globalisation. Kevin O’Rourke and Jeffrey Williamson argued in a 2002 paper that globalisation only really began in the nineteenth century when a…Read More

Category: Inflation

Category: Inflation, Think Tank

U.S. Health Care vs. The World


click for ginormous graphic
US healthcare


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Category: Digital Media, Economy, Inflation

Commodity Prices and Inflation: The Perspective of Firms

Commodity Prices and Inflation: The Perspective of Firms Mike Bryan, Brent Meyer and Nicholas Parker July 16, 2013     We’ve been thinking a lot about commodity prices lately. In case you haven’t noticed, they’ve been falling. And with inflation already tracking well under the Federal Open Market Committee’s (FOMC) longer-term objective of 2 percent,…Read More

Category: Commodities, Inflation, Think Tank

Friday Funny: Higher Prices

This is brilliant: The Federal Reserve is awaiting That prices may start re-inflating, So they can foresee Unwinding QE, Whose tapering they’ve been debating. The Fed will not bother to taper Its purchase of Treasury paper ‘Til the jobless rate now And inflation allow An end to their stimulus caper. Bernanke must act with agility…Read More

Category: Federal Reserve, Humor, Inflation

Following the Fed Out of Bonds?

Click to enlarge Source:   Excellent explanatory chart from the FT.   Source: Bond Traders Take Cue to Exit Treasuries By Michael Mackenzie and Stephen Foley FT, June 20, 2013 4:52 pm

Category: Federal Reserve, Inflation

What is Behind the Inflation Numbers?

Category: Inflation, Think Tank

Really!?! With Ben & Janet

Look Out Below, Fed Tapering Edition
click for updated futures
6.20.13 futes



Really traders!?! Did you really believe that the Fed was never going to stop buying bonds? Really?!?

Do you think that the Fed was going to have an infinite accommodation, and that rates were going to stay at zero forever? Is that what you expected from the Central bank. C’mon, Really!?

And what about the dreaded hyper-inflation you have been warning us about for so long? Inflation has been so low for so long that it had its name legally changed to Deflation. Really!

Source: Trading Economics


Where you out the day Bernanke said he was targeting Unemployment, which has fallen from nearly 11% to 7.6%? Did you forget about that? Really!?!

Source: FRED

And this entire Risk On rally — did you really think it was going to last forever? Really? US Equity are up nearly 150% over the past 5 years, didn’t you think it had to eventually slow down? Did you actually believe Markets were a uni-directional bet? Really?!?

SPX 5 year


The Fed has a dual mandate — stable prices and maximum employment. Did you really think there was a third component of maximizing your risk free equity returns? Really!?


This has been Really!?! With Ben & Janet.

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Category: Economy, Employment, Federal Reserve, Inflation, Trading

1988: Why is inflation so low?

Here is the Chicago Fed Letter circa 1988. Makes for fascinating reading  

Category: Inflation, Think Tank