Click to enlarge Fewer U.S. shares are available to purchase, which is driving prices higher. Repurchases are magnifying gains in U.S. stocks, and are poised to lift prices further, as seen in the Wilshire 5000 Total Market Index. According to Bloomberg, it has risen “more than the market value of all U.S. companies since…Read More
@TBPInvictus here. Things have not been going well of late for the ideologues who also wax economic regarding inflation, interest rates, austerity, etc. They’ve been wrong at every turn. Luskin, Ferguson, Bowyer, Laffer, Kudlow, the WSJ editorialists, and so on. Been a bad five or so years. As Barry has repeatedly pointed out, it is…Read More
My afternoon train reads: • Gold tallies a loss of 6% in six sessions (MarketWatch) see also Gold Seen Crushed as Credit Suisse Forecasts $1,100 in Year (Bloomberg) • The spigot of money starting to open up for installing solar panels (Gigaom) • Monetary Policy and Equity Prices at the Zero Lower Bound (Carola Binder)…Read More
Category: Financial Press
Fiscal Policy. Oy!
(With Reference to Ben Bernanke, Ken Arrow, Thomas Jefferson, William Shakespeare and the Oracle of Omaha)
Richard W. Fisher
Remarks at the 2013 National Association for Business Economics
Houston, TX · May 16, 2013
Thank you, Ken (Simonson). I am delighted that the National Association for Business Economics (NABE) has chosen the Dallas Fed’s Houston Branch as the venue for this meeting on the oil and gas boom as a possible engine for “Reigniting the Economy.” As you will shortly hear from my Dallas Fed colleague, Mine Yücel; my wise old colleague from my days at Treasury in the 1970s, Phil Verleger; the incoming chairman of our San Antonio Branch, Curt Anastasio; and others, this is an intriguing proposition. The technical and entrepreneurial genius of Houston and Texas is playing a key role in unlocking our nation’s energy potential. Indeed, there are many here in Texas and abroad—in places as distant as Illinois, Michigan and New York—who argue that reigniting their local economies and the nation’s economy calls for more “Texification,” above and beyond the frontiers of energy.
But I am not here today to discuss oil and gas or engage in “Texas brag.” I have been asked to provide a broader perspective on the nation’s economic and monetary policy.
Current Predicament of Monetary Policy: A Grand Experiment
I’ll begin with a summary of the current predicament of monetary policy.
The Federal Reserve has undertaken a grand experiment to reignite the economy through unprecedented monetary accommodation. We cut to zero the base rate that anchors the yield curve and have pursued a policy aimed at driving rates throughout the curve to historic lows by buying Treasuries and mortgage-backed securities (MBS). Our portfolio totals about $3 trillion, which we have recently been expanding at a rate of $85 billion per month.
Here is a picture of the domestic securities of the current System Open Market Account (SOMA) portfolio.