Debt

Why The Fed’s Monetary Policy is Failing

<h2><a href="http://www.professorhollybell.com/wp-content/uploads/2013/11/ID-100165710.jpg"><img class="alignleft size-medium wp-image-2622" alt="Debt" src="http://www.professorhollybell.com/wp-content/uploads/2013/11/ID-100165710-300x199.jpg" width="300" height="199" /></a>"There are studies that indicate that economic growth slows when public and private debt exceeds 260% to 275% of GDP. The U.S. hit the 260% level in 2000."</h2> <p>A recent paper by Hoisington Investment Management Company (<a href="http://www.hoisingtonmgt.com/pdf/HIM2013Q3NP.pdf" target="_blank">available here</a>) does an excellent job describing why the Federal Reserve is, and will continue to be, unsuccessful in its efforts to engineer economic growth by devaluing the U.S currency and attempting to increase inflation through persistent “Quantitative Easing”. They cite four factors:</p> <p>1)    <b>The Fed’s Forecast</b>: If the Fed’s forecasts were consistently right, we could have confidence that their actions might positively impact the economy. However, their forecasts for GDP and inflation have been “consistently above the actual outcomes”. They assume higher stock prices will lead to more spending because people feel wealthier if their portfolio is rising. This “wealth effect” has not occurred,

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Will Quantitative Easing Cause Asset Bubbles in the Developing World?

<div class="rpuEmbedCode"><!--rpuEmbedStart--> <script type="text/javascript" src="http://1.rp-api.com/rjs/repost-article.js?3" data-cfasync="false"></script> <div class="rpuArticle rpuRepost-6c68420ee412e188311174e9f0cbf602-top rpuNoTitle" style="margin: 0; padding: 0;"><a class="rpuThumb" href="http://s.tt/1q0mH" rel="norewrite"><img style="float: left; margin-right: 10px;" src="http://img.1.rp-api.com/thumb/3060894" alt="" /></a> <a class="rpuTitle" href="http://s.tt/1q0mH" rel="norewrite"><strong>Easing may cause developing world asset bubbles: IMF</strong></a> (via <a class="rpuHost" href="http://s.tt/1q0mH" rel="norewrite">AFP</a>) <p class="rpuSnip">Monetary easing in the developed world could cause overheating and asset <i>bubbles</i> in emerging economies, the International Monetary Fund's managing director said in Tokyo on Sunday. "Accommodative monetary policies... could strain the capacity of those economies to absorb the potentially large flows…</p> </div> <div class="rpuKeywords" style="display: none;">capital flows, monetary policies, rich countries, developing world, Accommodative monetary policies, huge capital flows, International Monetary Fund, volatile capital flows, asset price <u>bubbles</u>, Minister Guido Mantega, advanced-economy monetary policies, Monetary easing, international capital flows, chief ben bernanke, key developing world, emerging economies, large flows, asset bubbles, emerging-market economies, developed world, Christine Lagarde, emerging nations, currency fluctuations, Emerging markets, managing director, huge waves, World Bank, Currency wars, national currencies, economic

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QE Infinity: The Unintended Consequences

<div class="rpuEmbedCode"><!--rpuEmbedStart--> <script type="text/javascript" src="http://1.rp-api.com/rjs/repost-article.js?3" data-cfasync="false"></script> <div class="rpuArticle rpuRepost-990715fa5ac6e9fd9114fe1356dac453-top rpuNoTitle" style="margin: 0; padding: 0;"><a rel="nofollow" class="rpuThumb" href="http://s.tt/1o9Fd" rel="norewrite"><img style="float: left; margin-right: 10px;" src="http://img.1.rp-api.com/thumb/2942469" alt="QE"/></a> <a rel="nofollow" class="rpuTitle" href="http://s.tt/1o9Fd" rel="norewrite"><strong>QE Infinity: Unintended Consequences</strong></a> (via <a rel="nofollow" class="rpuHost" href="http://s.tt/1o9Fd" rel="norewrite">Market Shadows</a>) <p class="rpuSnip"><i>QE</i> Infinity: Unintended Consequences There is an intense debate going on in the first-class cabin of Economics Airlines about the direction in which our plane should be pointed. And while those of us back in the cheap seats don't get to help decide, knowing where we will land is of intense interest…</p> </div> <div class="rpuKeywords" style="display: none;">investments, Federal Reserve, policy, John Mauldin, Millennium Wave, monetary policy, market, Millennium Wave Investments, unintended consequences, Bernanke, balance sheet, quantitative easing, alternative investments, acceptable rate, unemployment rate, debt, month, dallas fed president, uncertainty levels, Mauldin Circle, current policy, price stability, federal reserve banks, mortgage-backed securities, reserve balances, new fed policy, investment advisory firm, New York, Commodity Pool Operator, Millennium Wave

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Is the Power to Implement Fiscal Policy Being Transferred to The Fed?

<h2>The Fed as Central Planner<a href="http://www.professorhollybell.com/wp-content/uploads/2012/09/ID-10071770.jpg"><img class="alignright size-medium wp-image-1870" title="ID-10071770" src="http://www.professorhollybell.com/wp-content/uploads/2012/09/ID-10071770-300x199.jpg" alt="The Fed"width="300" height="199" /></a></h2> By Holly A. Bell In an article in the Wall Street Journal (<a rel="nofollow" href="http://online.wsj.com/article/SB10000872396390444812704577609384030304936.html?KEYWORDS=Fed+as+central+planner">available here</a>), John H. Cochrane of The University of Chicago accuses the Federal Reserve of moving from a central bank to a central planner by engaging in fiscal policy and determining the allocation of credit. I must say I agree. Previously <b>the Fed</b> engaged exclusively in “open-market” operations including the purchase of short-term Treasure debt, and providing short-term lending to banks. However, since 2008 <i>the Fed</i> has been engaging in “nontraditional” actions that impact a much wider variety of markets. <u>The Fed</u>’s interventions include commercial paper, long-term Treasure debt, lending directly to nonbank institutions (like AIG) and assisting with mergers (like Bank of America and Merrell Lynch). They’ve also required banks to provide $25 billion in “mortgage relief” because some banks engaged in robo-signing,

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19 Warnings About A Coming Global Financial Catastrophe [Guest Article]

<script type="text/javascript" src="http://1.rp-api.com/rjs/repost-article.js?3" data-cfasync="false"></script> <div class="rpuEmbedCode"> <div class="rpuArticle rpuRepost-5f51e666d37a6f081d47c5ca2f9d84e4-top rpuNoTitle" style="margin: 0; padding: 0;"><a class="rpuThumb" href="http://s.tt/1hO10" rel="norewrite"><img style="float: left; margin-right: 10px;" src="http://img.1.rp-api.com/thumb/2508354" alt="" /></a> <a class="rpuTitle" href="http://s.tt/1hO10" rel="norewrite"><strong>19 Warnings About A Coming Global Financial Catastrophe</strong></a> (via <a class="rpuHost" href="http://s.tt/1hO10" rel="norewrite">http://dailydopenews.com</a>) <p class="rpuSnip">Reported By Michael Snyder The American Dream Global leaders have tried just about everything that they can think of, but the coming global financial catastrophe continues to march steadily toward us. We have seen “stimulus packages”, quantitative easing, bond buying, interest rate cuts, emergency…</p> <h3 class="rpuSnip"></h3>     <h3><a href="http://www.professorhollybell.com">Return to Homepage</a></h3> <h3>Recession image courtesy of Stuart Miles</h3> <h3></h3> </div> <h3 class="rpuKeywords" style="display: none;">ReRReReReglobal, global financial catastrophe, recession, debt, crisis, intermediate term, banking, eurozone, market, global economy, Germany, banking system, chief economist, bailout packages, double dip recession, Spanish banking, financial crisis, Greece, EU banking, Eurobonds, policy, global debt bubble, global financial catastrophe…, bond market, senior global economist, global systemic crisis, emergency economic summits, unprecedented government intervention, new government debt, Spanish national

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