The Federal Reserve has painted itself into a corner with its fight against inflation, and some experts say it now has no coherent plan for how to get out of it. Having kept interest rates near zero for more than a decade and expanded its balance sheet to $9 trillion to stimulate the economy, the…
The Fed’s Dilemma: Fight Inflation or Save Failing Banks
March 25, 2023
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Silicon Valley Bank Crash Due to Monetary Policy: Economist
Who is to blame for the collapse of Silicon Valley Bank? Daniel Lacalle, chief economist at hedge fund Tressis argues that the Federal Reserve’s loose monetary policy is partly responsible. He believes that if the Fed had tackled inflation earlier and had not labeled inflation as transitory, the Silicon Valley Bank fall could have been…
Loose Monetary Policy Can Trigger ‘Financial Turmoil’ in the Future, Fed Admits in New Paper
The Federal Reserve adopting a loose monetary policy—slashing interest rates and buying Treasurys—for an extended period can lead to “financial turmoil” several years later, the central bank stated in a new paper. Economists at the Fed Bank of San Francisco published a new study, titled “Loose Monetary Policy and Financial Stability,” (pdf) trying to determine…
Beijing’s Loose Monetary Policy Fails to Boost China’s Economy
News Analysis The People’s Bank of China (PBOC) recently published that the amount of private financing declined in December 2022, which is lower than market predictions. Personal loans continued to slump while individual deposits exceeded 80 percent year over year. The growth curves of both categories of money supply M1 and money supply M2 have…
Fed’s Harker Blames ‘Scourge’ of High Inflation on Too Much Government Spending and Easy Money Policies
January 12, 2023
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Excessive spending by the government and accommodative policies of the Federal Reserve have triggered rampant inflation in the United States that is hurting poorer Americans more, according to Patrick T. Harker, president of the Federal Reserve Bank of Philadelphia. The COVID-19 pandemic threw the United States into one of the “sharpest recessions” in history. However,…
Hong Kong Central Bank Raises Rate, HSBC and Standard Chartered Follow
HONG KONG—Hong Kong on Thursday raised its base rate by 75 basis points (bps) to 3.5 percent, prompting the largest commercial banks operating in the territory, including HSBC, to increase their best lending rates. HSBC was the first bank in Hong Kong to announce it was raising its best lending rate by 12.5 basis points…
What If?
August 30, 2022
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Commentary Probably the most important thing in forecasting is the ability to ask: What if something is not how you think it is? Open speculation on world developments is the key to establishing a position, where basically nothing can really surprise you. And at that point, you have come so far as a forecaster. The…
Powell Warns Wall Street That the Punch Bowl Is Empty
August 28, 2022
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Commentary Markets trimmed over 3 percent by Friday’s close after Federal Reserve Chairman Powell offered up a stark eight-minute soliloquy telling Wall Street’s “Masters of the Universe” to straighten up, fast, because the Fed was not going to refill the punch bowl. I said in my July jobs report that the prognostications of the stock peddlers-cum-“analysts”…
China’s US Debt Holdings Drop to 12-Year-Low, Further Reductions May Follow
August 26, 2022
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China’s holdings of U.S. debt dropped to the lowest since 2010 after falling below the $1 trillion mark in May, according to data released by the U.S. Treasury on Aug. 15. After seven months of continuous decreases, China’s U.S. Treasury holdings dropped to $967.8 billion in June, $113 billion less than last November, according to…
Soaring Inflation Mostly Caused by Stimulus-Fueled Demand: Study
August 24, 2022
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The pandemic-era inflationary wave that has swelled into a persistent cost-of-living crisis for many Americans was driven mostly by a stimulus-fueled demand surge, though supply-side bottlenecks made the problem worse, a team of economists said in a recent study. Julian di Giovanni, an economist at the Federal Reserve Bank of New York and co-author of…
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