On September 17th, the Federal Open Market Committee finally trimmed its benchmark lending rate by 0.25%, bringing the target range to 4.00%–4.25%. It’s the Fed’s first cut since December 2023, and typically, a rate cut signals that policymakers are bracing for softer growth and cooler consumer spending. But with inflation still “running hot,” why are they easing?
Fed’s First Rate Cut in Nine Months Read More »
In the following article Douglas French looks at the shaky Fractional Reserve Banking system that has been around since it was created by the Banking Act of 1933 (aka. the Glass-Steagall Act), which also created the Federal Deposit Insurance Corporation (FDIC). Will Fractional Reserve Banking survive to celebrate its Centennial anniversary? Recent trends in Idaho (of all places) could spell the end of fractional reserve banking (but not the FED).
Is this the End of Fractional Reserve Banking? Read More »
Recently there has been talk about the FED creating a Central Bank Digital Currency (CBDC). A CBDC is similar to a cryptocurrency, except that its value is set by the central bank and equivalent to the country’s fiat currency. Some countries like Venezuela have already tried a National Cryptocurrency in an effort to solve their inflation problem, but since the same guys are pulling the levers, it worked out about as well as you would expect.
Is it Really Paranoid to Worry about a Central Bank Digital Currency? Read More »
The Federal Reserve announced last month that they would start to reduce their $4.5 trillion balance sheet in October, thereby starting the process we call Quantitative Tightening (QT) which could have a significant impact on the Stock and Bond markets.
Bulls, Bears and Fed Bond Purchases Read More »
At the Federal Reserve’s recent policy meeting on Wednesday, December 14th the FED raised their federal-funds target interest rate by a quarter percentage point, to range between 0.50% and 0.75%. Fed officials pointed to a strengthening economy and inflation nearing their targeted level of 2%. According to the The Wall Stree Journal “The Fed’s more
FED Raises Interest Rates- ROC’s Retain Buy Signal Read More »
After the president of the United States, the most powerful person on the planet is the chairman of the Federal Reserve. By simply choosing to utter the right words, the chairman of the Fed can create or extinguish trillions of dollars of wealth both in and outside of the U.S. He holds the economic fate of billions of people in his hands. So it’s no shocker that investors carefully parse everything he says.
The Fed’s Alice In Wonderland Economy – What’s Next? Read More »
The opening riposte came from the Bank for International Settlements, the “bank for central banks.” In their annual report, released this week, they talked about “euphoric” financial markets that have become detached from reality. They clearly – clearly in central banker-speak, that is – fingered the culprit as the ultra-low monetary policies being pursued around the world. These are creating capital markets that are “extraordinarily buoyant.”
Central Bank Smackdown Read More »
The FED Thinks it has a “Magic Wand” that can boost the economy and solve all of our country’s problems. But as interest rates near zero… Housing is a major portion of GDP and lower interest rates make housing more affordable, thus boosting the economy but there is an actual limit to how low-interest rates can go and a theoretical limit to how long they can stay at zero.
Yellen’s Wand Is Running Low on Magic Read More »
Ladies and gentlemen, I give you (drumroll please) total outstanding credit versus GDP in the United States from 1929 to 2012: Source: St. Louis Fed
This one chart shows exactly WHY we are where we are, folks. From the moment Richard Nixon toppled the US dollar from its golden foundation and ushered in the era of pure fiat money (oxymoron though that may be) on August 15, 1971, there has been a ubiquitous and dangerous synonym for “growth”: credit. The world embarked upon a multi-decade credit-fueled binge and claimed the results as growth.
Edgar Allen Poe vs. The FED Read More »
I’ve never been a fan of Larry Summers. Perhaps he was too smart for his own good. After all, he was responsible for driving Jack Meyer out of managing the Harvard endowment fund. Meyer took the Harvard Endowment from $4.8 billion to $25.9 billion in 15 years but apparently Larry thought he was earning too much
With Summers Out: Which Way for Stocks? Read More »
