Financial Markets
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Fed Raises Rate, But Signals Potential Pause in May
“In 2021 they were looking for help from recovering supply chains. Now, they are looking for help from tight financial markets. It’s time FOMC members help themselves — or, God help us all.” ~ William J. Luther
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Understanding Inflationary Finance
“Providing revenue to the state is one of the reasons (and, perhaps the primary reason) governments worldwide monopolize the issuance of high-powered money.” ~ Bryan Cutsinger
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More Interest Rate Hikes Ahead
“Fed officials will likely continue tightening, and to a greater extent than previously projected. Their overreaction will not undo the damage of acting too late. It will make matters worse.” ~ Nicolás Cachanosky
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Persistently Pesky Price Pressures
“Although it may be difficult, the Fed must persevere. Elevated aggregate demand remains the best explanation for ongoing inflation. There is no reason for the Fed to ease its policy.” ~ Alexander William Salter
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Inflation Surges in January
“How high rates will ultimately go depends on how inflation evolves over the next few months — and how quickly the Fed reacts to restore confidence in its longer term-inflation projections. The January PCEPI release marked a step in the wrong direction.” ~ William J. Luther
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Does the Fed Control Interest Rates?
“The Fed is a failed institution in need of major reforms. But we won’t make the right changes if we don’t understand the basic relationship between central banks and capital markets.” ~ Alexander William Salter
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Inflation Remains Stubbornly High
“The neutral real interest rate is thought to be around 0.25 percent, suggesting the Fed may need to raise its nominal interest rate target another 175 to 200 basis points just to get to neutral.” ~ William J. Luther
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What Is an FTX?
“The existence of the FTT token combined with the opacity of the relationship between Alameda and FTX is crucial to the story.” ~ Joshua R. Hendrickson
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Helping Banks Help Themselves: Extended Shareholder Liability
“The best way to reduce systemic risk is to give the risktakers the incentive to economize on risk. An extended liability regime for banking is a simple and elegant way to improve incentives. We should seriously consider it.” ~ Alexander William Salter
