Financial Markets
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Federal Reserve Operating Losses and the Federal Budget Deficit
“In 2023, the Fed will likely report tens of billions of dollars in operating losses as it raises interest rates to combat raging inflation. Will Fed losses increase the budget deficit as logic dictates they should, or will they be treated as an off-budget expenditure?” ~ Paul H. Kupiec & Alex J. Pollock
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Will Federal Reserve Losses Impact Fed Shareholders or Affect Monetary Policy?
“Since it started raising interest rates, the Fed has already experienced mark-to-market losses of epic proportions, and will soon face large operating losses, something it has never seen in its 108-year history.” ~ Paul H. Kupiec & Alex J. Pollock
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Are Cryptoassets The Great Scam?
“The regulations in the Lummis-Gillibrand Responsible Financial Innovation Act, made public on the same day as publication of Krugman’s article, are far more likely to provide a brighter future than prohibiting cryptocurrencies, stablecoins or other digital assets.” ~ Gerald P. Dwyer
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Making Sense of Monetary Policy and the Future of Inflation
“The expansion of circulating currency has diminished to rates comparable to pre-pandemic lows. These factors and the current state of business inventories suggest that inflationary pressures are likely near their limit.” ~ James L. Caton
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Inflation Slowed in April, But Remains High
“The Fed increased its federal funds rate target by 50 basis points in May 2022 and looks set to follow with similar rate hikes in June and July. The price level data from April shows no anticipatory effects of the policy.” ~ William J. Luther
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When A Dollar Isn’t a Dollar
“A few weeks ago the stablecoin called TerraUSD broke its peg from the dollar and collapsed along with the protocol’s flexible price LUNA token, and now you know why.” ~ Joshua R. Hendrickson
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Inflation: What Causes It, and When Will it Subside?
“The growth rate of currency in circulation has been back to pre-crisis rates for at least 2 quarters. We should expect inflation and the growth rate of expenditures to follow and inflationary winds to subside as a result.” ~ James L. Caton
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Forecasting Prices from FOMC Projections
“While the period of time over which the Fed is committed to averaging inflation is not explicit, one might have reasonably expected it to ultimately offset the high inflation associated with the pandemic. Alas, that no longer appears to be the case.” ~ William J. Luther
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The New Status Quo for Public Finance
“After the 2008 financial crisis, the US never returned to pre-crisis growth levels. My expectation is that unless private investors find a means of avoiding this subsidization of federal borrowing, we never will.” ~ James L. Caton
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Financial Regulators Ignore the Costs of Regulation
“According to the main evidence cited by the bank regulators themselves, the NSFR will create a net cost to the U.S. financial system, not a net benefit.” ~ Thomas L. Hogan
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Despite Fed Asset Purchases, Lending Remains Depressed
“The Fed’s recent asset purchases appear to have significantly expanded the money supply. But given the small changes in bank lending, it is not clear what their overall effects will be on inflation and the economy.” ~ Thomas L. Hogan
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Crowding Out Under Quantitative Easing
“The data speaks loudly. An accommodative monetary policy has failed to facilitate a robust economic recovery. And an artificially low federal funds rate is pumping up the federal debt and weighing on private investment.” ~ James L. Caton
