tag:blogger.com,1999:blog-2499715909956774229.post2369285569404989035..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: FOMC Minutes: April 24-25 MeetingStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-2499715909956774229.post-24131891465759337262012-05-26T23:18:18.610-07:002012-05-26T23:18:18.610-07:00Stephen, let's make a couple bets. First, any ...Stephen, let's make a couple bets. First, any clear hint from Bernanke that he is considering maybe doing more QE, and the stock market will rise immediately, as it has previously. (and, then, when the Chairman tamps down on those expectations, the market has fallen...) Second bet is that unless we get worse economic data, we won't see QE3. I'd say it's a longshot. <br /><br />And, why do you think the great inflation you've been so worried about hasn't hit yet?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-49329262825168070372012-05-21T16:25:54.951-07:002012-05-21T16:25:54.951-07:00more SF Fed propaganda? jedi mind trick to enhance...more SF Fed propaganda? jedi mind trick to enhance the signalling (stimulative) properties of QE? if the stock market goes up, is there a wealth effect?<br /><br />tune in ....<br /><br /> http://www.frbsf.org/publications/economics/letter/2012/el2012-16.htmldwbnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-74197849761202215882012-05-21T10:26:53.912-07:002012-05-21T10:26:53.912-07:00http://www.guardian.co.uk/commentisfree/2012/may/2...http://www.guardian.co.uk/commentisfree/2012/may/20/observer-editorial-goverments-calamitous-economic-policy<br /><br />We have seen two years of torched economic forecasts – and this unbalanced, stricken economy has yet to be hit by the bulk of the spending cuts. There is still no serious new framework in which innovative businesses can be built and financed. The Lib Dems are threatened with extinction as a national party, proper reward for complicity in such epic mistakes. The Tories should be no less concerned. Their capacity to exist outside the gilded constituencies of London and the south-east is under threat. In democracies, the neglected can hit back and hit back they will.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-52475342532219883312012-05-19T09:20:20.172-07:002012-05-19T09:20:20.172-07:00"The way things are going in Europe and in as..."The way things are going in Europe and in asset markets makes it highly likely that more QE will be forthcoming. "<br /><br />It's as if I never have to worry about the Dow falling more than 10% because some magical purchasing/twist program will be announced by the Fed and, for some reason or other, it will get stocks to rise again. I may as well anticipate this by buying the Dow when it's only fallen by 9%. But if everyone does this, the Dow will never fall by more than 9% and the Fed will never need to do QE. I may as well anticipate this and buy the Dow when it's only fallen by 8% etc etc. What an odd world.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-90992828440878457602012-05-19T07:45:09.604-07:002012-05-19T07:45:09.604-07:00JP,
I don't think this is trivia. The swap li...JP,<br /><br />I don't think this is trivia. The swap lines are potentially very important, and we want to understand how they have been, and could be, used.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-30502288802774976762012-05-19T07:42:25.307-07:002012-05-19T07:42:25.307-07:00Good point. I could be wrong, but I don't thin...Good point. I could be wrong, but I don't think there are any deep secrets that aren't being revealed in speeches and in the FOMC minutes. The FOMC thinks QE works. Market participants believe it too. The way things are going in Europe and in asset markets makes it highly likely that more QE will be forthcoming. If I were you, I would go ahead.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-90501569812555600272012-05-18T20:44:47.756-07:002012-05-18T20:44:47.756-07:00Arcane monetary trivia:
"In addition, from t...Arcane monetary trivia:<br /><br />"In addition, from the 1960s through 1998, the Fed had standing FX swap lines with several central banks, but their purpose was to provide currency for FX market intervention rather than to provide money market liquidity. Most of these older swap lines were phased out by mutual agreement in 1998, although Canada and Mexico retained small swap lines under the auspices of the North American Free Trade Agreement."<br /><br />http://www.newyorkfed.org/research/current_issues/ci16-4.pdf<br /><br />The Fed used a swap line to help support Mexico during the 1995 debt crisis, if I remember correctly.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-79606819257539093002012-05-18T20:33:33.856-07:002012-05-18T20:33:33.856-07:00If you had inside information that the Fed was goi...If you had inside information that the Fed was going to launch QE3, and you knew you could act on it without being caught, and had no ethical qualms, would you not go long S&P futures? I would.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-81683249741160605812012-05-18T09:05:16.262-07:002012-05-18T09:05:16.262-07:00Sometimes expectations are self-fulfilling. Someti...Sometimes expectations are self-fulfilling. Sometimes we collectively expect something we're ultimately wrong. I think it's the latter.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-48276744213595650652012-05-18T08:51:30.264-07:002012-05-18T08:51:30.264-07:00i completely agree, however i look at it somewhat ...i completely agree, however i look at it somewhat differently given substantial model uncertainty. consensus = expectations.<br /><br />case a) QE does not work; case b) it does. I may assign a positive probability that it works, but whats actually relevant for planning is the probability that other people will assign to case (b): Even if i only assign a small probability to case (b) that QE works, if i am in a competitive industry I cannot afford to be wrong and lose market share therefore I will add a small amount of inventory consistent with my probability weighted expected forecast (and then you get a multiplier effect). If i am a bank with sophisticated models, those assumptions feed into my loss forecast models, and I update my capital and lending plan. etc etc. <br /><br />I don't really have to have a strong opinion on each of the (for example) 9 "real" channels of monetary policy listed in the undergrad Mishkin text. Clearly the stock market goes up and inflation expectations go up so other people assign a positive probability.<br /><br />As far as i am concerned, regardless of model uncertainty, as long as there is a sufficiently large number of people who assign a positive probability that QE works, then it works by affirming expectations and adjusting expected planning. Science may not be consensus, but expectations certainly are!dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-8756003409130621202012-05-18T08:48:01.500-07:002012-05-18T08:48:01.500-07:00This comment has been removed by the author.dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-89117600104096599362012-05-18T08:20:37.454-07:002012-05-18T08:20:37.454-07:00I did not mean to imply that at all. I meant exact...I did not mean to imply that at all. I meant exactly what I said: It would be interesting to see how you might craft the statement.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-62933441176358394442012-05-18T08:16:34.718-07:002012-05-18T08:16:34.718-07:00"sure, but the consensus among economists bot..."sure, but the consensus among economists both inside and outside with various models, including the very influential macro advisors model, is that it works."<br /><br />If science always went with consensus, what progress would we make?Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-34514322629486410322012-05-18T07:34:58.515-07:002012-05-18T07:34:58.515-07:00"To my dismay, these folks are convinced that..."To my dismay, these folks are convinced that quantitative easing actually does something. "<br /><br />sure, but the consensus among economists both inside and outside with various models, including the very influential macro advisors model, is that it works.<br /><br />for example, you can see the economic advisory panel materials that a lot of bank staff participate in:<br /><br />http://libertystreeteconomics.newyorkfed.org/2012/05/just-released-the-new-york-fed-staff-forecast-may-2012.html<br /><br />(follow the EAP materials)<br />http://www.newyorkfed.org/aboutthefed/ag_economic.html<br /><br />and in the bottom right the "Staff Review of Policy Issues" documentation here for a summary:<br /><br />http://www.newyorkfed.org/aboutthefed/staffreviewMay2012.pdf<br /><br />"expectations" are funny things: they work through consensus.dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-73595988045462772122012-05-18T06:53:29.616-07:002012-05-18T06:53:29.616-07:00We expect these things to happen in Canada and Mex...We expect these things to happen in Canada and Mexico?Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-41027510175127990282012-05-18T06:44:27.276-07:002012-05-18T06:44:27.276-07:00"What exactly did the signatories to this agr..."What exactly did the signatories to this agreement have in mind?"<br /><br />If it was anything like the 2008 swap lines, then presumably the Fed wants to prevent the dollar and dollar rates from rising as a result of demand for USD from foreign banks who lose access to short-term, wholesale USD funding in times of crisis.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-90923944899856659972012-05-18T04:43:48.884-07:002012-05-18T04:43:48.884-07:00"I think it would be interesting to see how y..."I think it would be interesting to see how you might go about crafting an FOMC statement. Care to give it a go?"<br /><br />You seem to be implying this is difficult. You just take what you wrote last time and change two or three words.<br /><br />I've been mostly hiding in plain sight.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-27594944161297952282012-05-18T04:36:26.942-07:002012-05-18T04:36:26.942-07:00I'm smarter than to read the General Theory fo...I'm smarter than to read the General Theory for illumination.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-91052556456970784462012-05-18T00:00:45.204-07:002012-05-18T00:00:45.204-07:00World markets
Shanghai 2,344.03 -34.86 (-1.47%)
Ni...World markets<br />Shanghai 2,344.03 -34.86 (-1.47%)<br />Nikkei 225 8,611.31 -265.28 (-2.99%)<br />Hang Seng Index 18,726.52 -474.41 (-2.47%)<br />TSEC 7,151.19 -205.58 (-2.79%)<br />FTSE 100 5,338.38 0.00 (0.00%)<br />EURO STOXX 50 2,146.91 0.00 (0.00%)<br />CAC 40 3,011.99 0.00 (0.00%)<br />S&P TSX 11,330.68 +4.60 (0.04%)<br />S&P/ASX 200 4,046.50 -110.90 (-2.67%)<br />BSE Sensex 15,896.35 -174.13 (-1.08%)<br /><br />The World at the Zero bound HorizonAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-2023070653042999362012-05-17T21:56:22.761-07:002012-05-17T21:56:22.761-07:00Steve,
I'm sympathetic to a lot of the points...Steve,<br /><br />I'm sympathetic to a lot of the points you raise here. The "alternative scenarios to enhance transparency" idea is going nowhere, imo. <br /><br />I think it would be interesting to see how you might go about crafting an FOMC statement. Care to give it a go? <br /><br />And welcome back, btw. Where have you been hiding?David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-21679850012431204392012-05-17T18:29:40.961-07:002012-05-17T18:29:40.961-07:00To my dismay ...
SW thinks he is smarter than Key...To my dismay ...<br /><br />SW thinks he is smarter than Keynes<br /><br />The Costs of Deflation:<br /><br />"Either the government’s announcement is believed and the future is discounted immediately in the rate of exchange, in which case we suffer all the elements of a violent and sudden deflation; or else the government’s announcement is disbelieved, or only half believed, in which case we have a slow movement with the expectation of a further movement in the same direction, the effect of which on trade and employment hardly bears thinking about. As soon as the business world has good reason to believe that prices are likely to fall, no course is open to it except to contract its engagements, draw in its horns, and go out of business as far as may be until the funeste process is over…"<br /><br />"In no other way than by the deliberate intensification of unemployment. The object of credit restriction… is to withdraw from employers the financial means to employ labour at the existing levels of prices and wages. The policy can only attain its end by intensifying unemployment without limit, until the workers are ready to accept the necessary reduction in money wages under the pressure of hard facts…. Deflation does not reduce wages ’automatically’. It reduces them by causing unemployment. The proper object of dear money is to check an incipient boom. Woe to those whose faith leads them to use it to aggravate a depression!"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-80151960930996831962012-05-17T18:23:36.722-07:002012-05-17T18:23:36.722-07:00I didn't know you cared.I didn't know you cared.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-54634673536669062652012-05-17T15:35:33.761-07:002012-05-17T15:35:33.761-07:00Stephen,
Please don't leave us for a whole mo...Stephen,<br /><br />Please don't leave us for a whole month again. Please.Anonymousnoreply@blogger.com