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Tag Archives: Central Banks

A Look Back at Nixon’s Infamous Monetary Policy Decision

  Putting the World on a Paper Standard Half a century ago one of the most disastrous monetary policy decisions in US history was committed by Richard Nixon.  In a television address, the president declared that the nation would no longer redeem internationally dollars for gold.  Since the dollar was the world’s reserve currency, Nixon’s closing of the “Gold Window” put the world on an irredeemable paper monetary standard. Richard...

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Central banks don’t have to pick winners and losers to fight climate change

Disclosures and financial regulation don’t get enough respect as tools to reduce emissions. Suddenly central banks are in the middle of the climate-policy debate and it always seems to zoom in on one question: Should they stop buying “brown” bonds? Either yes, and the traditional inflation-fighting mandate goes out the window, or no and the central bank is leaving the planet to burn. The truth is, there is a lot that the European Central Bank, the Federal Reserve and other global leaders can...

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Central banking’s brave new world

Ever since the 2008 financial crisis, central bankers have been busy developing new policy instruments to fight fires and ward off emerging threats. Nonetheless, many secretly dreamed of returning to the good old days of cautious conservatism (with financial stability taken seriously). By: Jean Pisani-Ferry Date: February 24, 2021 Topic: Global Economics & Governance This opinion piece was originally published in Project Syndicate. Twenty years ago, central bankers were...

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US separates climate concerns from financial oversight in contrast to EU activism

Different EU and US supervisory approaches to climate risk may hamper efforts to work together and risk fragmenting global markets. By: Rebecca Christie Date: February 18, 2021 Topic: Finance & Financial Regulation Climate change is a growing financial risk as well as an environmental threat. Increasingly, banks and asset managers are seeking ways to prevent future climate shocks from upending their businesses, while investors often seek ways to push their financial resources...

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Game Over Spending

  Coming and Going Like a Wildfire Second quarter 2020 came and went like a California wildfire.  The economic devastation caused by the government lock-downs was swift, the destruction immense, and the damage lasting.  But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace. The Nasdaq 100 (NDX), daily – the strongest of the major US stock indexes. Since its 2019 low it has roughly doubled. Needless to...

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US Money Supply – The Pandemic Moonshot

    Printing Until the Cows Come Home… It started out with Jay Powell planting a happy little money tree in 2019 to keep the repo market from suffering a terminal seizure. This essentially led to a restoration of the status quo ante “QT” (the mythical beast known as “quantitative tightening” that was briefly glimpsed in 2018/19). Thus the roach motel theory of QE was confirmed: once a central bank resorts to QE, a return to “standard...

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COVID-19’s reality shock for external-funding dependent emerging economies

COVID-19 is by far the biggest challenge policymakers in emerging economies have had to deal with in recent history. Beyond the potentially large negative impact on these countries’ fiscal accounts, and the related solvency issues, worsening conditions for these countries’ external funding are a major challenge. COVID-19 has brought to light a reality that had been mostly forgotten in an era of ample dollar liquidity: the excessive dependence of emerging economies on external financing. The...

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Investing in the Post-Corona World

  Incrementum Advisory Board Discussion of April 8, 2020 with Special Guest Rick Rule The Incrementum Fund’s Advisory Board held its quarterly meeting on April 8. This time renowned resource stock investor Rick Rule, the President and CEO of Sprott US Holdings Inc., joined the discussion as a special guest. As always, there is a download link to a transcript of the conference call in PDF format at the end of this post. Rick Rule, CEO...

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Rate Cutters Unanimous

  Easy Money Becomes Even Easier Last week the FOMC surprised the markets with a rare inter-meeting rate cut. As the FOMC statement released on the occasion reveals, the decision to cut the  federal funds rate by a hefty 50 basis points was unanimous. The much-lamented “zero bound” is coming closer rather quickly. A happy little money tree… from “The Joy of Printing” As Mish notes here, Mr. Powell stated the following in remarks to...

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The Impulses of Lunar Fed Policy Under Repo Madness

  Trepidation Nation This week, while you were busy working, Jamie Dimon, CEO of JP Morgan Chase, took time out from rubbing elbows with fellow movers and shakers at the World Economic Forum in Davos, Switzerland, to share his trepidations: “The only thing I have trepidation about is negative interest rates, QE, and the diversion between stock prices and bond prices and yield and stuff like that…  I think it’s very hard for central...

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