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Rate Hike Expectations Plunge From 58.1% To 1.5%; For First Time Ever, Some Anticipate A Negative Fed Fund Rate
Market speculators have now officially written off inflation: the most recent survey of Fed Fund Rate expectations indicates that the percentage of people expecting a hike to 0.5% at the December 16, 2009 FOMC meeting has plunged from 58.1% in March to 1.5% currently. And the opposite of inflation is deflation: just ask Treasuries. Furthermore, while exactly 0% had expected the EOY rate to be at 0% in March, almost a third of the market now believes this is the case. And, most shockingly, a solid 0.1% actually sees the Fed as having a negative 0.25% rate: whether this is a misprint based on futures data is unclear, however, it would be a very amusing outcome and with QE gradually ending, this may be the very, very last bullet in Chairman Ben's gun in his ongoing duel with the currency that he so desperately wants dead.
Of course, deflation is bad for stocks, but good for computer prices. Soon HFTs will be able to purchase many more HAL9000 who will be the only one left to trade the S&P House of 500 Cards
PS - we give our new, most fervent readers-cum-GE subsidiaries about one hour before this is made into a major piece, interspersed with Mighty Mend-It commercials.
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well paying people to borrow the dollar is kind of like paying to have your trash hauled. We are getting there. They could still make money selling the dollar if they packaged it in Charmin wrappers, but I guess paying people to borrow it is more sensible somehow.
Is it possible to have a negative rate without moving to a completely cashless system?
Apparently Sweeden can
http://www.google.com/hostednews/afp/article/ALeqM5gL4w6qjBZvfAWDKzy5ANg...
Sweeden can
http://www.google.com/hostednews/afp/article/ALeqM5gL4w6qjBZvfAWDKzy5ANg...
Yes, by fiat, government declares cash ending in an arbitrary digit exchangeable for something between 0 and 99 cents. Haircut designed to effect requisit negative vig.
The problem is that the public will lynch any public official that literally starts vaporizing their cash.
The govn are vaporizing cash as we speak. Wheres the lynchings? The public are either a) stupid or b) lazy or c) have too much in their mind to lose by going postal. Give it time...
I choose A and B and C.
It will only come when those that think they have too much to loose to hit the streets or make a fuss finally have nothing left to loose.
Of course, by then it will be too late. Which is what inspired the phrase "Better late than never."
Yep, and that would be outrageous! Sadly, it would go right over Boobus Americanus' head.
The Swedish Central Bank, the Sveriges Riksbank, does hat negative interest rates for depositing with them though not for lending from them. That would indeed be novel.
http://www.riksbank.com/templates/Page.aspx?id=12182
Negative deposit rates are not unheard of. Never heard of negative interest rates on loans. Keeping a yield curve sufficient to recapitalize banks would require deposits to bear negative interest of a big enough magnitude that banks could make a spread even after paying interest to borrowers. Like bank charges 6% for deposits, and pays 3% for loans. Hard to see the public tolerating that level of insanity from the economists.
http://research.stlouisfed.org/fred2/series/EXCRESNS?cid=123
Negative deposit rates at the Fed would quickly remove this nasty spike.
I meant that in case they wanted to move back to mark to market and battle deflation by implementing the Taylor rule implied -6% rate, then the negative rate might spread though the system and force a negative rate unto the depostiors.
I got started thinking about the cashless implications on this tidbit of news:
http://www.theaustralian.news.com.au/business/story/0,28124,25661617-643...
Hmm, and how come I get offered this....
"as a valued customer we would like to invite you.......
........This is a credit card that offers you outstanding personal service, exceptional benifits....."
interest rate if you don't pay in full
51.8%APR and a card annual fee of £250!
I don't feel very valued at that when BoE rate is miniscule by comparison!
http://www.american.com/archive/2009/may-2009/why-not-negative-interest-...
Which comes first - negative Fed Funds, or negative prices for Corn and Wheat? It's a tight race right now.
Appropriately, CF is breaking out today.
Negative rates ? I thought the Swedes were just doing for a joke, I laughed. Fuck it, I am going 100% in metal
The stock market and commodities markets seem to be pricing for inflation rather than deflation. Someone is going to be really wrong and it's going to be ugly.
I just think that too many people need this market propped up for as long as possible so that they can distribute shares they didn't sell a year ago.
With a negative discount rate we definitely cannot afford the future
Mighty Mend-It commercials. You guys are soo funny.
So someone with knowledge and wisdom explain to me, how will negative deposit rates help?
Wouldn't the banks have a difficult time making money in such an environment? Don't their lending spreads becoming weird past 0?
They'll just be forced to look for higher returns by doing what that "bank" Goldman Sacks is doing. They'll all buy HFT computers and gun the market everyday.
Just ask the Swedes.
Sure they help. If the government by fiat vaporizes 1 of 10 dollars every year, individuals and firms will try hard to spend dollars faster. And banks will recapitalize faster by earning a bigger spread. Basically, banks get paid to borrow at the Fed discount window, and pass along none of the benefit to borrowers, and lend out all cash because they have to pay the fed interest on any reserves.
In real world though, negative interest rates work because the public will lynch government officials if they start literally vaporizing or confiscating dollars.
In theory a negative Fed interest rate will force the bank to lend more. In reality it will cause a bank run and increase bank failures.
Banks aren’t lending because the people that has good credit isn’t borrowing. While the people that need the money have bad credits or jobless and thus a good chance of default. So what you have is if the bank is force to lend, it will lend to people that will default on the loans. I think in the end the bank will take the -.25 hit instead of having the loan default.
The Feds is mad.
The Swedish Central Bank, the Sveriges Riksbank, does hat negative interest rates for depositing with them though not for lending from them. That would indeed be novel.
http://www.riksbank.com/templates/Page.aspx?id=12182
There was/is no bank run in Sweden as far as I am aware.
There was a bank run. The depositors move their money to other countries in the EU.
Let’s use logic if you have 5 million in deposit and you’re getting charge -.25 for saving what would you do?
The Swishies can charge negative interest rates for offering asset hiding or money laundering services. But they would face a run if they tried to charge negative interest on deposits of clean money (i.e., money that doesn't require these services).
Possibly talking his book... but making sense:
http://www.cnbc.com/id/32688645
If you expect an economic environment where you have to have a negative FF rate how in the world do you justify a 50% ramp in the market ex-casino?
Good way for them to start their own "bank run". Give me negative interest on my deposits; deposits dissapear and go in the safe!
I just received a letter from my bank this week. They are going to do away with paying interest on checking balances. If you want interest you're going to have to up you daily balances with them.
Do you use one of the TBTF banks or a major TARP recipient? It would be interesting to find out if that is happening throughout the industry... what a better way to move dollars into riskier assets like the stock market... and to keep the equities inflating.
Someone, I forget who, implied that a negative rate can only be accomplished by holding the rate at 0 longer than necessary... it sounds plausible
Everyone around me has stopped all spending but necessity. Unloaded everything they could to go to cash. With un- and under-employment, everyone with jobs fears for the future; those without are scrambling trying to find some economic place. There aren't any. To add to worry, they fear whatever assets needed to tide over this hard time is rapidly being run down. Dollar crash, more bank failures.
Never seen such despondency. Only government jobs and bank hanger onners.
ISM Prices Paid index surges:
http://www.reuters.com/article/pressRelease/idUS173419+03-Sep-2009+BW200...
Someone forgot to tell 'gold' that inflation has been written off... better shoot off an email quick-like because spot gold was over 996 bid-997 ask in the last hour.
Gold is not rallying because of inflation. Gold is rallying because of fear. Which means this is likely bubblicious.
http://www.wired.com/politics/law/news/1999/10/32121
Cash and the 'Carry Tax' Declan McCullagh 10.27.99WASHINGTON -- US currency should include tracking devices that let the government tax private possession of dollar bills, a Federal Reserve official says.
The longer you hold currency without depositing it in a bank account, the less that cash will be worth, according to a proposal from Marvin Goodfriend, a senior vice president at the Federal Reserve Bank of Richmond.
In other words, greenbacks will get automatic expiration dates.
"The magnetic strip could visibly record when a bill was last withdrawn from the banking system. A carry tax could be deducted from each bill upon deposit according to how long the bill was in circulation," Goodfriend wrote in a recent presentation to a Federal Reserve System conference in Woodstock, Vermont.
The 34-page paper argues a carry tax will discourage "hoarding" currency, deter black market and criminal activities, and boost economic stability during deflationary periods when interest rates hover near zero.
It says new technology finally makes such a scheme feasible. "Systems would have to be put in place at banks and automatic teller machines to read bills, assess the carry tax, and stamp the bills 'current,'" the report recommends.
Goodfriend said in an interview that banks might place a kind of visible "date issued" stamp on each note they distributed. "The thing could actually stamp the date when the bill comes out of the ATM," he said.
If anyone of you thinks they're just screwing around, they're not, I promise you.
In that case, people will just stop holding dollars (or, a la Gresham, will just hold on to the old dollar bills). If they nullify the old bills, all the foreigners holding USDs will dump them and start a run on the currency, even in the unlikely event that Americans don't.
It seems like there are an awful lot of stupid proposals out there just to keep the impossible-to-maintain status quo going a little bit longer.
It seems like there are an awful lot of stupid proposals out there just to keep the impossible-to-maintain status quo going a little bit longer.
Exactly my point. There is no limit to what is possible in this environment. And some might say I am trying to be scary, and then those very same go right on to saying this particular idea might work. Now THAT's scary.
Yeah, and the longer they keep it up, the more disastrous the eventual blowup is going to be.
You promise us? Well, gee, then it has to be real...
That article you posted is from 1999 and I haven't heard anything about a carry tax these last 10 years. Unless the Fed is doing this in secret. Oooohhh, cue the scary music and the all seeing eye, we have yet another Fed conspiracy.
The article does mention Silvio Gesell though, and this is basically his idea. Gesell was anti-Marxist, btw, and his ideas might actually work in this current economic environment.
Actually it is just a matter of time IMHO.
Wait till H1N1 or some other virus gets rockin' and rollin' ... the stupid mofo's will be screaming for it ... "chip me, chip me, no me first... chip me!"
BTW have you EVER seen a Klingon pull out cash to pay for something?
there's that 666 number on the dow; foreshadowing huge crash, chips and klingons
I just hope the Klingons wash their hands frequently so they don't get any cling-ons on the chips...
But if only from a public health perspective bills and coins are riddled with bacteria and viruses and when a dollar bill is cheaper than toilet paper...
hey hey ho ho the dollar bill has got to go...
Glad I opened Canadian accounts... so I can hoard it there.
PS - we give our new, most fervent readers-cum-GE subsidiaries about one hour before this is made into a major piece, interspersed with Mighty Mend-It commercials.
tyler, j'adore.
CNBC and BNN are what play on our screens.
Amuses me to no end, that msm now coming to ZH for content.
I hope that the orginal founder of this site, is able to monetize his/her stake to an extent that would make me blush.
BNN is +1000. Mmmmm Amanda Lang....
agree with you 100% on bnn.
well then i hope tyler (all 40 of them) is able to monetize his/her their stake to an extent that would make me blush (and i don't blush easily).
Andy, you are making it very hard for me to stick with the officially sanctioned legend of Tyler Durden.
I can't go with the Braveheart visual due to the fact that mel gibson is such an overwhelming racist douchebag.
My visual of Tyler is a bit more cerebral (but then i am a dork). But there is definitely fire....
so do you, have a point
In my mind it would be insulting to tyler, to refer to him as brad pitt. but cannot look at a any character mel gibson has portrayed and not think "complete douche".
Someone help me understand this better...If there where serious deflation expectations then wouldn't people be seeing TIPS? Looks like the iShares TIP has been in a trading range since April...
Why aren't people selling TIPS (Treasury Inflation Protected Securities)?
and Rosie said this AM that the next big thing will be dollar depreciation, going on to suggest that might be an explanation for gold
Stop me when I am off the reservation:
Negative FF rate really means that the excess reserves already swiped into existence by the Fed's giant ATM card no longer sit there earning .25% for doing nothing. Instead, to the extent they sit there, they dwindle. It has no (immediate) effect on consumer retail deposit accounts. With negative interest, the Fed is basically saying, geez guys go forth and lend. Trouble is, this bold stroke by the Fed would not suddenly create creditworthy borrower, and who borrows when deflation rears its ugly head, taking cash now to pay back in ever more dear dollars? I think not. It's kind of a theoretical idea, IMHO, not a practical one.
That would be a negative reserve rate? Not a general deposit rate offered to everyone. So the chain of banks all the way up to the last bank connecting to the Central Bank will be given a negative reserve rate. Now that may work in opening up a gusher of dollars being released in the whole system... not that it's a good thing.
Someone help me understand this better...If there where serious deflation expectations then wouldn't people be seeing TIPS? Looks like the iShares TIP has been in a trading range since April...
In Europe, during the past few trading sessions,
Index Futures have always been trading with a
healthy premium. We have not had so much Index
arbitrage trading for a long time. This is probably
the forerunner of september expiry and it was
definitely driving markets up, limiting the losses for
the week. The above picture was just the invitation
for carry traders, who once again crashed the USD
and all carry crosses freaked out again. I don't think
that central bankers have a bloomberg terminal. If
they would see this forex market, they would freak out.
Or maybe they even don't understand, what an icredible
nonsense game this is.
Bearish sentiment fell a healthy 10.5 %points, from
48.5 to 38. In Europe, we managed to close down for
the week, despite the heavy index futures buying, who,
probably are carry traders. So I am eager to see if these
freaks manage to push up US stocks in double digit
% gains for the week. 2 hours left...
The FED's last inflatable asset class are equities.
After housing and commodities there we go with
equities.
Have a nice week-end.
sounds familiar,
Silvio Gesell, Freigeldthoerie
look at wiki:
the Wörgl experiment:
Worgl was the site of the "Miracle of Worgl" during the Great Depression. It was started on the 31st of July 1932 with the issuing of "Certified Compensation Bills", a form of currency commonly known as Stamp Scrip, or Freigeld. This was an application of the monetary theories of the economist Silvio Gesell by the town's then mayor, Michael Unterguggenberger.
The experiment resulted in a growth in employment and meant that local government projects such as new houses, a reservoir , a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment.[2]
Despite attracting great interest at the time, including from French Premier Edouard Daladier and the economist Irving Fisher[3], the "experiment" was terminated by the Austrian National Bank on the 1st September 1933 on the basis of the "Certified Compensation Bills" being a threat to the Bank's monopoly on printing money.[4][5][6][7]
sounds familiar,
silvio gesell at wiki, look at" the wörgl experiment"
Worgl was the site of the "Miracle of Worgl" during the Great Depression. It was started on the 31st of July 1932 with the issuing of "Certified Compensation Bills", a form of currency commonly known as Stamp Scrip, or Freigeld. This was an application of the monetary theories of the economist Silvio Gesell by the town's then mayor, Michael Unterguggenberger.
The experiment resulted in a growth in employment and meant that local government projects such as new houses, a reservoir , a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment.[2]
Despite attracting great interest at the time, including from French Premier Edouard Daladier and the economist Irving Fisher[3], the "experiment" was terminated by the Austrian National Bank on the 1st September 1933 on the basis of the "Certified Compensation Bills" being a threat to the Bank's monopoly on printing money.[4][5][6][7]
Worgl was the site of the "Miracle of Worgl" during the Great Depression. It was started on the 31st of July 1932 with the issuing of "Certified Compensation Bills", a form of currency commonly known as Stamp Scrip, or Freigeld. This was an application of the monetary theories of the economist Silvio Gesell by the town's then mayor, Michael Unterguggenberger.
The experiment resulted in a growth in employment and meant that local government projects such as new houses, a reservoir , a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment.[2]
Despite attracting great interest at the time, including from French Premier Edouard Daladier and the economist Irving Fisher[3], the "experiment" was terminated by the Austrian National Bank on the 1st September 1933 on the basis of the "Certified Compensation Bills" being a threat to the Bank's monopoly on printing money.[4][5][6][7]
Worgl was the site of the "Miracle of Worgl" during the Great Depression. It was started on the 31st of July 1932 with the issuing of "Certified Compensation Bills", a form of currency commonly known as Stamp Scrip, or Freigeld. This was an application of the monetary theories of the economist Silvio Gesell by the town's then mayor, Michael Unterguggenberger.
The experiment resulted in a growth in employment and meant that local government projects such as new houses, a reservoir , a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment.[2]
Despite attracting great interest at the time, including from French Premier Edouard Daladier and the economist Irving Fisher[3], the "experiment" was terminated by the Austrian National Bank on the 1st September 1933 on the basis of the "Certified Compensation Bills" being a threat to the Bank's monopoly on printing money.[4][5][6][7]
nothing new under the sun...
silvio gesell and the wörgl experiment
This website is great, with one exception. It is extremely biased towards the US market. The rest of the world has nothing like ZH's close-ups of market manipulations, bank solvencies, etc etc. So while the picture in the US is bleak, (including USD weakness), the rest of the world faces an equally bleak picture.
Concerning the EUR, it is infrequently mentioned about German/Swiss/Austrian (etc) banks' exposure to Eastern Europe RE and CRE.
Also GBP, banks have massive leverage on a service driven economy, that relies wholly and completely on the city of London.
Every nation in G7 has pumped huge liquidity into the market , on the principle of solving the debt issue by creating more debt.
Status quo for the moment. Tonnes of liquidity, all assets remain serviceable under lvl3 assets. But for how long? My gut instinct tells me that the 'straw that breaks the camels' back will not come from US, but from EUR. Hence USD will appreciate because it is still the global currency, and will remain so for a while yet
hey man i understand your point, not being American myself; but you can find many detailed information in the comment section under the articles about non-US economic conditions. Browse the comments more often and connect the dots offered.
I agree. Of all the ugly whores at Bois de Boulogne, the Dollar whore is the prettiest.
Banks starting to implement ATM upgrades to support Cash Carry Tax
https://www.nscu.com/AboutUs/MediaCentre/WhatsNew/ATMSystemUpgrade/
Between September 11 and 15, 2009, North Shore Credit Union will be upgrading our ATM system to one that will enable us to provide our members with several enhanced features.
This is part of our commitment to ensure your banking experience with us is convenient, easy, and secure through all our access channels – whether you choose to bank through ATMs, in-branch, online or by phone.
http://www.gardeniasoftwaresystems.com/Automated-Teller-Machines-ATMs.asp
interface with central bank host in real time, batch, or stand-alone mode
The issue is liquidity.
When people don't spend and banks don't lend, the velocity and growth of money is negative. M2 reflects that already.
Problem all around the globe is government spending on steroids aka "stimulus", propped up zombie banks which use accounting gimmicks like a Russian whore uses lipstick and to top it all off, cash strapped companies that cannot raise money in the open market and have been turned down by the zombie banks.
Governments have sworn to "fix" (again!) this problem by giving out loans themselves to corporations without the background checks.
Money has to flow into the system and if the people don't want it, the banks don't lend to corporations then the brutal hellbent on inflation government is gonna put a gun to the head and say "take it or die".
It worked for a few years into the inception of the former Soviet Union. Of course government couldn't "fix" anything and we all know the result.
I've noticed an interesting pattern lately. 2 of the US banks I use for checking accounts have had "erroneous" fees slapped on them lately.
First there was Chase's $9.95 "Financial Management Software: Monthly Service Fee" that came out of nowhere. When I called to ask them about this, I was told that it was because I used Quicken or some such product. Nonsense. I'd never done anything like that. They then told me it was a "bank error" and happily reversed the fee.
Then there were the 2 x $34 overdraft fees that got applied to my Citi account. I called them because the balance never went below 4 figures, and got some bullshit explanation that didn't make any sense, and when I pressed them, I was told that "it's complicated". Again, with a little bit of pressure, they reversed these fees and apologized.
This was about 2 weeks ago. I watch these accounts very closely, so I catch this stuff quickly, but I suspect the majority of people would not.
Whether or not they're trying to rob me - let's ignore that question for the moment - wouldn't this sort of behavior constitute an effectively negative interest rate regime at these banks, assuming that I'm not the only one they're doing this to?
Before anyone tells me to move these accounts to a local credit union, I've done so with the ones that I can. There are reasons I still have these accounts.
#59215
Switch to a local Credit Union instead of feeding the
beasts.
why dont we set up a death panel for this economy and just pull the plug. Its limping along to its death.
This shit scares me. It is like a retarded Robin hood story. We give all our money to the king, whilst paying taxes on every fucking thing!?
When the government needs money, it doesn’t earn it, it collects it. And the primary weapon for collection is inflation. It’s the way the Fed harvests value and savings. The setting of interest rates is pre-sold by the Fed and its co-conspirator, the financial media, with the big lie—there is no inflation.
The retiree getting 0.98% on his CD is being robbed intentionally by a government needing the money to pay to its friends and for its excesses. When negative interest rates are suggested by some, one wonders if it might be more efficient for the Fed just to clean out bank accounts rather than waste time on hype.
As the Fed plunges interest rates to juice the stock market, it is forcing more and more people to take on additional risk to obtain higher yields. Yields on “safe havens” such as Treasury bills, certificates of deposit and money-market funds are practically non-existent—hitting hardest America’s retirees.
Bankrate’s weekly survey of large banks and thrifts taken Sept. 2 found the average return on 12-month CDs has fallen below 1% for the first-time ever--to 0.98% from 1.01% — the lowest average since the survey began tracking 12-month CD rates in October 1983.
Also, many retirees who bought say a 13-year CD that paid 6 percent about two years ago--which was higher than the going rate--have had those CDs “called” or redeemed by the banks before maturity, forcing savers to replace them with a CD paying 2 percent or lower.
While retirees are taking drastic cuts in income, the Fed is using falsified inflation to justify its nonmarket rates and to enable states such as California to use a negative inflation index to lower the point where each of its tax brackets begins, bumping many people into a higher category. (California additionally had hiked income and sales taxes earlier in the year.)
The government steals by falsifying inflation as deflation. If you don’t believe me, consider the increased prices for gasoline, heating fuel, air conditioning, electricity, water, garbage disposal, groceries, eating out, property taxes, sales taxes, income taxes, health insurance, Medicare payments, prescription drugs, dental and eye care, house insurance, car insurance, life insurance, services based on an increased minimum wage, auto repair, home repairs, school and college tuition, banking fees, state fees and fines, credit card interest... It’s all a matter of Bernanke’s devalued dollars.
It was Ben who explained how it’s done by “enlightened Central Bankers” in a 2002 speech on how to "cure" deflation in the price of goods in a modern economy:“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to…reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
Last Friday I went to cash my paycheck at my local Chase, and was told by the teller of an interesting change to their deposit policies. Beginning in mid-October, check deposits will not be available until the next business day. Unless, of course, the check was issued by Chase.
CD rates are next to nothing, and now your own money isn't even available to you until you get 'permission' from the bank to withdraw it.
As soon as she told me this, I immediately thought of the rumors of upcoming bank holidays...
Over at the Pink Sheet Willem Buiter has addressed this topic on his Mavercon blog. This first entry discusses "There are three practical ways to implement negative nominal interest rates".
http://blogs.ft.com/maverecon/2009/05/negative-interest-rates-when-are-t...
The second post dealt with what WB calls "The purpose of the exercise is to eliminate a silly asymmetry in the monetary policy arsenal."
http://blogs.ft.com/maverecon/2009/05/the-wonderful-world-of-negative-no...
The third entry WB has this to say (With some math I am sure CB would have something to add to). "But there is nothing at all strange about a world in which you put a dollar in a deposit account and get back 95 cents after a year. With a bit of luck, we may even get used to having such a state of affairs prevail from time to time."
http://blogs.ft.com/maverecon/2009/05/negative-interest-rates-sharia-law...
One thing is clear, the topic on negative interest rates has been discussed at various central banks and other high level forums over the course of this year. i would not be surprised to see something along these lines being deployed as a means to force Americans to consume.
Kings have been hanged for clipping the currency as Buiter so arrogantly proposes in Negative interest rates: when are they coming to a central bank near you?. In fact, the nickname of Eric "Klipping" V - The King of Denmark (1259-1286), refers to ”clipping” of the coin. Says Buiter: “I agree with Greg Mankiw that it is time for central banks to stop pretending that zero is the floor for nominal interest rates. There is no theoretical or practical reason for not having the Federal Funds target rate and market rates at, say, minus five percent, if that is what your Taylor rule, or whatever heuristic guides your official policy rate, suggests.”
Ah, William Buiter, professor of European Political Economy at the London School of Economics and Political Science, and former chief economist of the EBRD, one of four major regional development banks currently operating in the global economy, and, oh, yes, adviser to international organizations, governments and central banks and private financial institutions.
It’s not very hard to tell for whom he’s working. He is not a columnist; he is not an economist, he’s a prostitute.
This isn’t the way Willie Sutton did it, of course. But, then, Willie didn’t own the bank.
"And the opposite of inflation is deflation: just ask Treasuries."
Better still lets ask GG and PM, are they not the experts?
You betcha!
"Market speculators have now officially written off inflation: the most recent survey of Fed Fund Rate expectations indicates that the percentage of people expecting a hike to 0.5% at the December 16, 2009 FOMC meeting has plunged from 58.1% in March to 1.5% currently. "
A clear signal that inflation is about to commence?
at work today i was asking people about inflation. the only people who don't see it are policy makers and the markets. everybody at work sees it clear as day. I would say this is another case of data not telling the truth.
BINGO!
Seriously, we have lost heart to be productive. We are fighting doing anything of meaning with our lives, other than our soldiers and sailors.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
they have to use the deflation issue as an excuse to keep th epolicy that benefits bankers around for as long as they can. haven't we figured out the game yet.
"Market speculators have now officially written off inflation"
Which tells me that we're about to see a massive surge in it. Bye, bye deflation...welcome inflation.
Everybody's about to get Prechterized.
So what's the result? Smart folks exit US leaving dumb folks in charge of sheeple investors. A winning combination for a fleecing.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions