Central Banks

Another Warning Sign

While there are many hopes of an end to the current “profits” recession, there is mounting evidence those hopes may once again be disappointed. One of the latest such indications is rising employee compensation. While rising employee compensation is good from the view it should lead to rising consumption, it also reduces corporate profitability (wages reduce profits.) Furthermore, this is especially problematic currently as rising compensation is being offset by soaring healthcare costs due to the Affordable Care Act.

Risks Of Loose Money - Exposing The Link Between Monetary Policy And Social Inequality

... what we are looking at is a flawed system that penalizes saving and encourages reckless spending and printing money. Although we all appear to be stuck in the same environment that combines negative interest rates and price inflation, we have the lower strata of society that is doomed to lose, as they end up spending more, discouraged by negative rates, and instead accumulate debt to keep up with the increasing prices. And then we have the “winners”, who know how to take advantage of the system and thrive in it...

'Last Economist Standing' John Taylor Urges "Less Weird Policy" At Jackson Hole

Infamous rules-based economist John Taylor attended the first monetary-policy conference in Jackson Hole in 1982, and he may be the only person to attend both the 1st and the this year's 35th. With Fed policy the easiest (relative to economic fundamentals) every in history, Taylor has one wish for an outcome... "less weird policy"

The Lowest Vol In A Lifetime

In times gone by, of course, exceptionally low financial market volatility was a source of concern for policymakers.   Such conditions, they knew, were unlikely to last but might encourage behaviour that could threaten financial stability when the volatility regime and market risk premia normalized. Fast forward to today, and while there has been the occasional brief mention of the reach for yield, there's been nary a mention of the potentially pernicious problems posed by low volatility.

"Central Banks Now Own $25 Trillion Of Financial Assets"

  1. Central banks own $25tn of financial assets (a sum larger than GDP of US + Japan, and up $12tn since Lehman);
  2. There are currently $12.3tn of negative yielding global bonds (28% of total);
  3. There is currently $8tn of negative yielding sovereign debt (54% of total).

Global Stocks Decline Along With The Dollar, As Jackson Hole Begins

Global stocks declined broadly, led by European equities which fell for the first time this week while currency markets continued their subdued tone even as the recent 4-day rally in the USD appears to have topped out, as investors took to sidelines ahead of the Jackson Hole meeting which begins tonight. Japanese and Chinese stocks had suffered modest drops in Asia.  S&P 500 Index futures slipped 0.2%, continuing yesterday's modest selloff.

Government Study Admits Fed Policies Have Deepened Downturn For Many

People, more and more of them, understand the impossibility of improving the economy by giving a handful of people the power to expand or contract the money stock at will. In simplest terms it is a ridiculous idea. It can’t work. It doesn’t work. And this analysis is further proof. And sooner or later the current system will not have the necessary popular support to survive.