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Tag Archives: QE

Deflation’s Persistence Implies Yields Will Be Lower for Longer

Despite what you hear from the TV pundits, the U.S.’s second quarter ended on weakness, and there is little evidence that economic acceleration occurred.  In previous years, slow GDP growth in Q1 was followed by 3%+ in Q2.  Not this time!  The Atlanta Fed GDPNow model, which uses a lot of sentiment indicators, is all the way down to 2.4% for Q2.  I suspect that the Commerce Department’s initial GDP …Read More

On a Recession Watch

For the first time since the industrial revolution, the U.S. faces two significant growth issues: 1) a declining labor force; and 2) a job skills mismatch.  The declining labor force is demographic in nature and is occurring in every industrial economy; likely a function of the long-term success of capitalism.   The skills mismatch is a function of technological change that is so rapid that the skills of the existing labor …Read More

The Topsy-Turvy Economy

The financial markets are hooked on easy money, low interest rates, and growth via debt issuance. Yet, it has become obvious to some market players, economists, and maybe even the Federal Reserve’s Federal Open Market Committee (the rate setting cabal), that current monetary policy is now hurting, not helping, the economy. Of course, monetary historians know that monetary policy was never meant to act alone, or in a vacuum, as …Read More

Economic Review – Q1/16

At quarter’s end, the equity market had recovered all that it had lost between 12/31 and 2/11, plus about 1%.  Apparently, this was the swiftest recovery in any quarter since 1933.  While we were fairly certain that the downdraft was just a much needed correction, like you, we don’t care too much for the uncertainty that such markets bring, especially when the business media was practically cheerleading for a recession.  …Read More

The Possibility of Negative Interest Rates on Your Deposits – Part I

The very concept of negative interest rates appears, at least at first blush, to be an oxymoron.   What rational entity would “loan” money and expect, under the contract, to get less back than loaned?  If you think “no one would,” think again!  In this two part narrative, I explain how this is possible, how it is actually occurring in Europe, and what consequences there might be for the American saver/investor. …Read More

Should investors worry QE3 has ended?

Originally published on RGJ.com’s website http://www.rgj.com/story/money/business/2014/11/16/robert-barone-investors-worry-qe-ended/19080941/ As October ended, the Fed announced an end to its controversial money printing policy, known as QE3 (the third round of quantitative easing). In QE3, the Fed purchased large quantities of U.S government securities. When the Fed purchases bonds, it creates new money in the form of bank reserves. For the past five years, the liquidity created by the Fed via this process has …Read More