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Saturday, January 30, 2010
25 jan 2010
japan will go under first in next 10 years
us growing population, entrepreneurs keep it going
10 december 2009
normalish again, inflation expectations to before
biggest problem with small business - sales
fed stoking aggregate demand
(addressed tick - kasriel old fashioned, mainstream approach)
3 december 2010
I would argue that since mid March of this year the Fed has engaged in a qualitative easing policy, not a quantitative easing policy. The Fed’s balance sheet has not shown exceptional growth when compared with some recent years. Rather, the composition of the Fed’s balance sheet has been changed in favor of mortgage-backed securities, which has coincided with a return to normal spreads of conventional mortgage rates relative to Treasury bond yields. If the Fed were pursuing a true quantitative easing policy, the M2 money supply would be accelerating in growth, not decelerating.
quite mainstream
usa is fine
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investors more risk averse
dec 2009 - monthly report
To summarize, M2 growth currently is extremely weak. It likely will remain relatively weak through 2010 as credit creation by depository institutions will be impeded by capital constraints. If investors remain risk averse, their demand to hold federally-insured bank deposits will remain relatively high. This implies that velocity of the M2 money supply will not increase rapidly. Weak M2 money supply growth in combination with weak M2 velocity growth implies a sluggish economic recovery in 2010.
japan will go under first in next 10 years
us growing population, entrepreneurs keep it going
10 december 2009
normalish again, inflation expectations to before
biggest problem with small business - sales
fed stoking aggregate demand
(addressed tick - kasriel old fashioned, mainstream approach)
3 december 2010
I would argue that since mid March of this year the Fed has engaged in a qualitative easing policy, not a quantitative easing policy. The Fed’s balance sheet has not shown exceptional growth when compared with some recent years. Rather, the composition of the Fed’s balance sheet has been changed in favor of mortgage-backed securities, which has coincided with a return to normal spreads of conventional mortgage rates relative to Treasury bond yields. If the Fed were pursuing a true quantitative easing policy, the M2 money supply would be accelerating in growth, not decelerating.
quite mainstream
usa is fine
--------------------------------------------------------------------
investors more risk averse
dec 2009 - monthly report
To summarize, M2 growth currently is extremely weak. It likely will remain relatively weak through 2010 as credit creation by depository institutions will be impeded by capital constraints. If investors remain risk averse, their demand to hold federally-insured bank deposits will remain relatively high. This implies that velocity of the M2 money supply will not increase rapidly. Weak M2 money supply growth in combination with weak M2 velocity growth implies a sluggish economic recovery in 2010.
Saturday, March 21, 2009
20 March 2009
Light at the end of the tunnel
But we still have income to fall back on. In fact in January, our disposable personal income jumped by 1.7% (see Chart 2), thanks in no small part to government unemployment insurance, which accounted for 0.93% of disposable personal income, the highest percentage since July 1983 (see Chart 3). Thank goodness for automatic stabilizers, huh?
We concede that the demand to hold that money stock also may be growing as well, but the economy would be in even worse shape if that increased demand for money were not being accommodated by an increased supply. When the federal government’s fiscal stimulus program is implemented, we expect the money supply to grow even more rapidly and its "velocity" to increase because the increased money supply will be to fund increased government spending.
In sum, although the economy remains mired in a severe recession, we have seen nothing of late to dissuade us from our forecast of recovery getting underway in the fourth quarter of this year. In fact, what we have seen of late increases our confidence in the forecast.
Light at the end of the tunnel
But we still have income to fall back on. In fact in January, our disposable personal income jumped by 1.7% (see Chart 2), thanks in no small part to government unemployment insurance, which accounted for 0.93% of disposable personal income, the highest percentage since July 1983 (see Chart 3). Thank goodness for automatic stabilizers, huh?
We concede that the demand to hold that money stock also may be growing as well, but the economy would be in even worse shape if that increased demand for money were not being accommodated by an increased supply. When the federal government’s fiscal stimulus program is implemented, we expect the money supply to grow even more rapidly and its "velocity" to increase because the increased money supply will be to fund increased government spending.
In sum, although the economy remains mired in a severe recession, we have seen nothing of late to dissuade us from our forecast of recovery getting underway in the fourth quarter of this year. In fact, what we have seen of late increases our confidence in the forecast.
Sunday, February 01, 2009
January 20, 2009
W shaped double recession
second half 2010 start increasing IR
could be another recession in 2012
Leading Economic Indicators look at
inflationary pressures start to rise in second half of 2010
bond yields higher towards the end of the year and into 2010
W shaped double recession
second half 2010 start increasing IR
could be another recession in 2012
Leading Economic Indicators look at
inflationary pressures start to rise in second half of 2010
bond yields higher towards the end of the year and into 2010
december 15 2008
very bad recession, but not great depression
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0812/document/us1208.pdf
superb anaalysis.
expected 24 months, dec 2007 - 2009
expected maybe 5% contraction
Great Depression 43 months 1929-1933, GDP contracted 30%
13 months May 1937, contratced 3.5%
magnitude differences
4,3,1,4% CPI increases in 1934-1938, even though output gap was large
very large increase in money from 1933 onwards
now money increasing 10x faster than 1930s
deflation is not a political option
more borrowers than lenders
owes 7 trillion
debtors hate deflation
starting in 2010, starts reducing money supply
very bad recession, but not great depression
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0812/document/us1208.pdf
superb anaalysis.
expected 24 months, dec 2007 - 2009
expected maybe 5% contraction
Great Depression 43 months 1929-1933, GDP contracted 30%
13 months May 1937, contratced 3.5%
magnitude differences
4,3,1,4% CPI increases in 1934-1938, even though output gap was large
very large increase in money from 1933 onwards
now money increasing 10x faster than 1930s
deflation is not a political option
more borrowers than lenders
owes 7 trillion
debtors hate deflation
starting in 2010, starts reducing money supply
Monday, December 24, 2007
December 2007
67% probability of recession in US
payroll employment
personal income COINCIDENT INDICATORS
under 1420 sp500 would be fall in stockmarket
invariably associated with recession
Inflation is LAGGING indicator - 2 quarters after GDP peak
therefore inflation can be higher in recession
BUT 1970s inflation wa caused by SUPPLY DISRUPTION
Increase in global DEMAND now means growth is LESS not a CONTRACTION
Slowdown in economy will cause oil prices to fall,
What we do see for 2008 is an economy teetering on the brink of recession, energy prices falling as growth in the global demand for energy slows and the price increases of non-energy goods and services slowing as growth in the demand for these goods and services slows. We see the Federal Reserve continuing to lower the federal funds rate – down to 3.25% -- in an attempt either to prevent a recession or to mitigate the economic effects of a recession. Despite the lower federal funds rate, we see a sharp slowing in the growth of credit as financial intermediaries are constrained in their ability to lend because of losses incurred on prior lending.
67% probability of recession in US
payroll employment
personal income COINCIDENT INDICATORS
under 1420 sp500 would be fall in stockmarket
invariably associated with recession
Inflation is LAGGING indicator - 2 quarters after GDP peak
therefore inflation can be higher in recession
BUT 1970s inflation wa caused by SUPPLY DISRUPTION
Increase in global DEMAND now means growth is LESS not a CONTRACTION
Slowdown in economy will cause oil prices to fall,
What we do see for 2008 is an economy teetering on the brink of recession, energy prices falling as growth in the global demand for energy slows and the price increases of non-energy goods and services slowing as growth in the demand for these goods and services slows. We see the Federal Reserve continuing to lower the federal funds rate – down to 3.25% -- in an attempt either to prevent a recession or to mitigate the economic effects of a recession. Despite the lower federal funds rate, we see a sharp slowing in the growth of credit as financial intermediaries are constrained in their ability to lend because of losses incurred on prior lending.
Saturday, December 15, 2007
November 2007
There are numerous examples of when real GDP growth was strong just before it wasn’t anymore.
1960, 1974,1982,1990,2001,
As mentioned above, households tend to spend a little less of their after-tax income, that is, they increase their saving rate, just before the economy enters a recession. Households collectively sense economic problems ahead, whereas economists collectively are the last to know.
Although we believe exports will be the relative star performer of the U.S. economy in 2008, we are not convinced export growth will be as strong as the consensus believes.
Falling home prices also will erode the value of the collateral underlying outstanding mortgage-backed securities, which will lead to more problems on Wall Street.
Thus, although the FOMC is likely to further cut the federal funds rate starting in early 2008, there is some question in our minds as to whether it will have the policy latitude to cut the funds rate sufficiently to avoid a recession next year.
There are numerous examples of when real GDP growth was strong just before it wasn’t anymore.
1960, 1974,1982,1990,2001,
As mentioned above, households tend to spend a little less of their after-tax income, that is, they increase their saving rate, just before the economy enters a recession. Households collectively sense economic problems ahead, whereas economists collectively are the last to know.
Although we believe exports will be the relative star performer of the U.S. economy in 2008, we are not convinced export growth will be as strong as the consensus believes.
Falling home prices also will erode the value of the collateral underlying outstanding mortgage-backed securities, which will lead to more problems on Wall Street.
Thus, although the FOMC is likely to further cut the federal funds rate starting in early 2008, there is some question in our minds as to whether it will have the policy latitude to cut the funds rate sufficiently to avoid a recession next year.
Saturday, November 12, 2005
October 28th 2005
Bernanke - pretty much things tsay the same.
By preventing the price of credit from moving to its equilibrium level, teh Fed distorts teh economically efficient allocatiion of resources, just as the USSR did for 70 years.
October 21st 2005
Real M2 growth is slowing, indicating possible recession ahead.
But interest rates need togo higher.
Fed is in a bind.
Bernanke - pretty much things tsay the same.
By preventing the price of credit from moving to its equilibrium level, teh Fed distorts teh economically efficient allocatiion of resources, just as the USSR did for 70 years.
October 21st 2005
Real M2 growth is slowing, indicating possible recession ahead.
But interest rates need togo higher.
Fed is in a bind.
Saturday, July 03, 2004
June 18 2004
Beware the fires of raging inflation, neagtive interest rates too long.
Beware the fires of raging inflation, neagtive interest rates too long.