Money

Central Bankers Follow Bonds, Then Insist They Aren’t And That Bonds Agree With Them

By |2019-05-24T13:04:09-04:00May 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When central bankers use the word “financial” in an economic context, they mean exclusively stocks. Maybe that’s somewhat appropriate given how bonds are so often treated as monetary equivalents. Then again, if that is the case in the official view, how does anyone reconcile bonds with anything? Economy or money? The hard answer is that [...]

Proposed Negative Rates Really Expose The Bond Market’s Appreciation For What Is Nothing More Than Magic Number Theory

By |2019-05-21T16:10:42-04:00May 21st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture: [...]

Decaying Offshore Money Is A Lot More Than An Offshore Decay

By |2019-03-12T18:45:30-04:00March 12th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

During the first quarter of 2008, as Bear Stearns teetered on the edge of illiquidity, foreign holders of US$ financial assets contributed $9.3 trillion to US credit markets. According to the Fed’s Z1, the Financial Accounts of the United States, it tells us that’s the amount they held in possession from outside the American geographical [...]

Not Even PBOC Supports Yuan’s Reserve Role

By |2019-02-19T12:57:00-05:00February 19th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

China’s yuan just isn’t a stable currency. I don’t mean its exchange value, either. CNY floats up and down on the whims of the eurodollar. The PBOC can and does limit the daily trading band, but often at tremendous cost (ticking clock). Therefore, the internal constraint governing this dynamic is a symptom of a world [...]

ZIRP At 20; The ZLB Is A Trap, But Not The One Central Bankers Think It Is

By |2019-02-12T17:01:46-05:00February 12th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Were they rushed, or were they late? Middle 2000’s consensus put academic opinion on the latter. The Bank of Japan had been Japan’s central bank since 1882, but it hadn’t been allowed to become a modern one until years into the 1990’s crisis. When speaking on the topic, Economists mostly mean independence and mandate rather [...]

COT Blue: The Velocity of Capitulation

By |2019-02-11T13:06:32-05:00February 11th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On Friday, the CFTC posted its COT data for the first week in 2019. For crude oil, capitulation. For US Treasury bond futures, capitulation. In the latter financial market, unsurprisingly the net market position utterly collapsed during December. From a relatively high (meaning market overall short) +58k contracts that last week in November when everyone [...]

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