A Trapped Fed
The clearest way to understand current Fed policy and its effect on markets is to view it through interest rates. Interest rates are the price of credit. Credit is not money. When a bank creates credit, it does not create…
Read more
Federal Reserve
The Basics of Money
Start with the basics of money. Money is not wealth, it is the measurement of wealth. All money does is value the exchange of goods and services—the productive economy—similar to any other basic unit of measurement in the International System…
Read more
Trump vs the Fed
Trump Bashes the Fed Over Rate Hikes The Federal Reserve and the Holy Natural Rate of Interest The Federal Reserve is on a Monty Pythonesque search for the Holy Grail of natural interest rates—the Wicksellian natural rate of interest. As…
Read more
Fed Normalization II
The economic term normalization has entered the financial lexicon and will soon dominate markets. As with everything the Fed has done since Nixon ended dollar stability by severing its link to gold in 1971, the advent of normalization is just…
Read more
Fed Normalization
The Fed learned from the taper tantrum that in our hybrid central bank commanded/market economy it is best not to surprise the market. This requires notifying the market far in advance of any change in Fed policy. The Fed has…
Read more
The Kendall Rule Explained
The Kendall Rule “As long as excess reserves persist, with IOR, in amounts necessary to facilitate Federal Reserve control of the price of interest, the trend for the minimum price of gold is determinative by its average price over the…
Read more
How the Fed Works
The complement to understanding the dollar price of gold is understanding how the Fed works. Google “how the Fed works” and you won’t find much. Most is bland repetition from federalreserve.gov to satisfy the bureaucratic requirement of a quasi government…
Read more
Money and Credit Post 2008
Part II of Money and Credit. See Part I Bernanke’s Fed upended traditional Fed operating procedures after the 2008 financial crisis. Bernanke made his academic career as a Great Depression “expert”. His belief that the GD was a monetary event…
Read more
Money and Credit
What is money? That seems like a simple question. It’s mainly the green stuff in your pocket that you want more of, but it leads to all sorts of confusion in the economic world, with harmful results. It is the…
Read more
A New Monetary Order
According to a study of 775 fiat currencies by Michael Hewitt, the average shelf life of a fiat currency is 27 years. The fiat dollar is at the 46 year point. It has long passed its value freshness date and is ready…
Read more