The KU Economist reported on my recent Op Ed in the Kansas City Star.
Barnett Op Ed Outlines Why Fed Was Caught Unawares by Inflation (Summer, 2022)
You can read the Op Ed in the Kansas City Star here.
The KU Economist reported on my recent Op Ed in the Kansas City Star.
Barnett Op Ed Outlines Why Fed Was Caught Unawares by Inflation (Summer, 2022)
You can read the Op Ed in the Kansas City Star here.
Professor William A. Barnett – CFS director of Advances in Financial and Monetary Measurement (AMFM) – questions “Why were the Fed’s inflation forecasts so wrong?”
He then addresses limitations in the modeling approach at the Federal Reserve and – more importantly – offers ideas for the future.
To view Bill’s opinion piece…
https://www.kansascity.com/opinion/readers-opinion/guest-commentary/article260903877.html
Thanks to Patrick Harker (President, Federal Reserve Bank of Philadelphia) for thoughtful remarks and engagement with CFS members and friends.
The full video starts at 3 minutes and is now available… https://www.youtube.com/watch?v=99zqumz3Pyg
Congratulations to David J. Lynch at The Washington Post for being the first in a major news outlet, as far as we are aware, to ask the question “why does the Fed ignore the money supply”?
The piece covers much ground, references Bill Barnett’s work as CFS director of Advances in Monetary and Financial Measurement (AMFM), and quotes Steve Hanke, CFS special counsellor and Johns Hopkins professor.
Yet, misconceptions exist. Lynch frames monetarists versus “all but the monetarists” and “conservative critics” versus others. He is correct. Sadly, this is the narrative.
However, CFS Divisia monetary aggregates and liability measures vividly illustrate how Fed policy transmits through the financial system and into the real economy. That’s it. They have been exceedingly helpful at analytically and dispassionately identifying trades and how the economy responds to policy.
CFS monetary data and optimal uses are vehemently non-partisan.
We look forward to any comments you might have.
To view the full article in the Washington Post:
https://www.washingtonpost.com/business/2022/02/06/federal-reserve-inflation-money-supply/
CFS Chairman of the Advisor Board William R. Rhodes was interviewed by Trish Regan of American Consequences. They discussed the dangers of inflation, and the need to tackle it rapidly so it doesn’t turn into a more serious problem of stagflation or hyperinflation as the US experienced in the late 70s and early 80s. Bill also points out that the inflation problem is not unique to the US; it is also a problem for the UK, continental Europe and other countries as well. He states that the time for action on reducing inflation and rising prices is now, before it becomes embedded in the expectation levels of the population.
Commentary by Steven Lofchie
Former Vice Chair for Supervision Randal K. Quarles covered a broad range of topics in his farewell remarks. He celebrated the overall strength of the banking system and suggested areas where there is latitude for regulatory change or recalibration.
“But I did at the time, and still do, have concerns about the possible precedents that have been created by the novel [credit] facilities that we [the Federal Reserve] created [as a reaction to the pandemic].”
Federal Reserve Board Vice Chair for Supervision Randal K. Quarles
Read his remarks, Between the Hither and the Farther Shore: Thoughts on Unfinished Business.
The Center for Financial Stability (CFS) hosted remarks and a discussion with Federal Reserve Board Governor Christopher J. Waller on the economic and monetary outlook on Friday, November 19.
Remarks and the discussion are available at:
https://youtu.be/hQIA4bVFKXw
Thanks also to Howard Marks, John Ryding, Michelle Caruso-Cabrera, Colin Teichholtz, Nick Sargen, Colby Smith, Nick Silitch, Lisa Lee, Bruce Tuckman, and Jeff Young for excellent questions.
Today, The Wall Street Journal published my op-ed titled “How the Fed Rigs the Bond Market.” Themes include:
High inflation should no longer be surprising, nor should it be labeled “transitory.” Its existence should prompt serious reflection on policy decisions and spur action to avoid a financial crisis.
The big issue is financial stability.
– The U.S. Treasury bond market has been rigged and manipulated since the Federal Reserve’s second quantitative-easing program began in 2010. The consequence of this blurred line between Fed and Treasury responsibilities—”monetizing the debt”—is inflation.
– Sales by the infamous “bond vigilantes” used to serve as a warning of inflationary policies. The signal has been muted.
The op-ed offers specific actions for Congress, Treasury, and the Fed to defuse imbalances and gradually restore market dynamics to the determination of bond yields.
We look forward to any comments you might have.
To view the full article:
https://www.wsj.com/articles/how-the-fed-rigs-the-bond-market-inflation-yields-financial-crisis-treasury-11637165868
This morning, Bloomberg’s John Authors said it well “We have October’s inflation numbers, and they were bad. Indeed, they were worse than the worst fears, with U.S. CPI exceeding the highest estimates provided by economists to Bloomberg. When you go below the surface, they’re even more troubling than they look.”
Macro and financial market analysis often includes a bit of guesswork. However, there are certain mathematical forces of nature in markets, economics, and debt management that are frequently ignored. Money, the government’s budget constraint, and the resulting seigniorage tax are among them.
Under the leadership of Professor William A. Barnett, the Center for Financial Stability (CFS) has provided many tools for investors and officials to reduce the probability of errors in making meaningful decisions.
Here are a few to help frame the new debate around what John Authors suggests is “how long it will last.”
Two Measures for the Fed and Investors
https://centerforfinancialstability.org/research/Measures_Fed_110221.pdf
Inflation Fears Offers the Fed a Chance to Modernize with Money
https://centerforfinancialstability.org/research/Modernize_Money_042621.pdf
Post-Pandemic Economic Risks
https://centerforfinancialstability.org/research/Post_Pandemic_Economic_Risks_050521.pdf
Advances in Monetary and Financial Measurement (AMFM)
https://centerforfinancialstability.org/amfm_data.php
We look forward to any comments you might have.
With inflation in excess of 5% in each of the last 5 months, two measures would have been helpful for the Fed and investors in prior months. To be sure, they should influence Fed and investor decisions going forward.
They include
To view the two measures:
https://centerforfinancialstability.org/research/Measures_Fed_110221.pdf
We look forward to any comments you might have.