Fed Gov Waller Discussion

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.

Discussion with Fed Gov Waller on Economic and Monetary Outlook

The Center for Financial Stability (CFS) will host remarks and a discussion with Federal Reserve Board Governor Christopher J. Waller.  Governor Waller will focus on the economic and monetary outlook.

Prior to his appointment at the Board, Chris served as executive vice president and director of research at the Federal Reserve Bank of St. Louis since 2009.  In addition to his experience in the Federal Reserve System, he served as a professor and the Gilbert F. Schaefer Chair of Economics at the University of Notre Dame.

Date:  Friday, November 19, 2021
Time:  Program begins promptly at 10:45 a.m. and ends at 12:00 p.m.

Remarks and discussion will be live streamed and can be viewed later at: https://youtu.be/hQIA4bVFKXw

Today’s WSJ: “How the Fed Rigs the Bond Market”

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?mod=opinion_lead_pos5

Thoughts on inflation

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.

Two Measures for the Fed and Investors

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

  • Center for Financial Stability (CFS) Divisia M4-,
  • Global inflation diffusion indexes that analyze price and expectation signals in 49 countries.

To view the two measures:
https://centerforfinancialstability.org/research/Measures_Fed_110221.pdf

We look forward to any comments you might have.

CFS Monetary Measures for September 2021

Today we release CFS monetary and financial measures for September 2021.  CFS Divisia M4, which is the broadest and most important measure of money, grew by 3.8% in September 2021 on a year-over-year basis versus 4.5% in August.

For Monetary and Financial Data Release Report:
https://centerforfinancialstability.org/amfm/Divisia_Sep21.pdf

For more information about the CFS Divisia indices and the data in Excel:
https://centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM <GO>
2) ECST T DIVMM4IY <GO>
3) ECST <GO> –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY <GO> –> From source list on left, select ‘Center for Financial Stability’