Tag: mother goose

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With Trump in Power, the Fed Gets Ready for a Reckoning : Volcker Time

Paul A

By BINYAMIN APPELBAUMNOV. 12, 2016

WASHINGTON — Paul A. Volcker, the Federal Reserve chairman, received an urgent warning two weeks after Ronald Reagan won the 1980 presidential election. Some of the president-elect’s advisers, he was told, wanted to abolish the central bank and replace it with a computer program that would manage interest rates and monetary policy.

Today, a Democratic Fed leader is once again bracing to see whether victorious and emboldened Republicans will try to overhaul the central bank.

In almost three years as the Fed’s chairwoman, Janet L. Yellen has led an aggressive campaign to stimulate economic growth. Donald J. Trump, the president-elect, has embraced criticism that the Fed is causing more problems than it is solving, and he has surrounded himself with advisers who would like to rein in the institution that has the greatest influence over the direction of the nation’s economy.

Mr. Trump can fill a majority of the Fed’s seven-member board with his own nominees over the next 18 months, including replacing Ms. Yellen in February 2018. He also could work with Congress on new constraints, including some form of an old idea on the right that a formula should dictate the Fed’s movements of interest rates.

https://www.nytimes.com/2016/11/13/business/economy/trump-the-fed-yellen-gets-ready-for-reckoning.html

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Rep. Garrett to Chair Yellen: why does the Fed favor Wall Street over Main Street?

House Budget Panel Holds Hearing to Receive Views on Fiscal 2012
July 1,2016

the staff of the Ridgewood blog

Ridgewood NJ, In case you missed it, earlier this week Rep. Scott Garrett asked Fed Chair Janet Yellen why the Fed of pursues policies that help the rich at the expense of the poor. Garrett schooled Fed Chair Yellen on the damaging impact her policies have had on the middle class in this country . Garret said the net effect of Fed and administration policy has been to widen income inequality.

In this clip Garrett turns the Fed’s own language against itself and details how Fed policies have hurt African America’s and other  minority groups , as well as the middle class  .

 Watch the clip and let me know your thoughts.
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Trump raises prospect of replacing Yellen

mother goose

Sam Fleming in Washington

Donald Trump would probably replace Janet Yellen as Federal Reserve chair if he wins the presidential election, the presumptive Republican nominee said on Thursday.

The property developer turned politician told CNBC that Ms Yellen is “not a Republican” and that it would be “appropriate” to put someone new in the position when her four-year term expires in February 2018.

Nevertheless, Mr Trump also said that he agreed with Ms Yellen’s policy of keeping short-term interest rates low, saying that rate increases would push up the dollar and damage America’s competitive position with China, as well as making it harder to service US debt.

“I have nothing against Janet Yellen whatsoever; I think she has been doing her job,” said Mr Trump, describing her as “very capable”. However, he added: “She is not a Republican . . . when her time is up I would most likely replace her because of the fact that I think it would be appropriate.”

https://www.ft.com/cms/s/0/7271d02e-12eb-11e6-91da-096d89bd2173.html#axzz47pDrmj00

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Keynesian black hole: The Fed Wants to Test How Banks Would Handle Negative Rates

Black Hole

Rich Miller

Three-month Treasury bill rate falls to negative 0.5 percent
Very adverse scenario posits harsh worldwide recession

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As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S.

In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period.

“The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities,” the central bank said in announcing the stress tests last week.

In that particular simulation, the unemployment rate doubles to 10 percent, the same level it reached in the aftermath of the last financial crisis.

Three-month bill rates have slipped slightly below zero several times in recent years, including in September after the Fed delayed rate liftoff amid global financial market turmoil, touching a low of minus 0.05 percent on Oct. 2.

But in the stress test, banks would have to handle three-month bill rates entering negative territory in the second quarter of 2016, and then falling to negative 0.5 percent and holding there through the first quarter of 2019.

 

 

https://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016

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Talk of Fed ‘policy error’ grows

mother goose

Robin Wigglesworth

Gathering for the first time after their epoch-ending decision to raise interest rates in December, the backdrop couldn’t be more different for Federal Reserve policy officials.

The long-awaited rate increase went smoothly, but simmering concerns over China, the global economy as a whole, deflating commodities and financial market valuations have since risen to the fore. Even fund managers that were relaxed about slightly tighter monetary policy last month are now wondering whether that was complacent.

“It is reasonable for investors to wonder whether Fed’s December rate hike was a policy error,” admits Bob Michele, chief investment officer of JPMorgan Asset Management. “Historically the Fed has raised rates because either growth or inflation was uncomfortably high. This time is different — growth is slow; wage growth is limited; deflation is being imported.”

Perhaps most of all, many investors now fret that they are operating without a safety net they had grown attached to during the post-financial crisis era.

https://www.ft.com/intl/cms/s/0/fcb4202a-c04d-11e5-846f-79b0e3d20eaf.html#axzz3yOZYWeNT

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Credit Traders Gird for the Worst as Fed Loses Its Grip on Debt

mother goose

Lisa Abramowicz

What happens when the Federal Reserve loses its stranglehold over debt markets? Investors are finding out.

The selloff in corporate bonds is deepening and investors are seeking safety in the longest-dated government debt, which does best when the economy does worst. Defaults are rising as oil tumbles and investors are looking for the best ways to hedge against credit losses.

All this comes as the Fed does, well, nothing much. Instead, it’s China that’s taken the lead with new rounds of financial stimulus in the face of slowing growth. But some days it’s a free for all, with even Kazakhstan wielding its influence.

https://www.bloomberg.com/news/articles/2015-08-20/credit-traders-gird-for-the-worst-as-fed-loses-its-grip-on-debt