“Quantitative Easing” is the latest thing to get in a tizzy about these days. Everyone seems to have an opinion on quantative easing, either in favor (deflation-countering inflation is a good thing) or opposed (depreciation is a bad thing). An investment analyst whose work I recommend, Nicholas Vardy, the “Global Guru,” recently jumped on the…Continue Reading “Much Ado About Easing”

If the Fed wants to boost economic activity, it should think about raising the federal funds target rate. Why? Wouldn’t that restrict lending? Paradoxically, it would likely increase lending. This would force banks to engage in more lending in order to make a profit. Currently, banks can make money doing virtually nothing, as they borrow…Continue Reading “Why the Fed Should Boost Interest Rates”

are lukewarm at best. Today’s Wall Street Journal op-ed (“The Geithner Asset Play“) raises the appropriate objections. The goal of the plan, which is to rid banks’ balance sheets of unmarketable assets, really is something that has to be done if credit relations are to be restored. But it seems that Geithner wishes to accomplish…Continue Reading “Responses to the Geithner Plan…”

The recently announced Fed action has been characterized as a massive exercise in printing money, in “pumping liquidity“. But such characterizations, once again, are misleading. Take a Wall Street Journal article from March 19th, 2009, by John Hilsenrath. In “Fed in Bond-Buying Binge to Spur Growth” he wrote, The Fed had already cut its benchmark…Continue Reading “What the Fed is Up To”

The solution to the toxic asset problem, and the credit crisis, may well be the one propounded by Holman W. Jenkins in his Wall Street Journal column of March 18 2009: “Needed: A Bailout That Doesn’t Look Like One.” The root of the crisis is bad assets (securitized subprime loans) on banks’ balance sheets. Mr….Continue Reading “And We Have a Winner”