by Jerry O’Driscoll The monetary analysis of the housing bubble focuses on the impact of low – even negative – real rates of interest on housing demand. That theory suggests the Fed must be inflating new bubbles with its continued policy of a near-zero federal funds rate. Skeptics ask where are the bubbles? In today’s … Continue reading Where is the Bubble?
by Jerry O’Driscoll According to Reinhart and Rogoff, “for the advanced economies during 1800-2008, the picture that emerges is one of serial banking crises.” In This Time is Different, the authors bring us up to the present by examining the history of banking crises. Banking crises are not only frequent , but often accompanied by … Continue reading Summer Reading III
by Jerry O’Driscoll In Tuesday’s Wall Street Journal, George Melloan makes the case that savers and investors lose under the Fed’s low-interest policy. He also argues that the policy leads to greater risk-taking by those pursuing yield. Presumably it is leading to the next asset bubble. But where?
by Roger Koppl At the Cobden Centre's website (and here), Steve Baker discusses recent Fed signals in the context of Big Players theory. The more active the Fed (or other central bank), the greater the fraction of entrepreneurial attention devoted to Fed watching rather than productive activity. As Baker says, “traders must pay attention to the … Continue reading Bleeding the Economy