Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘Reflation’

Inflated Wishful Thinking – Why Reflation Isn’t Going to Happen Any Time Soon

Posted by hkarner - 9. Januar 2012

Author: Daniel Alpert · January 9th, 2012 · RGE EconoMonitor

There has been a lot of chatter coming out of this past weekend’s meet of the American Economics Association in Chicago. Among the interesting reports is this one from Ryan Avent’s blog at The Economist.

In his post, Avent discusses a talk given by Stanford economist Robert Hall. Ryan summarizes Hall’s argument as follows:

“A little more inflation would have a hugely beneficial impact on labor markets,
And a reasonable central bank would therefore generate more inflation,
And the Federal Reserve as currently constituted is, in his estimation, very reasonable; therefore
The Federal Reserve must not be able to influence the inflation rate.”

The reason for the lack of influence is variously attributable by some to either or both of (a) with interest rates at the zero lower bound and most (Keynesian) models indicating that we are in a liquidity trap, the Fed is unable to lower rates below zero and consequently is unable to increase expectations of inflation, and/or (b) the Fed is politically constrained in terms of additional quantitative easing (what Republicans call “printing money”).

Personally, I believe that Ben Bernanke, the Fed Board and the FOMC are still quite independent and hell-bent on doing anything within their means to fix the U.S. economy. In other words, I don’t buy the political stuff. In my opinion. it is beyond question that we are, and have been, experiencing a liquidity trap – and that pumping more liquidity into the system should have little or negative impact on its recovery. But it is equally true that when the Fed has resorted to quantitative measures, it has – in fact – increased inflation expectations. Den Rest des Beitrags lesen »

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The Great Reflation

Posted by hkarner - 4. Mai 2010

John Mauldin’s “Outside the Box”, 4/5/10. 

Let me start this week’s Outside the Box by venting a little anger. It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can’t tell you how outraged that makes me.

What that means is that US (and Canadian and British, etc.) tax payers will be giving money to Greece who will use a lot of it to roll over old bonds, letting European banks and funds reduce their exposure to Greece while tax-payers all over the world who fund the IMF assume that risk. And does anyone really think that Greece will pay that debt back? IMF debt should be senior and no bank should be allowed to roll over debt and reduce their exposure to Greek debt on the back of foreign tax-payers.

I don’t think I signed on for that duty. Why should my tax money go to help European banks? This is just wrong on so many levels and there is nothing seemingly we can do. Oh, well. Thanks for listening.

This week we look at an essay by my friend Tony Boeckh, who from 1968 until 2002, was chairman and editor-in-chief of BCA Publications, publisher of The Bank Credit Analyst. He has written a very important book called The Great Reflation. Tony feels that one of the most important things for investor to understand is money flows, whether from debt or monetary easing. The ebb and flow of money can both create and burst bubbles and we are now in what he calls a Great Experiment where governments around the world are trying to again reflate the economy (and are succeeding). What bubbles will this create and how does it end? How should we then invest?

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The Great Reflation Experiment

Posted by hkarner - 1. August 2009

from John Maukdin’s weekly E-Letter:

The question we have been focused on for some time now is whether we end up with inflation, or deflation, and what that endgame looks like. It is one of the most important questions an investor must ask today, and getting the answer right is critical. This week, we have a guest writer who takes on the topic of the great experiment the Fed is now waging, which he calls The Great Reflation Experiment. Den Rest des Beitrags lesen »

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