Paul Kasriel
Paul Kasriel
bank central cut dollar fact fallen faster further massive resume
The dollar would have fallen faster or further had there not been this massive central bank intervention. If in fact they are going to cut back on their dollar-support activities, then the dollar is going to resume its decline, and that's going to have some inflationary implications.
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The Fed is happy to provide all the reserves the banking system needs, ... It's told the banking system 'Ya'll lend now,' and they're doing it.
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There may be somebody else taking the baton now, which is not unusual in a recovery. Housing is typically the leader out of the desert to the promised land; but, just like Moses didn't make it to the promised land, as rates rise, housing doesn't quite make it, either. Other sectors do.
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A bursting of the housing bubble could result in a severe recession.
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And rates are not likely to be adjusting downward. Households are paying about 13.75 percent of their aggregate tax income to service debt -- and it is going to go higher.
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It's growing rapidly, and it does suggest that we're going to see at least a temporary pickup in economic activity.
detect doubt growth view
In a longer-run sense, I would view it as marginally unproductive, a worsening of the trade-off between growth and inflation, ... But will we be able to detect that? I doubt it.
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We really don't want to give Greenspan a grade yet. You want to wait a year or two to see whether the seeds turn to weeds.
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There are a lot of crosscurrents now, but falling yields might indicate that demand for credit is slowing down and that the Fed, by holding the fed funds rate where it is, is actually keeping rates all along the curve from falling to their equilibrium level, or to the level where would they would more naturally go.
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When the fog of war is finally lifted, we may find that economic growth remains weak because monetary policy turns out to be less accommodative than the Fed thought,