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I have no idea what the folks there mean by this "2. Money is not increasing either because of the massive government deficits. While private sector gross savings—a product of personal savings and undistributed corporate profits—have surely improved over the last year, they have been...

Well, we have a great experiment right now. I believe the ECB will endup turning the EU in a some kind of Japanese economy, meanwhile the Fed will get aggressive at some point and reverse that. We will see whos right

One of the few groups that seem to get what is going on "Hong Kong-based Gavekal, meanwhile, asks whether the Fed went far enough. In its Wednesday note, Gavekal research house: Since the end of March, the Fed’s outstanding credit to the private sector has begun a slow path of...

Thats why its so crucial to monitor M2, up to this point despite all of the cries from Peter Schiff the Fed has done little to bring the monetary destruction of society, matter of fact nominal GDP had the first decline in a long-time back during the LEH depression. M2 Yoy it has very little...

If you knew that the Fed balance sheet would never go down from current levels ever again, how would one profit from this?

$1.5T might actually understate things, the new future Fed balance sheet might actually be quite a bit higher than current levels! It all depends on how many years the delevering takes place, that is how long does net bank credit growth remains negative, also if it turns positive how positive is...

Still, I cant see them gathering enough support to override a presidential veto with the worst labor market since the 30's in order to stop loosening of monetary policy

One realization that I had lately is that the Fed exit strategy might not be complicated as it appears. The reason is, the private sector is delevering and will probably continue to do that for a number of years, as that happens the government(including the Fed) will lever up. As people use...

I'm not sure which limitations are you referring, as far as I know politicians(except Ron Paul) love cheap money, some might not want they to buy GSE debt but they are a minority(Plus what if Fed buys USTs, they might change their concerns). To me there is little doubt that if Bernanke saw some...

"An alternative strategy, which does not rely at all on trade diversion, is money-financed transfers to domestic households—-the real-life equivalent of that hoary thought experiment, the “helicopter drop” of newly printed money. I think most economists would agree that a large enough...

I'm sorry but Koo is dead wrong "The important question, of course, is whether a determined Bank of Japan would be able to depreciate the yen. I am not aware of any previous historical episode, including the periods of very low interest rates of the 1930s, in which a central bank has been...

The math is not refuted by that, you are changing the variables which affect the result. Point is the Fed can boost M more than the collapse in V

Another Bernanke paper where he addresses the apparent failure of monetary policy in Japan http://people.su.se/~leosven/und/522/Readings/Bernanke.pdf

NGDP = M * V To the extend that QE boosts M, nominal incomes will rise(mainly due inflation, avoiding the japanese disease). I cant see how this math can be refuted Fiscal policy can help with the V part of the equation but putting to work money that otherwise the private sector would not...

why

Its amazing to keep reading in many sites how 'in a balance sheet recession monetary policy is useless', a myth that seem to be spread by Richard Koo, the Fed purchased $1.7T in assets, $1T became excess reserves. Most of the $700B became M2, which likely boosted nominal GDP(it goes directly in...

Greenlaw updates his Fed forecast "The lower inflation trajectory carries implications for the Fed and yields: • With lower inflation next year, we see the Fed waiting until 3Q11 to move. Previously we expected a move by the end of 1Q. And once it starts, the move will be...

Correction, actually the Fed interest income only disappears from the system for some monthsr then they send the money to the UST at year end

I also wonder why the Fed wont reinvest the interest payments from MBSs(they say they will only do principal payments), that transaction directly decreases M2(from the people's bank account behind that mortgage or from FNM FRE bank account when the person doesnt pay) and turns into Fed's...

Really?To me just look like they dont want the markets interpreting the shrinking of the balance sheet as a sign of tightening. They will move in that direction when they do QE again(and Hoenig threatens to bomb the NY Fed building), they are not there yet