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Thoughts From The Divide - Archive

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Freight's Perspective and Asset Purchases - July 16, 2019

We review the Cass Freight Index is “ signalling economic contraction” as indicators across sectors and geographic flash warning signs. and James Hamilton of UC San Diego warns that one of the unconventional tools that Powell and other central bankers rely on is less effective than its users believe.

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Know Thy Nominee - July 8, 2019

Judy Shelton and Christopher Waller’s nomination to the Federal Reserve board leads us to dig into their pasts for clues to their policy views. Christine Lagarde is also a newly minted nominee, up for the presidency of the ECB, and though she is not an economist, has spent some time in the monetary policy trenches.

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"Against" and "For" MMT - July 2, 2019

James Meadway argues that beyond the danger of inflation and issues of democracy surrounding MMT, it is just a simplistic solution to complex problems. Thomas Fazi and Bill Mitchell rebut Meadway’s points, arguing not only that MMT is a lens to understand how the monetary system “already works”, but also a way to “imagine truly transformational politics”.

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Dallas Data Deluge - June 25, 2019

Dallas Fed Manufacturing Data Disappoints, Dallas Fed President Robert Kaplan gave a speech warning about the potential problems arising from tariffs and trade uncertainty, but the silver lining out of Dallas was research showing wages might be growing faster than reported.

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Central Bank Scorecard - June 18, 2019

Leika Kihara chronicles the path of Haruhiko Kuroda and finds that the monetary experiments implemented by the BoJ has failed. Also, Eric Sims and Jing Cynthia Wu develop a model that draws conclusions from unconventional monetary policy tools.

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Interest Rates Re-Examined - June 12, 2019

A number of commentators, including Warren Mosler and Jim Chanos, found fault with the monetary policy framework espoused by Ken Rogoff. They explain why central bankers have “got it backward” and why “the Fed itself” is behind some of the dynamics they are fighting.

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Unconstrained Negative Interest Rates - June 4, 2019

In “The Case for Implementing Negative Interest Rate Policy” Kenneth Rogoff & Andrew Lilley probe the limitations of monetary policy tools and examine the steps necessary to implement deeply negative interest rate policy.

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Shaky Confidence and Italy - May 28, 2019

Recent US data, such as the Case-Shiller Home Price Index, Durable Goods Orders, and New Home Sales continue to underwhelm, but this could be related to current trade tensions. The Italian budget is back in the news as the European Commission and Italy are once again at odds.

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Trade Ripples - May 21, 2019

Recent developments in the trade war between the United States and China could have serious implications for some big name companies. Chas W. Freeman, Jr.’s recent speech regarding Sino-American relations provides broader context. Also, we have BONUS content in this Thoughts from the Divide!

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Déjà Vu: SBOI and Flipping - May 14, 2019

Recent news is giving us deja vu. The NFIB's SBOI data shows employment metrics are back near all-time highs. And house flipping is back in the news, with both small and large speculators taking some losses, but CoreLogic's report on flipping shows it's not yet time to be worried.

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The Fed and Evolving QT - April 30, 2019

Following Ex-Fed Kocherlakota's call for a rate cut, WSJ's Nick Timiraos details the economic conditions that would lead current FOMC members to consider cuts. Meanwhile, yet another recent Fed paper on reserves, this time in the context of a potential repo facility, indicates that, when it comes to the level of "ample reserves", they are just "guesstimating".

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Complicated Housing & Fed Preparation - April 23, 2019

The divergence in recent housing data both across price points and between new and existing housing imply complex dynamics going on under the surface. Also, while the Fed has cooed before, an ex-Fed president has gone as far as to say that the next move should be a rate cut.

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Quantitative Tightening & Auto Sales - April 9, 2019

The Trump-vs-the-Fed battle over quantitative tightening has flared up again and there are some peculiar dynamics under the surface of the auto sector in subprime auto loans.

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Superlative Labor & Missing Inflation - March 12, 2019

New Unemployment Rate data continues to surprise forecasters to the downside as job creation was at a record high. The strong labor market has economists puzzled over the lack of inflation, prompting the Fed to review their strategy, including looking at BoJ-inspired price controls.

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