Commodity Trade Mantra

Posts Tagged ‘Excess Reserves’

The Bear's Lair: Where's the link to Inflation broken?

Monetary economists around 2009-10 were sure that the Fed’s unprecedented creation of “narrow money” in the form of bank reserves would show up fairly quickly in a burst of inflation. The Fed has increased monetary base by $3 trillion, or 319%, since Sep 2008. Yet inflation remains very subdued – Why?

A Fed Policy Change That Will Increase the Gold Price

With all of the good news, the Fed may indeed be thinking they can pull out the 25bp lifeline and the banks will be just fine – When the Fed announces it won’t pay any more interest on excess reserves, and banks start lending in earnest again, the price of gold will be very interesting to watch.

Banks Warn Fed They May Have To Start Charging Depositors

Should the Fed cut IOER to offset the tapering pain, banks will crush depositors by cutting rates, depositors will pull their money from banks en masse, and banks will have no choice but to close on a record levered $2.2 trillion in margined risk position.

FOMC Minutes Reveal Taper Likely In "Coming Months"

FOMC participants expected that the data would prove consistent with the Committee’s outlook, but also considered scenarios under which it might, at some stage, be appropriate to begin to taper down the program before an unambiguous further improvement in the outlook was apparent.

The Adverse Effects Of Monetary Stimulation

The problem for central banks is that the alternative to maintaining an increasing pace of monetary growth is to risk triggering a widespread debt crisis involving both over-indebted governments and also over-extended businesses and home-owners.

It's The Boom That Should Be Feared, Not The Bust

The bust was written in the cards and it could not be avoided, just postponed – It is not the bust, but the boom that should be feared. We currently fear Fed tapering, as we should. Yet, we should be even more fearful that it doesn’t taper.

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