"You've always had the power to go back to Kansas." —the Good Witch of the East, to Dorothy, in The Wizard of Oz. (This is the conclusion of a two-part essay. For Part 1 click here.) Equipped with some historical background, we can now consider ways in…
If the recent yield curve panic proves anything, it proves that, in financial markets, what may start out as a mere statistical correlation, and possibly a spurious one, can become a genuine causal relationship. In particular, if enough people subscribe to a post-hoc fallacy, it may not…
When I published Floored! last October, I thought I'd said all I could say concerning the adverse consequences of the Fed's then decade-old decision to adopt a "floor"-type operating system. In the new arrangement, the Fed pays interest on bank reserves, and uses changes in the rate…
Fed Chairman Jerome Powell's decision in December to raise the federal funds target by 25 basis points, to 2.25–2.50 percent, and to continue raising rates at least twice in the new year, upset financial markets. The Dow and S&P each dropped at least 8.7 percent, logging their…
In my last post I wrote about the lawsuit TNB USA Inc has filed against the New York Fed, which has refused to grant the would-be bank a Master Account. I argued that, despite its name (TNB stands for "The Narrow Bank"), and despite what some commentators…