Don’t Blame the Banks for Holding Excess Reserves

Continue reading Don’t Blame the Banks for Holding Excess Reserves

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Comments on Exiting the Era of Big Balance Sheets

Balance sheets of central banks in advanced economies have ballooned by trillions of dollars since the onset of the Great Recession.  Now, U.S. policymakers are beginning to focus on the goal of unwinding the balance sheet.  While the arguments for doing so are not convincing, it seems inevitable at this point.  That said, there are several things that seem to missing from policymakers’ discussions this far of the unwind of which they must be very cognizant. Continue reading Comments on Exiting the Era of Big Balance Sheets

Presentation: The Safe Asset Shortage

3 days of the “Europe in Crisis” conference in Madison, WI have come to a close.  A fantastic conference with even better speakers—ranging from Gillian Tett of the Financial Times to Chad Bown of the Peterson Institute, and everyone in between.  Great insights on Brexit, the euro crisis, populism, and more.  I presented on Europe’s safe asset shortage and the mechanisms by which it is hindering the economic recovery. (Slides below.) Thanks to all the attendees, speakers, and conference organizers (European Horizons) for the great conference.

Responding to St. Louis Fed President Bullard’s Call to Reduce the Fed’s Balance Sheet

The CEO and President of the St. Louis Regional Federal Reserve Bank, James Bullard, recently offered a presentation (here) making a case for reducing the size of the Fed’s balance sheet—at about $4.5 trillion as a result of the Fed’s crisis response (as opposed to less than $1 trillion pre-crisis).  Bullard made several excellent points but I wanted to highlight and/or push back against a few. Continue reading Responding to St. Louis Fed President Bullard’s Call to Reduce the Fed’s Balance Sheet

Yes, The World Does Have a Shortage of Safe Assets…And Central Banks Aren’t Helping

My latest over at The Huffington Post. A wonkish look at the safe asset shortage and the waning efficacy of quantitative easing: http://www.huffingtonpost.com/european-horizons/yes-the-world-does-have-a_b_14636524.html

Are Market Players Mispricing Fedspeak?

A barrage of comments from FOMC members last week has bumped up market expectations of Federal Reserve rate hikes.  However, it’s not clear that market players are adjusting their rate expectations correctly; the U.S. Treasury curve has steepened (Figure 1). Continue reading Are Market Players Mispricing Fedspeak?

Central Banks Should Focus Stimulus Efforts on Equities

Weak economic activity, central bank balance sheet risks, and misaligned investor incentives can be alleviated.  My latest at the Huffington Post: http://www.huffingtonpost.com/european-horizons/draghi-other-central-bank_b_11968802.html