This page shows you your search results in order of relevance. This is page number 8.
Order by Relevance | Date
Total 1184 results found since Jan 2013.
Producer Prices for Goods Rise and Fall with Oil Prices
Alan ReynoldsEver since Federal Reserve Chairman Jerome Powell described cyclical or COVID-related elements of inflation as "transitory" (an ambiguous phrase now retired), critics repeatedly seized onyear-to-year changes in price indexes as evidence that inflation was insteadaccelerating every month.As I have noted before, however, the stubborn rise in year-to-year inflation —even when monthly rates slowed in the third quarter—was partly because ofbase effects (prices indexes were often flat or falling in the 2020 pandemic) and particularly because ofcompounding: If we keep adding the same monthly increase to a price i...
Source: Cato-at-liberty - December 16, 2021 Category: American Health Authors: Alan Reynolds Source Type: blogs
Turkey Hopes to Restore Currency Confidence
Alan ReynoldsTurkey is at least trying to stabilize exchange rate expectations, though it is not clear if they have a sustainable strategy to do that.When people at home and abroad lose confidence in a country’s currency, the time‐tested ways to stop the inflationary rush to get rid of the shrinking currency are to firmly link the unit of account (Turkish lira) to a more credible currency such as the euro or dollar – preferably through full convertibility (a currency board).In 1993, the Istanbul Chamber of Commerce invited me to spend a week consulting with Turkish businessmen there and government offic...
Source: Cato-at-liberty - December 21, 2021 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Fed ’s Higher Fed Funds Rate Projections Mean What?
Alan ReynoldsBefore they were awash with reserves, banks often paid interest to other banks in the “federal funds” market if they needed more reserves to support more lending (due to reserve requirements). Since 2008 and massive “quantitative easing” (buying federal debt with new reserves), reserve requirements stopped limiting commercial bank credit. The Federal Reserve instead paid an interest rate on reserve balances (IROB)– which effectively sets a floor under the fed funds rate.Members of the Federal Open Market Committee, the Fed ’s policymaking arm, announced on December 15 that their median projection ...
Source: Cato-at-liberty - December 21, 2021 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Fed ’s Astonishing Quantitative Tightening in the Great Recession
Alan Reynolds“There Was No Housing Bubble in 2008 and There Isn ’t One Now, ” concludes Ramesh Ponnuru. Writing in Bloomberg, Ponnuru notes that, ” economists David Beckworth and Scott Sumner have argued that the timing of the last housing bust does not line up with the conventional wisdom that it played a central role in the recession that began in December 2007. The housing market peaked in early 2006, and sustained nearly two years of decline before the economy stopped growing as unemployment stayed low.”“A monetaristexplanation for the Great Recession, ” he adds, “is that the Federal Reserve erred from...
Source: Cato-at-liberty - January 21, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
Real Earnings Should Stop Falling If Energy Prices Stop Rising
Alan ReynoldsIn an interesting newPeterson Institute blog, Jason Furman and Willie Powell write, “Real wages and compensation increased dramatically in the first six months of the pandemic, as prices fell while wages and compensation continued to grow. Since then, however, price growth has been more rapid than wage and compensation growth, and so real wages and compensation have been falling. ”The facts are clear, yet they scream out for clarification. First, evennominalaverage hourly earnings “increased dramatically in the first six months of the pandemic (March‐August 2020)” while the economy collapsed under...
Source: Cato-at-liberty - January 31, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Fed Doesn ’t Rule the Stock Market
Alan ReynoldsAWall Street Journal editorial ( “Inflation Haunts the Biden Economy”), fears that “one risk is the Fed gets spooked bythe market reaction to its tightening. ” However, the stock market is rarely hyper‐sensitive to Fed statements or actions for more than a few days.“Stocks Turn Lower AfterFed Announcement” was theJournal ’sJanuary 26 headline, yet the Fed chairman did not actually announce anything much different from what was already expected – namely, phasing‐out the “Quantitative Easing” routine plus several quarter‐point increases in the IORB (Interest on Reserve Balance...
Source: Cato-at-liberty - February 11, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Unintelligible Psaki ‐Biden Theory of Oil Prices
Alan ReynoldsJust as Congress was poised to ban imports of Russian oil, President Biden got the jump on them with an executive order. Despite the delay, it was the right thing to do as a national expression of moral outrage over Russian military atrocities.The White House repeatedly explained its two ‐week inaction by suggesting that U.S. gasoline prices depend on how much oil we buy from this one minor source of imports.In late FebruaryReuters reported, “As the White House developed the sanctions package… [officials] were concerned about the possible impacts of a loss of Russian oil supply at a time of rising...
Source: Cato-at-liberty - March 9, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
The 2008 Oil Price Spike and Collapse in Retrospect
Alan ReynoldsI wrote “Get Ready for the Oil Price Drop” in June 2008 for the New York Post. It proved to be a good and timely call. The price of WTI crude peaked at $133.90 that month before falling to $41 that December.There are obvious differences between 2022 and 2008 (unpredictable warfare andsanctions), but some economic principals I enumerated in 2008 still apply even if the timing does not.Here are a few points I raised in 2008 which may still be worth keeping in mind:“A huge share of crude oil is used to produce and distributeindustrial products. That explains why the price of oil isextrem...
Source: Cato-at-liberty - March 10, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
Fed Chairman Powell ’s “Base Effects” Are Revealing
Alan ReynoldsAt the Federal Reserve Chairman ’sMarch 16 press conference, he announced that “we expect inflation to remain high through the middle of the year, begin to come down.” Prodded by reporters for more explanation. Chairman Powell acknowledged that “part of inflation coming down [in the Spring] is clearly to do with factors other than our policy, and those would include … certainlybase effects [emphasis added] … When you look at a 12 ‐month trailing window, you’re lapping very high inflation in March, April, May, June of last year. So, there should be some effects from that … in a 12...
Source: Cato-at-liberty - March 19, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Strategic Petroleum Reserve Was Never Used Strategically
Alan ReynoldsPresident Biden plans to tap the Strategic Petroleum Reserve (SPR) for a million barrels a day for six months, describing this as “awartime bridge to increase oil supply until production ramps up later this year. ”This is only the second time that the SPR has been used for the purpose Congress intended in 1975 – to counteract temporary spikes in the global price of oil due to cartel extortion or foreign wars. The first time was during the Gulf War, on January 16, 1991, when President George H.W. Bush announced the SPR would immediately begin selling up to 2.5 million barrels a day. On the following d...
Source: Cato-at-liberty - April 1, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
GDP Inflation Includes Food, Energy and Export Prices
Alan ReynoldsAWall Street Journal editorial, “Rumors of Stagflation, ” describes accelerating inflation in the first quarter GDP report: “The GDP decline … coincided with an accelerating rise in prices. The GDP price index rose at an 8% annual rate on top of 7.1% in the previous quarter. The Fed’s preferred inflation measure, personal consumption expenditures , rose 7%, when its target is 2%.”The Fed ’s preferred inflation measure is really the “core” personal consumption index which excludes some but not all food and energy prices. The Core PCE was up 5.2% in the first quarter, nearly the same as 5% in t...
Source: Cato-at-liberty - April 29, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
Core PCE Inflation Has Been Slowing Down
Alan ReynoldsCore inflation slowed substantially in February and March to less than 0.3% a month (.029%). The core personal consumption expenditures (PCE) price index rose more slowly this March than it did a year ago (as shown by the blue bars in the graph).The backward ‐lookingyear ‐to‐year price change nonetheless still appeared misleadingly high this March (5.2%) because of rapid price increaseslast year– during the second and fourth quarters.The red line in the graph projects that if the February to March monthly pace continues for the next three months, the year ‐to‐year increase in co...
Source: Cato-at-liberty - May 2, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
The Fed ’s Unplanned Soft Landing of 2018–19
Alan ReynoldsFederal Reserve officials spentmonths talking ‐up their visions of a linear upward path for the overnight federal funds rate on bank reserves, but with few clues about when the increase might stop or why.But markets do not wait for the Fed to act. The policy ‐making Federal Open Market Committee (FOMC) had done nothing until now except to raise the fed funds rate a quarter point in March. Yet they nonetheless managed to double mortgage interest rates and crash the value of bonds and stocks in retirement accounts by simply talking increasingly bold ly about what FOMC members “project” might happ...
Source: Cato-at-liberty - May 4, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
U.S. Gasoline Prices Depend on Global Oil Markets — Not “Independence”
Alan ReynoldsI still have a 1979 bookmark that says, “INFLATION IS A PAIN IN THE GAS.”Funny but wrong. U.S. gasoline prices follow gyrations in world oil markets, which depend on global (not domestic) supply and demand.What actually happened in 1978 –80, an important German study from Bruegel reminds us, was the Iranian revolution and the Iran ‐Iraq War: “The 1978 Iranian revolution decreased global supply by 4 percent and led to a price increase of 57 percent. The 1980 Iran‐Iraq war decreased global supply by 4 percent and led to a price increase of 45 percent.”What happened to world oil market...
Source: Cato-at-liberty - May 10, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
Core Commodity Price Inflation Was Zero in March and April
Alan ReynoldsThe Producer Price Index (PPI)is not a measure of inflation in the cost of living. It estimates pricesbusinesses receive, not prices consumers pay. Importantly, it includes soaringexport prices for U.S. on food and energy, which had already risen 4.5% in the month of March, 3% in February, and 2.8% in January due to sudden global scarcity in the wake of the Russian war and sanctions.The PPI “increased 0.5 percent in April…[partly because] construction increased 4.0 percent, whileprices for final demand services were unchanged. ” “The indexes for final demand trade services and for final demand servic...
Source: Cato-at-liberty - May 12, 2022 Category: American Health Authors: Alan Reynolds Source Type: blogs
