Fiscal Policy

The Purpose of Monetary Policy

The Federal Open Market Committee is scheduled to have one of its regularly-scheduled meetings with Fed Chair Janet Yellen making an announcement on interest rate policy.  Most observers expect the Fed to leave short-term interest rates unchanged for now, but the FOMC’s likely actions in the near future could be to raise rates.  Dr. Tiemann reviews the […]

Why the Debt Ceiling Debate Matters

US Congressional hardliners have been threatening not to raise the debt limit again.  They may not understand how central US Treasury securities are to the US and global monetary and banking system.  Dr. Tiemann explains the importance of raising the debt ceiling and the catastrophic consequences that could result from a failure by Congress to act in […]

The Launch of the QE 2

In Nov. 2010, the Fed launched a second round of quantitative easing, dubbed the “QE2”. The action raised many questions and this note explores the possible impacts of this action on the economy. It continues the discussion started in the prior note-addressing the Government’s fiscal policies-and focuses this time on the Government’s monetary policy.

The Borrower of Last Resort

Discusses why governments need private savings to maintain stimulative fiscal policies and why channeling those savings into investments is best. Review of the Keynes paradox of thrift, the need to reduce deficits but also how that can also be a recipe for disaster. Describes how the Feds can avoid igniting inflation and why government spending and borrowing […]

Liquidity and the Markets

Explains how illiquid portfolios played a role in the violent plunge in global equity markets in the recent past, why prudent use of liquidity is an element that investors can use to their advantage in generating returns and why understanding liquidity can also help us to interpret market activity.

Lessons from History

 Discusses the philosophical framework of the Obama Administrations' stimulus plan and places it into an historical context, discussing its Keynesian economic impact and Hamiltonian design, revealing the coherence and consistency of the ideas behind it.

Head Over Heels for the Yield Curve

Examines the perils of prediction and the relationship between an inverted yield curve and recession, the stock market and the economy as a whole. Explains why the disciplined investor would not make sudden, sharp changes in portfolio strategies to "beat the gun" based on an inverted yield curve.

Meet Ben Bernanke, the New Fed Chair

A summary of the Federal Reserve's shift in policy and transparency during the tenures of Paul Volker and Alan Greenspan. Discusses the changes in the Fed's approach to monetary policy from managing money supply to managing short term interest rates. The new Fed Chair, Ben Bernanke, supports a Fed policy targeting inflation rather than interest rates or […]