Author: Joseph Wang

Vice President Harris’ proposed economic plan essentially guarantees stagflation by both subsidizing demand and discouraging supply. While Harris has been shy about her economic platform, her recent speech and prior campaigns suggest she would favor measures that discourage supply such as higher taxes and price controls. It also seems she would like to increase demand by subsidizing housing and forgiving some types of loans. A combination of stronger demand amidst lower supply suggests a stagflationary […]

The post Harrisomics appeared first on Joseph Wang.

There is little risk of a crisis in the banking sector, but that does not mean there aren’t badly run banks. QE and Basel III have made the banking sector significantly more liquid and resilient such that a replay of the GFC is very unlikely. However, individual banks under poor management can still be subject […]

Governor Waller suggests two significant changes to the Fed’s QT framework that effectively removes all obstacles to an extended QT. First, Waller suggests that the $2t in RRP balances should be consolidated with bank reserves when thinking of bank liquidity levels. This indicates that the Fed would be comfortable with bank reserve levels dropping below […]

The post Come Hell or High Water appeared first on Fed Guy.

A change in the underlying plumbing of the financial system is making it unlikely that QT can run its expected 2+ year course. An ideal QT would drain liquidity in the overall financial system while keeping liquidity in the banking sector above a minimum threshold. That is only possible if the bulk of the liquidity […]

Originally posted at FedGuy. Reposted with the kind permission of Joseph Wang. A Treasury buyback program today would be mechanically equivalent to quantitative easing and a tailwind…