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  • Is China Sparking An American Renaissance? [View article]
    With these declining wages comes the erosion of middle class purchasing power, so who is going to be buying enough stuff to support earnings necessary for the return on capital described? Without the traditional broad base of US middle class buying power, will there be adequate aggregate demand to forestall deflationary pressures? What sustains growth in this "renaissance" scenario?
    Mar 2, 2014. 04:34 AM | Likes Like |Link to Comment
  • Is The Bernanke Bull Market Ending Along With The Chairman's Departure? [View article]
    Thank you for another insightful and thought provoking analysis.

    What in the administration's message would prompt the banks to sell gold in particular?

    If the president signaled a less accommodative and more regulatory future for the banks, why not choose to liquidate equity positions before Fed funds dry up?
    Aug 21, 2013. 03:22 AM | Likes Like |Link to Comment
  • Understanding The Schizophrenic Fed's Risk-On / Risk-Off Messages  [View instapost]

    Thanks for another excellent article. Can you clarify how primary dealers can be holding both excess reserves and be using Fed QE money to drive up equity prices? You mention that the Fed conducts QE through "a credit to excess reserves" of primary dealers, and later explain that "the Fed's QE has not been inflationary as the new money has not moved into the broader economy. Rather it has remained trapped in excess reserves"

    I'm not clear on how the Fed's money could be ending up both in reserves and in the market. I am not suggesting the premise is incorrect, just that I don't understand the mechanism by which Fed money ends up directly in the equity market while reserves are at these elevated levels.

    Jun 29, 2013. 06:04 AM | 1 Like Like |Link to Comment
  • What's The Message In The Ongoing Slide In Inflation Expectations? [View article]

    You comment: "(I know the Fed is not buying stocks directly but the people who owned the bonds the Fed buys receive the Fed's cash and have to reinvest it somewhere and a lot of it is going into the stock market (the definition of a bubble))"

    But if the Fed is buying from Primary Dealers, and if bank reserves have reached an all-time high, where is this money coming from that is driving up equity markets? No doubt equity prices seem inflated compared to fundamentals, but If Fed money is in a liquidity trap evidenced by both high bank reserve levels and low velocity of money, what is inflating this 'bubble?'
    Jun 11, 2013. 12:19 AM | Likes Like |Link to Comment
  • Market Rally A Function Of Liquidity And Speculation [View article]
    Excellent article, thank you. Can you clarify where this liquidity is coming from that's driving the market? Conventional wisdom says its QE, but with data suggesting Fed money is trapped in historically high bank reserves, low bank lending rates, declining M2V, and retail investor "cash on the sidelines" what is the source of liquidity behind Equity price inflation, in your opinion?
    May 16, 2013. 11:53 PM | Likes Like |Link to Comment
  • The Bernanke Agenda - It Isn't What You Think It Is [View article]
    Joseph, thanks for your article. If Fed QE funds are trapped in bank reserves, then what liquidity is fueling the rise in equity prices? If there is "cash on the sidelines" and Fed money trapped in reserves, where is the money coming from that is driving the equity markets up?
    May 15, 2013. 03:01 PM | Likes Like |Link to Comment