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Tag Archives: Quantitative Easing

Emerging and Frontier Markets: Policy Tools in Times of Financial Stress

By Dimitris Drakopoulos, Rohit Goel, Fabio Natalucci, and Evan Papageorgiou عربي, 中文, Español, Français After the unprecedented hit to economic activity in emerging market economies from the COVID-19 pandemic, their economic output is projected to shrink by 3.3 percent in 2020. Central banks across emerging markets responded swiftly and forcefully with an unprecedented response of their own. They did this by using a variety of policy tools and, to a great extent, helped stabilize markets and...

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“Monetäre Staatsfinanzierung mit Folgen (Monetary Financing of Government),” Die Volkswirtschaft, 2020

Die Volkswirtschaft, 24 July 2020. PDF. Clarifying the connections between outright monetary financing, QE, the distribution of seignorage profits, the relationship between fiscal and monetary policy, and central bank independence. Abstract: Wenn Parlamentarier höhere Gewinnausschüttungen der Nationalbank fordern, Kritiker im Euroraum mehr «Quantitative Easing» oder Helikoptergeld verlangen und andere Stimmen monetäre Staatsfinanzierung monieren, dann steht die...

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“Wenn die Notenbank den Staat finanziert (When the Central Bank Finances the State),” FAS, 2020

FAS, 31 May 2020. PDF. Monetary deficit financing is the norm—after all, central banks distribute their profits. Monetary financing occurs in the context of regular open market operations and QE and, hyper charged, with helicopter drops. The question is not whether monetary policy should finance the government, but why it does so, and to what extent. Fiscal and monetary policy are inherently connected; what constitutes monetary policy is defined by objectives....

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How the Bank of Canada’s balance sheet went from $118 billion to $440 billion in eight weeks

Ever since the coronavirus hit, the Bank of Canada's balance sheet has exploded. In late February its assets measured just $118 billion. Eight weeks later the Bank of Canada has $440 billion in assets. That's a $320 billion jump! To put this in context, I've charted out the Bank of Canada's assets going back to when it was founded in 1935. (Note: to make the distant past comparable to the present, the axis uses logarithmic scaling.) The rate of increase in Bank of Canada assets far exceeds...

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Stephen Poloz needs to be honest with Canadians about negative interest rates

To soften the blow of the COVID-19 pandemic, the Bank of Canada is running what it sees as an expansionary, or loose, monetary policy. I think an expansionary policy makes a lot of sense. The problem is this. The Bank of Canada has several tools it can use to loosen. Some are better than others. But it has stopped trying to use its best tool.What is its best tool? Well, there are three ways that the Bank of Canada can loosen monetary policy.Say interest rates are at 4%. Stephen Poloz, the...

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Bubble Watch: Warning Signs That The Everything Bubble Will Burst in 2018

I believe 2018 will be the year inflation arrives. The reason, as I’ve noted throughout mid-2017, is that multiple Central Banks, particularly the European Central Bank (ECB), Bank of Japan (BoJ) and Swiss National Bank (SNB) have maintained emergency levels of QE and money printing, despite the fact that globally the economy is performing relatively well. All told, in 2017 alone, these Central Banks will printed over...

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Fed’s Asset Bubbles Now At The Mercy Of The Rest Of The World’s Central Bankers

“Like watching paint dry,” is how The Fed describes the beginning of the end of its experiment with massively inflating its balance sheet to save the world. As former fund manager Richard Breslow notes, however, Yellen’s decision today means the risk-suppression boot is on the other foot (or feet) of The SNB, The ECB, and The BoJ; as he writes, “have no fear, The SNB knows what it’s doing.” As we reported previously, In...

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The Secret History Of The Banking Crisis

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for? - Click to enlarge It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken...

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SNB Balance Sheet, Markets and Economy: As Good As It Gets?

Late 2014/early 2015 will perhaps be the closest to a real recovery from the Great “Recession” we shall see in this cycle.  Q1 2015 marked the peak year over year growth rate of GDP in this recovery at 3.76%. That rate compares quite unfavorably with even the feeble post dot com crash recovery high of 4.41% in Q1 2004. It doesn’t even come close to the routine 4-5% year over year growth rates we saw in the late 90s....

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Central Banks Buying Stocks Have Rigged US Stock Market Beyond Recovery

 The following article by David Haggith was first published on The Great Recession Blog: US Federal Reserve Eccles Building - Click to enlarge Central banks buying stocks are effectively nationalizing US corporations just to maintain the illusion that their “recovery” plan is working because they have become the banks that are too big to fail. At first, their novel entry into the stock market was only intended to...

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