Dr. Tiemann takes a look at three specific instances of actions relating to U.S. industry which suggest that Trump is making a dramatic shift in both the style and substance of national industrial policy and answers the question of what these say about the type of Industrial Policy we can expect to see out of the Trump Administration. (Click the image to read Dr. Tiemann’s viewpoint on this topic.)
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 purpose of Monetary Policy in the context of the functioning of our banking system, the history, thinking and goals that animate the Fed’s actions.
Overturning NFL Commissioner Roger Goodell’s imposition of a four-game suspension on Patriots uber-star quarterback Tom Brady provides organized labor with a bigger gain from the ruling than Patriots fans received. Leaders of organized labor should see in the ruling a strengthening of both the role of collective bargaining agreements and protections for workers facing arbitrary and capricious workplace disciplinary action. The Patriots’ apparent use of under-inflated footballs nevertheless pumps up existing collective bargaining principles and protective statutes in employment law. Read more at the link.
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 a timely manner.
In this note, Dr. Tiemann analyzes the assertion that Dodd-Frank financial reform legislation, passed in the aftermath of the financial crisis, has contributed to a decline in the liquidity in the bond market. Dodd-Frank set out to moderate the risks that banks might take with their balance sheets but Wall Street has tried to argue that the law’s restrictions impair the profitability of bond dealing, resulting in declining liquidity of the bond market and therefore could cause a market disruption. Dr. Tiemann utilizes the underlying data of bond trading before and after to evaluate Wall Street’s assertion and used the show boxplot to show how bond trading liquidity has increased since Dodd-Frank was implemented.
This note helps readers understand how corporate management thinks about and makes deliberate choices about their capital structure, depending upon market conditions, discount rates, level of employment in the economy and other factors. A refresher on Modigliani and Miller, and assessment of why companies appear to be doing better yet unemployment remains high.
The Federal Reserve has a dual mandate to both maintain price stability and reasonably full employment at the same time. This differs from that of its counterparts in other countries, which focus primarily on fighting inflation. Because of this, the Fed’s monetary action are often overtly counter-cyclical, raising or lowering interest rates or tightening or loosening money and credit to try to fuel or slow economic growth. Read this note to understand the Fed’s role and reasons for its actions better.
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.
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 can prevent deflation.