Notes

Is Bond Market Liquidity Really Falling?

2018-04-04T12:53:43-07:00

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.

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The Irony of Bitcoin

2018-04-04T13:09:37-07:00

Dr. Tiemann reviews how Bitcoin, the new “crypto-currency,” works and shows that, while designed to not require the participation of banks or other trusted financial intermediaries, nevertheless, Bitcoin does require a form of verification that can be established by ordinary people, which is not yet available.

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Competition

2018-04-04T13:14:06-07:00

Dr. Tiemann’s note on market competition. He writes: “It’s an attempt to dig a little deeper than the stylized models we study in economics courses, and think a bit about how competition operates in the real economy.”

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Growth in the Age of Cheap Capital

2018-04-04T13:41:19-07:00

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.

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It Isn’t a Forecast

2018-04-10T00:57:33-07:00

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.

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The Store of Value Under Siege

2018-04-05T13:27:13-07:00

What is money? You might as well ask, “What is time?”  It’s one of those concepts we all think we understand until we really examine them. After all, we use money in its various form to buy things every day. But where does it come from? What does it represent? And most important of all, what stands behind our confidence that if we use our money to pay for something, the seller will accept it? This note answers all of those questions, and more.

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The Launch of the QE 2

2011-01-27T14:12:41-07:00

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

2018-04-13T12:29:06-07:00

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.

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Liquidity and the Markets

2018-04-13T12:34:13-07:00

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.

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Lessons from History

2009-05-07T22:08:32-07:00

 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.