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Sunday, September 23, 2012

Fisher And White

These are both really good reading if you want to think about our current course. Richard Fisher's "Sailing" talk is here. Bill White's August paper is here, in a slightly different format than I first read.

I particularly recommend White's paper. I believe that the BIS framework is more accurate than the Fed framework, largely because the Bank of International Settlements has an ingrained habit of looking at the financial system of the globe as a whole. 

There is no possible way that the Fed's recent policy shift doesn't create new instability. There is no way to tell what will come of it, but it is highly unlikely that it will actually accomplish the stated goals. It may well turn out to increase aggregate borrowing and reserving costs in the US.

"...highly unlikely that it will actually accomplish the stated goals."

Understatement of the year nominee, right there. I would prefer not to think about our current course, but I think I'll have to. Seems to me the financial and political elites are stuck in coffin corner; there's no point in wondering whether the crash will come any more, only when and and what form it will take.

Welcome to the dark side, Neil. Long time coming... ;-)
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