Janet Yellen’s Debut and the Cause of Low Interest Rates

From Janet Yellen's first Congressional testimony as the new Chairman of the Federal Reserve: "The fundamental reason we have low interest rates is because there is a glut of savings relative to the demand for those savings." Really? Would you like to test that theory? Pull off the easy monetary policy - the bond buying - the zero interest rate Fed Funds policy - and let's see where the "natural" rate goes ... The idea that the Fed should manipulate the basic interest rate to generate … [Read more...]

The Wolf of Wall Street Reviewed

I read Jordan Belfort's book the first week that it came out five or so years ago. I knew immediately that the talk of it turning into a movie would happen, for the book itself read like it was written to be put on the screen. Here was a guy convicted in one of the largest white collar crime cases in history, and a 300-page book barely made mention of what he did for a living (legally or illegally). The book read from cover to cover about the crazy shenanigans they did when they WEREN'T … [Read more...]

The Rational Optimist Reviewed

The Rational Optimist is a rare find for those who love markets, love history, and love reading. Few books you will ever read combine the historical depth that this gem of a find from Matt Ridley has, and yet also challenge your thinking in the way he does. I am a lover of markets and one who finds the perpetual pessimism often permeating amongst those of a like mind to be, well, unacceptable. What Ridley does in this 350-page beauty is explain why, and do so in such a manner that not a … [Read more...]

The Fed Chooses Enabling over Tapering

The first thing I will say is that I am not one of those "the Fed is the devil" type of people. There are legitimate criticisms of the Federal Reserve out there, and there are irrational ones. I am critical of present monetary policy, but I am not critical of the motives of Chairman Bernanke, who I believe to be consistently applying the principles he sadly believes in. With that said, the Fed's actions yesterday were appalling even for this Fed. In taking three months to flat-out tell … [Read more...]

Lehman Five Years Later

Five years ago today Wall Street lost one of its staple investment banks to bankruptcy, and Main Street woke up to the reality of the financial crisis. The American economy had been in a financial crisis for at least a year, but it was the Lehman bankruptcy filing this fateful weekend that caused push to come to shove. As has been amply recorded, Lehman's bankruptcy led to Merrill Lynch's panic sale to Bank of America, which led to the Fed bailout of AIG, which led to a massive hedge fund … [Read more...]