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Easy Money (3) – Fed Ignores Those Harmed by Policy

By John S. Tobey

With all the talk about the Fed’s easy money actions, there remains one subject that is largely ignored: Who’s paying for the Fed’s largess? With low interest rates, lots of money and good intentions (increase employment and bolster the economy), the Fed’s easy money policy seems like a win-win situation. The only “cost” appears... »

Easy Money (2-cont.): Fed Policy Understates Money Growth

By John S. Tobey

During the Fed’s easy money policy, official money supply growth looks moderate. Therefore, there seems to be little indication of high inflation risk. However, the easy money policy has caused money supply dislocations. When adjusted for these, money supply growth increases appreciably, thereby raising inflation concerns. Here’s the situation… This article is posted on... »

Easy Money (2): U.S. Inflation Now at 4% – How Fed Dismisses the Signs

By John S. Tobey

In “Easy Money (1): Fed Touts Flawed/Risky Rationale,” we discussed the Federal Reserve Open Market Committee’s (FOMC’s) weak rationale for easy money. Today, we’ll cover how the FOMC dismisses clear signs of 4% inflation. This article is posted on SeekingAlpha.com. »

Easy Money (1): Fed Touts Flawed/Risky Rationale

By John S. Tobey

Federal Reserve Vice Chairwoman Janet Yellen, attempting to explain the wisdom of the Fed’s easy money policy, instead exposed its weak reasoning. To understand what is going on, we need to come at it from three points of view: Easy Money (1) – Fed Touts Flawed/Risky Rationale Easy Money (2) – Fed Dismisses Inflation’s... »

PIMCO’s Bill Gross Cashes in U.S. Treasurys. What Should the Rest of Us Do?

By John S. Tobey

It’s official. Bill Gross is divorced from the U.S. Treasury. The PIMCO Total Return Fund, the largest U.S. mutual fund at about one-quarter trillion dollars, now holds no U.S. Government securities. What’s up? Is the U.S. about to be downgraded? Is it bankrupt? Or is this a political thing? None of the above, according... »

Avoid Mixing Political Opinions and Investing Decisions

By John S. Tobey

I am seeing more investors incorrectly use political opinions to substantiate their investing actions. Political beliefs are often emotionally charged, thereby skewing reasoning. The result: Poor investment decision-making. »

The Fed’s Unbalanced Decision: Stockholders Win, Bondholders Lose

By John S. Tobey

The Federal Reserve Open Market Committee decided to maintain the status quo (option #1 in the previous article, “Forecast for Bondholders: How the Fed’s Dilemma Will Affect You”). What does this decision mean for investors? »

Forecast for Bondholders: How the Fed’s Dilemma Will Affect You

By John S. Tobey

Previously, I discussed whether the Fed was paying attention to inflation’s apparent resurgence (“Tame Inflation Just Growled – Is the Fed Listening?”). Today, let’s talk about the box the Fed is in, what its choices are and how the direction chosen would affect bondholders. (more) This article is posted on SeekingAlpha.com »

Tame Inflation Just Growled – Is the Fed Listening?

By John S. Tobey

The Wall Street Journal’s lead article says it all: “Global Price Fears Mount” (By Brian Blackstone and Marcus Walker, January 24, page A-1). Rising inflation concerns have reached the “something must be done” stage. Everywhere except here in the US, that is. Now that anti-inflation actions (i.e., interest rate increases) are being discussed or... »

/Quick Point/ – Fed Succeeds by Talking – Growing Signs of Inflation

By John S. Tobey

The Federal Reserve (Chair Ben Bernanke, in particular) would like a tad more inflation and thinks its plan to buy bonds could accomplish that goal. Now there are signs that just talking about it has done the trick. Here are three examples: »

Bondholder Alert: Disconcerting News from the Federal Reserve

By John S. Tobey

Fed Vice Chair states the obvious. Two lessons learned: Easy money can lead to leverage and speculation Markets cannot be counted on to self-correct Wow! That reaction is not for the lessons. It’s for the admission that the Fed had to relearn them. US financial history is filled with examples. Indeed, the Federal Reserve... »

Which Way Is Inflation Headed? Experts Disagree, So It’s Time for a Third Opinion

By John S. Tobey

You’re traveling to an important destination, so you get both your computer-mapped route and your GPS directions. The problem is, they’re widely different. Now, what? Well, you get a third opinion that can be trusted. The same goes for inflation expectations… »

Fed’s Discount Rate Announces, “Investors, Time To Get Aboard!”

By John S. Tobey

EARLY RELEASE OF MONDAY, FEBRUARY 22, ARTICLE On Thursday (February 18), I wrote about three trends approaching (Indicators Have Shifted – New Investment Directions in the Wind). That same afternoon’s Federal Reserve announcement of a discount rate increase is just the spark we need. For a window on what could happen, let’s look back... »

Bernanke Wins! Now, What?

By John S. Tobey

The Senate confirmed Ben Bernanke’s reappointment, albeit with a record high 30 “nay” votes. So, is he now free to act independently? Or does the far-from-unanimous approval vote, combined with the on-going congressional efforts to trim the Federal Reserve’s powers, limit his actions? And what about that negative vote at the Federal Reserve Open... »

Triple Witching Week – Three Economic Issues Meet in Washington DC

By John S. Tobey

Forget Wall Street and Main Street. This week, it’s Washington DC and the US economy. Tomorrow night, President Obama’s State of the Union address. Tomorrow afternoon, the Federal Reserve’s Open Market Committee (FOMC) decision about interest rates. By week’s end (probably), the Senate’s vote on Ben Bernanke’s reappointment as Federal Reserve Board chairman. »

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