Wednesday, July 3, 2013

CNBC's Kelly Evans shares her thoughts on establishing a futures market on the FOMC.

CNBC's Kelly Evans shares her thoughts on establishing a futures market on the FOMC.
what are you watching this tuesday morning? well, as much as you are fascinating with the markets, people want to know what happened. we have been talking about the weird signals coming out from the ma22nd, whether it is a speed up or slowing or square from the fed. ing to bring us to a topic here of what is happening with the prediction market and gdp. can do the gdp bonds, and a lot of people out there will be familiar in terms of this debate with the nominal gdp. since may 22nd, again, some confusion to some extent in markets about whether what we have seen the fed spurring freakout in credit markets or equities or responding to improvement of conditions on the ground. trying to get the signal from the noise here would be much eathere were a place the look to saying that the market participants see the growth and increasing over to the longer term or decreasing? a couple of ways to do that is that you can, again, set up futures in the gdp linked bond or do a prediction market. one of the guys calling for this is noting that if it is done right, the markets, themselves could more smoothly guide the taper and there wouldn't be any friction back and forth between what one group is thinking and another at the fmyc, and another fed notes that without this type of thing in place, we are still flying blind. that certainly seems to be the case thinking about the market activity over to the last six weeks. and guys, the jury is whether this is the right thing for the fed to target gdp instead of inflation, and the tacit market. and there is a strong case for being set up a market to get this information out there, and then we would know with clarity, are we taing about the growth or not. well, to some extent. helping people know what people are thinking. and better than what finesfelt came out. it is better when he is in the journal, and jim, you didn't like the piece? well, what you said is more formative and gun to the head -- and gun to the head may not be the right thing. and his response would be if there is a supply shock here happening to the economy, it is not something that you will necessarily as the fed respond to, but it would help to have clarify from the market itself. i could not agree more.
The Transcript could use a bit of work BW

Tuesday, July 2, 2013

A Post on Private Currency and the Zero Nominal Bound

Miles Kimball reposted a piece from JP Koning that cited a couple of my posts, here and here.

Koning argues that efforts by a central bank to suppress  the use of hand-to-hand currency when faced with a zero nominal bound really just proxy what private currency-issuing banks would be compelled to do in a similar circumstance.  

Thanks for the citations!

P.S.  Getting ready to return home to Charleston from the WEA meetings in Seattle.   Seattle was terribly hot at 82 degrees and 40% humidity.  (Yes, fellow denizens of the Lowcountry, that is what people around here are saying.)  I presented a paper at a session on Nominal GDP targeting.   Scott Sumner, David Eagle, and Evan Koenig also presented.  Even better than the session was lunch with them after, and then dinner with Scott and David.