"Twin Deficits" Won't Tank the Dollar. Many analysts have been thinking and writing about the "twin deficits" and whether the record-breaking size of those two deficits, combined, means the US dollar is about to plummet versus other currencies.
One of the key decisions President Biden will make later this year is who is going to run the Federal Reserve for the next four years... We think the choice will ultimately come down to two people: Roger Ferguson or Jerome Powell.
The “Fake Tight” Labor Market. Is the job market tight, or not? We think the best way to describe it is “fake tight.” ...The key problem with the labor market right now is that the government is still giving out unemployment benefits far in excess of what the situation demands.
Taper Tantrum Two? However, with so much liquidity in the financial system, we are skeptical that a policy shift toward tapering would create the same kind of market response for a few reasons. First...
There’s Nothing Normal About this Recovery... In fact, trying to compare the current rebound to historical events minimizes the pain that COVID-related and government-mandated economic shutdowns have caused...At the same time, giving credit to government spending for creating the current "recovery" is simply not true.
Inflation Revisionism...the "revisionists" say that the inflation of the 1970s was good for many people. They argue that home-ownership rose, student debt got wiped out, and inflation reduced the value of the national debt. In other words, if you can see these benefits, why don't we do it again?
A Question for the Fed It's not a surprise. Inflation is running hot. But, is it transitory and temporary, or is it real and here for the longer term. How hot will the Federal Reserve let it run, and for how long? When does transitory and cyclical become "secular" and "serious"?
Unsustainable. The problem is that the massive government “stimulus” checks have put the economy in a strange position, where retail sales are far above where they would be if COVID had never happened, even as the production side of the economy remains relatively weak.
Biden and Powell vs Summers and Dudley...it's between policymakers who want to go full steam ahead with as much fiscal and monetary "stimulus" as possible and center-left economists who worry about the economic effects of over-stimulating the economy.
Resisting the Budget Blowout....The best bet now is that spending and taxes both go up, but not nearly as much as President Biden or the far-left has asked for. Hold onto your hats, it's going to be a wild ride.