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Quantitative Easing Round Four

A new round of Quantitative Easing began yesterday when the Fed announced that it would create $60 billion a month to buy US government securities. Although I have long expected the resumption of QE, I find the suddenness and size of QE4 startling.  It could signify the Fed is aware of a grave problem somewhere in…
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Expect More Rate Cuts

Credit Growth in the United States has been the most important driver of economic growth for decades, so it is important to monitor it closely.  If it expands by less than 2% a year (adjusted for inflation), the economy goes into recession.  Therefore, when credit growth is weak, the Fed is forced to loosen monetary policy to…
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Interview: The Future Of Monetary Policy

I recently discussed the future of Monetary Policy with Hunter Thompson, the host of the Cash Flow Connections podcast.  It was an interesting and timely conversation. This week, the Fed injected more than $125 billion of liquidity into the financial markets and cut the Federal Funds Rate by an additional 25 basis points. Last week, the European…
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Dalio vs. Mauldin: The Great Debate – Part 3

Ray Dalio is the founder of Bridgewater Associates, the world’s largest and most successful hedge fund.  In May, he published a paper called “It’s Time to Look More Carefully at “Monetary Policy 3 (MP3)” and “Modern Monetary Theory (MMT)”.   In that paper Dalio defined MP3 as “fiscal and monetary policy working together, with fiscal policy producing…
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