Tag Archives: inflation

Is the US yield curve close to inverting – and does this mean a recession?

We have had a long period of economic growth since the great recession of 2009, leading many market commentators to fear a recession is overdue. One fairly reliable indicator of coming recession is an inverted yield curve – meaning that short term interest rates are above long term rates. This looks increasingly possible but is… Continue Reading

US inflation: still showing no signs of being a problem, let alone hyperinflation

Every year when the new MFin class starts, there is usually at least one person who asks the question: when will QE cause a big rise in inflation? The person is often from a hedge fund or trading background because that seems to be where this point of view┬áis most commonly found. The assumption is… Continue Reading

A simple but misleading model of inflation

A lot of hedge fund managers seem to believe that the Fed and other central banks that have been using unconventional monetary policy, specifically “quantitative easing” (see note 1), are dooming us to much higher inflation in future. Some believe the very large increase in central bank balance sheets will cause hyperinflation, economic ruin and… Continue Reading

The controversy over quantitative easing

Quantitative easing (QE) has become a highly controversial policy, particularly in the USA, where the Federal Reserve has been criticised by politicians, investors and academics up to and including the charge of treason. Yet the Chairman of the Fed, Ben Bernanke, is a highly respected former academic economist, a scholar of the 1930s great depression… Continue Reading