OK, then the repo market is a “bank has bond holdings and sells them short term for reserve cash then buys them back in 24 hours” type thing? That I sorta get...but the N.Y. Fed has to get the cash to buy the bonds from somewhere, so sort-term QE I guess? (Money/”M3” “creation/printing”). Also, what is your opinion on the “2% inflation target” shouldn’t it be “0%/stable prices”, or does that mess with the “full employment mandate”? I see 5-6% annual inflation in what I buy when they shoot for a “2%” “core” rate, so that combined with 1%-2% (at best) MM and CD rates as screwing the common “Main Street” man & woman.
Real inflation rates?: http://www.shadowstats.com/alternate_data/inflation-charts
Or do you think Jim W. is way off?
0% is too difficult to hit. Their price measurements have a lag. Deflation is bad. It's easier to just try to target a low, positive number.
I see 5-6% annual inflation in what I buy
What are you buying?
Or do you think Jim W. is way off?
Yes, his imaginary calculations are way, way off.
“OK, then the repo market is a “bank has bond holdings and sells them short term for reserve cash then buys them back in 24 hours” type thing? “
Yep.
“That I sorta get...but the N.Y. Fed has to get the cash to buy the bonds from somewhere, so sort-term QE I guess?”
The Fed creates a cash balance to exchange for the bonds. That cash then “disappears” when the Fed hands the bonds back to the banks. It’s converting illiquid bonds into liquid money for the life of the repo.
“Also, what is your opinion on the “2% inflation target” shouldn’t it be “0%/stable prices”, or does that mess with the “full employment mandate”? “
IMO it comes from the full employment mandate- something that Congress has ordered the Fed to aim at. If we still had the gold standard I think they’d have to go for price stability.
“I see 5-6% annual inflation in what I buy when they shoot for a “2%” “core” rate,”
In the view of Milton Friedman and the Quantity of Money school, inflation is a purely monetary phenomenon that will cause a rise in all prices, not just some prices.
Prices rise (and fall) for all sorts of reasons having nothing to do with the quantity of money, so the prices of familiar items isn’t always a reliable guide.
If we have another inflation like the 1970s you will spend your money on hard goods as fast as you get it. You’ll know there is inflation. Everyone will know.
“Or do you think Jim W. is way off?
I wouldn’t dismiss Williams. Interest rates aren’t including any inflation premium at all. So if he’s right on inflation it would pay to borrow long and pay off the loan in depreciated dollars.