Don't invest based on FOMC Member Projections

FOMC Member Projections - March 19, 2014

FOMC Member Projections - June 18, 2014

FOMC GDP Forecasts - Lowering Expectations (2012-Present)

Baseline thinking for central bankers is to think of the economy as a metronome: self-correcting and needing a bit of help to evoke confidence and spur demand. There is an a priori philosophical reluctance to view the economic system as an organism that is broken or sick. Moreover, as stated by David Fields in his paper on Dollar Hegemony,

the role of the US dollar in international markets, and the advantages that come with it, are the spoils of structural power. The provision of this asset allows the United States to become the source of global demand, and to insulate itself from fluctuations and contradictions of perilous cumulative disequilibria that may arise in the world economy. The US dollar enables the United States to set the global social, political, and economic conditions, within which the transmission of misery (contagion) between countries, and between global and national levels, is essentially regulated.

We have a recovery of sorts but its sustainability must be called into question. Nearly six years after the Global Financial Crash, the economy has not bounced back like a metronome and the deficiency of the global economic model, being all the more reliant on financialization, off shoring, low cost carbon based energy inputs, and the promise of so-called free trade agreements doesn't address the fact that there is no mechanism to recycle current account surpluses. The mere fact that financial market volatility is at a multi-year low is not reason for complacency. 

References:
Fields, David (Forthcoming), "Dollar Hegemony," Edward Elgar Encyclopedia on Central Banking, edited by L.P. Rochon et. al, Edward Elgar.

William White on Central Banking... (Not a Science)

Disclaimer: I don't subscribe to McAlvany Financial's advocacy of gold and their tendency to conflate (all forms of) government debt with household debt. Having said that this shop has interesting guests and William White --currently at the BIS and formerly at the BOC and BOE-- is one worth listening to.

55.6% of Energy Produced is Rejected

Because it is thermal energy that cannot be readily utilized yet the reality that the energy needs of the global populace are increasing is lost on those who cannot grasp the laws of thermodynamics and the systems dynamics of climate modelling.

Russel Napier on Turkey

"This is not Hong Kong or Latvia"

Related to the FED increasing its balance sheet read Frances Coppola's "Banks Don't Lend Out Reserves" and pay attention to Lee Adler's comments as they add to the understanding rather then obfuscate and deflect as with most of the discourse on the web.

Monetary Policy Report Press Conference - January 22, 2014

Webcast of this morning's press conference by Bank of Canada Governor Stephen S. Poloz and Senior Deputy Governor Tiff Macklem about the Monetary Policy Report.

• Of note, at about 11 minutes Tiff Macklem responds to a question about a soft landing in the housing market.
• At about 24 minutes Stephen Poloz is asked about how to moderate risk in the housing market (and by extension in the financial sector) given the reluctance to cut the policy rate.
• And at about 27 minutes Stephen Poloz is questioned about the Canadian dollar dropping 10 cents in relation to the US dollar since his tenure began.

Related post: BOC's benchmark policy rate to continue flatlining