Wednesday, September 21, 2011

Ben Bernanke's 10 Minutes Off (Musical Tribute)

September 21, 2011
“Very Unusual” Fed Action Fails To Boost Animal Spirits: Dow Drops 285

While Operation Twist was widely expected, the MBS announcement was a bit of a surprise, as was the timing of the Fed's announcement, some 10 minutes after its normal 2:15 ET release.

The Fed's failure to meet its (self-imposed) deadline is "very unusual," Olson says, suggesting there was likely some last-minute wrangling over the wording of the release.

Ferris Bueller's Day Off

Ben Stein's famous monotonic lecture about the Hawley-Smoot Tariff Act was not originally in Hughes's script. Stein, by happenstance, was lecturing off-camera to the amusement of the student cast. "I was just going to do it off camera, but the student extras laughed so hard when they heard my voice that (Hughes) said do it on camera, improvise, something you know a lot about. When I gave the lecture about supply side economics, I thought they were applauding. Everybody on the set applauded. I thought they were applauding because they had learned something about supply side economics. But they were applauding because they thought I was boring...It was the best day of my life," Stein said.


nanute said...

What does the Fed's action do to short term rates? (Selling 400 billion of short term holdings and purchasing and equal amount of 6-30 year bonds.) Will this, in theory, drive short term rates higher?

Audrey said...

Nice take on the debacle.

Stagflationary Mark said...


In theory, selling 400 billion of short term holdings would drive short term rates higher.

In practice, there are apparently plenty of buyers to keep short term rates low even without the Fed's help. The 3-month treasury is yielding 0.01% right now.

That alone should spook the stock market.

I'm not really sure that the Fed is doing anything that the market itself wouldn't be doing. I was certainly willing to buy long-term bonds (TIPS) in February. It wasn't because I thought the Fed would be buying them someday. It is and was my plan to hold them to maturity. Once I bought, did I really care what the Fed did?

Also consider this. What if the market thinks 3-month treasury bills are still a bargain at 0.0%? 0.0% is the floor. What would the rate be if the floor did not exist? Who knows?

Stagflationary Mark said...


Look, it's real simple. Whatever mileage we put on, we'll take off. - Ferris Bueller