News
Associated Press | NY Fed confirms intervention in currency markets
The disclosure came a day after the Goup of Seven majore industrialized natiosn pledged in a statement to join in a coordinated effort to weaken the Janpanese yen. The yen has surged in the last week to post war record levels following the Japanese earthquake and tsunami.
WSJ | Supply Disruptions Pose Threat of Stagflation
A scramble for supplies prompted by Japan's crisis may add to the specter of stagflation stalking the U.S. economy.
MSNBC | Soaring Yen curbed after G-7 pledges to support Japan
Coordinated intervention in currency markets to support Japan’s recovery from disaster.
The Economist | Muddle, fuddle, toil and trouble
European leaders boldly decide to carry on muddling through.
Bloomberg | Japan May Need $500 Billion to Weaken Yen, Deutsche Bank Says
The yen’s weakness may be short- lived as Japan would need as much as $500 billion to intervene in markets just to match its previous efforts to curb the currency’s strength, according to Deutsche Bank AG.
Econ Comments
CNN: Money | Why the yen needs to be restrained
The dollar is going to keep getting sand kicked in its face till the U.S. economy finally flexes some job-creating muscle.
Washington Times | Why inflation hurts more than it did 30 years ago
Inflation spooked the nation in the early 1980s. It surged and kept rising until it topped 13 percent. These days, inflation is much lower. Yet to many Americans, it feels worse now. And for a good reason: Their income has been even flatter than inflation.
Ludwig von Mises Institute | Is QE3 Ahead?
Austrian School economists have often explained the business cycle using the metaphor of liquor or drugs. The expansion of paper money and credit gives a sense of exuberance, an economic high that leads to excessive risk taking and balloons of production. But it can't be sustained.
Minyanville | What the Fed Ignores When It Denies Inflation
The Fed likes to strip out the prices of things that are rising in price when it measures inflation, focusing on the "core rate" rather than the "headline rate."
Blogs
The Curious Capitalist | Is G7 yen intervention a good idea?
First of all, will the G7 action work? In the short term, probably. Joint action by major economies in currency markets has historically proven much more effective in achieving results than unilateral aciton by one cerntral bank.
WSJ: Real Time Economics | Higher Food Prices Likely Here to Stay
The world may need to get used to higher food prices,” IMF research department staff Thomas Helbling and Shaun Roache wrote in a new IMF article. “Policymakers — particularly in emerging and developing economies — will likely have to continue confronting the challenges posed by food prices that are both higher and more volatile.”
Econlog | Liquidity Traps and Unicorns
Once you admit that the central bank can cause inflation by expanding money growth, then you have admitted that there is a way out of the liquidity trap, in which case there is no trap.
