EconReporter

The floor system needs a cap on top of it. The sooner the Fed realizes it, the better they will be prepared for the coming financial turmoil.

In recent months, the Global Economic Policy Uncertainty index has risen to a level much higher than periods around the 911 Terrorist Attack or the 2008 Financial Crisis, hence the conclusion that the economic policy is unprecedently uncertain now. But here is why you might not have to worry.

Federal Reserve decided to cut rate by an supersized 0.5 percentage point. The decision finally ended the weeks-long market debate of whether the central bank would cut 25 or 50 basis points. One important thing, though, didn't reach the headline: The Fed has never been this "confused" about where the natural rate should be.

Quantitative tightening (QT)—a process central banks use to reverse years of liquidity creation from quantitative easing (QE)—is concluding in many advanced economies. The central banks are growing confident that reserve levels in their financial systems are nearing their endpoints. Where are the endpoints of QT and what come next?

Ben Bernanke has a new blog post on Brookings. The focus of the post is to explain "the large difference between the reactions of the Fed and the markets to the change in fiscal prospects since the election"

A new working paper from the IMF which tries to assess the impact of media sentiment on equity markets.

Olivier Blanchard a list of things that macroeconomists normally agreed on and need no further discussions.

President Trump's plan to install a "Shadow Chair" months before Jerome Powell's term ends will definitely reshape US monetary policy — but it could face a surprising challenge from Powell himself.

This week, the trio who was directly responsible for the decision to let Lehman fail – Bernanke, Tim Geithner (then New York Fed President), and Hank Paulson (then Treasury Secretary) – joined together at a panel held by Brookings Institution and spoke about the lessons they had learned from the crisis.

The Saturated Level of Reserves or efficient level of reserves, is the point which the opportunity cost for banks to hold reserves disappears, and became indifferent towards holding more reserves. The reserve demand curve beyond this point becomes close to horizontal.