| Investment Manager | Fund Name |
| BlackRock Advisors, LLC | Master Institutional Portfolio Master Money LLC Master Premier Institutional Portfolio |
| BlackRock Fund Advisors, LLC | Money Market Master Portfolio Prime Money Market Master Portfolio |
| BlackRock Institutional Management Corp | BlackRock Liquidity Funds: FedFund |
| BofA Advisors, LLC | BofA Money Market Reserves |
| Charles Schwab Investment Management, Inc. | Schwab Advisor Cash Reserves Schwab Government Money Fund Schwab Money Market Fund |
| The Dreyfus Corporation | Dreyfus Institutional Preferred Money Market Fund Dreyfus Treasury & Agency Cash Management General Money Market Fund |
| Federated Investment Management Company | Federated Treasury Preferred Money Market Fund |
| Fidelity Investments Money Management, Inc. | Fidelity Cash Central Fund Fidelity Securities Lending Cash Central Fund |
| Fidelity Management & Research Company | Fidelity Prime Fund Fidelity Retirement Money Market Trust Fidelity Treasury Portfolio |
| Goldman Sachs Asset Management | Goldman Sachs Financial Square Treasury Obligations Fund |
| Invesco Advisers, Inc. | STIT Treasury Portfolio |
| J. P. Morgan Investment Management Inc. | JPMorgan U.S. Treasury Plus Money Market Fund |
| Legg Mason Partners Fund Advisor, LLC | Western Asset/Institutional Cash Reserves Portfolio Western Asset/Institutional Government Reserves Portfolio |
| Morgan Stanley Investment Management, Inc. | Morgan Stanley Institutional Liquidity Fund Prime Portfolio |
| Passport Research, Ltd. | Edward Jones Money Market Fund |
| RBC Global Asset Management (U.S.) Inc. | RBC Prime Money Market Fund |
| T. Rowe Price Associates, Inc. | T. Rowe Price Reserve Investment Fund |
| U.S. Bancorp Asset Management, Inc. | First American Government Obligations Fund |
| Wells Fargo Funds Management | Wells Fargo Advantage Cash Investment Money Market Fund |
Will any of Ben's tools actual work when price inflation is the 800 lb gorilla that can no longer be ignored? If nothing else, it's merely another way to subsidize the financial industry with favorable prices and commissions for the primary dealers that operate as counterparties.
BobE,
ReplyDeleteIn a strange sense, Bernanke is correct. He won't even need 15 minutes. He will need one second to decide to stop pushing credit into the economy. Once he does, the rate of credit growth drops to zero and a lot of faux-economic activity instantly stops and begins to reverse. Ultimately, inflation is always caused by and up to the central banker's discretion.
But I doubt that is what he meant.
I've been observing the debate between the deficit hawks and doves, modern monetary theorists and Austrians, and c.. Technically, as I understand it, the MMTers are correct - the US does not need to sell Treasuries to fund itself. The $s are blinked into existence by the Congress, accounted for by the T, and laundered by the FED.
ReplyDeleteVery well.
Yet it intuits sensibly also that the jig is up at some critical point where some future creditor/vendor finally decides that dollars have a net present value of zero; their collective worth having been erased by the future infinitude of their number required to pay off [fill in rant grist here].
I looked up the price of bread in various places, and found a value of $0.05 for 1905; $.50 for 1980, and $5.00 for 2011. That last was at WFMI so the weights and compositions are probably not apple-apple, but this is an anecdote, not a dissertation. The basic grocery loaf probably has another year or two.
Yet the value-in-time compression remains illustrative. 75 years for the first order of magnitude, but only 33ish for the second. Cut that in roughly half again, and you get $50.00 Wonder in ~ 2027.
Today's 16-18-year olds have no memory of buying $1/gallon car fuel. I have no memory of buying $0.10 cigarettes. It is impossible to calibrate the pain-to-action threshold of an abstraction of 310 million souls, but it seems to me there is something worth thinking about in the idea of logarithmic price inflation v. the pace at which living memory extinguishes.
Perhaps the perpetual motion $ machine has cranked merrily on because it steamrolls wealth in slow motion, on a speedometer whose red-line is one generation. Which would imply that either a whole bunch of boomers are going to have to come up missing pretty soon, or the developed world is going to have a whole new set of data at which to marvel: what happens when a single electorate collectively experiences a power of 10.
Hey, Ellis. Not sure if you read my comment on MMTers at the EPJ main site the other day. Based on your observation of the creditor/vendor/printer coming to Jesus moment, I think we're on the same page. Another way to think about it is that the fat tail risk of currency failure exists and, therefore, affects interest rates, which is something MMT doesn't seem to acknowledge (I could be wrong as I have not read enough about it).
ReplyDeleteOnly the possibility of revenue derived from productive labor (taxes on private sector, including the plunder of war]) will stop interest rates from approaching infinity, which is the point at which currency fails. If printed money is backed by no credible promise of tax revenue, then coercion and price controls can work for a time, but they ultimately stop working. Even in places where noncompliance means death, such as N. Korea, black markets flourish.
Your last paragraph is poetry and captures the problem well. Notwithstanding that it's still a drag on productivity, persistent, but relatively stable inflation can be withstood by people, within certain institutionalized (sic Fed) operational bands. It's when those bands are breached and corrective mechanisms are impaired that the volatility of all metrics explodes with the great potential for social unrest.
I think we narrowly escaped in the late 1970's a fate we will soon have, the current pessimism due to the very problem you touch on. Personal memory (especially of pain) is more real and has a greater effect than an abstract appreciation of someone else's experience. The 1970's ruling class was still dominated by people that had a personal memory of WWII, the Depression and German hyperinflation. Pedigreed hard money advocates such as Hayek were still around and listened to. Those people are now dead or in homes (sic marginalized, a la Volcker).
Should a financial Armageddon ensue, at least we could take comfort that there will be some degree of restraint as long as those with a personal memory of it have a role in the puppet show.
Taylor, I think you're correct: the Fed flew under the radar until a few years ago, before which it could add or withdraw liquidity largely unnoticed by most. Now that even mom and pop know to BTFD, with the Ponzi is at this elevated stage, the mere hint of non-escalation will send the heard in search of a risk exit. That's why I think any slowing will be done under the radar. The mere numerousness of Fed "tools" might be subterfuge for this possibility. POMO on one side, raise IOER on the other, all the while stacking up reserves for banks to be paid interest on. Who knows. Sometimes I think they haven't thought ahead of tomorrow's POMO.
ReplyDelete