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Should The Fed Care About Any Of This?
I imagine that innumerable newsletters are writing the equivalent of “the markets are being roiled by volatility.” (When things are being roiled, you know it’s bad.) With the immediate disclaimer that I do not have much in the way of useful market data, I do not see anything that the Fed should immediately care about. What matters to the central bank is that credit is available to finance capitalist activity. This means that the trip wire for a crisis that it will care about is disruptions to core funding markets. These are money markets, interbank markets, and wacky things like cross-currency basis swaps and ... (full story)