Core Viewpoint - The article discusses the potential for unconventional measures by the U.S. government to lower long-term interest rates, which may be underestimated by the market consensus that primarily anticipates a reduction in short-term rates due to Federal Reserve rate cuts [1][2][3]. Group 1: Market Expectations and Government Actions - The prevailing market expectation is that even if the Federal Reserve initiates rate cuts, it will primarily lower short-term rates while long-term rates may rise due to inflation concerns [2][5]. - Peter Tchir argues that investors may not fully appreciate the government's commitment to lowering rates, which could include unconventional measures beyond traditional monetary policy [2][3]. - Potential unconventional measures could involve adjustments to the Federal Reserve's balance sheet, changes in inflation data reporting, and even re-evaluating gold reserves to achieve lower long-term rates [2][12]. Group 2: Economic Data and Rate Cuts - The article suggests that if there is sufficient economic data supporting significant rate cuts, market fears regarding long-term rates may not materialize [5][6]. - Tchir highlights that signs of economic weakness were evident before officials expressed disagreement over rate cuts, indicating that the rationale for lowering rates may be stronger than reflected in meeting minutes [5][6]. Group 3: Effectiveness of Traditional Monetary Policy - Tchir notes that the effectiveness of traditional monetary policy tools is diminishing, as relying solely on adjusting the federal funds rate has a long and variable transmission lag, making it difficult to assess its impact [7][9]. - Many entities have locked in long-term low rates since the zero interest rate policy era, reducing their sensitivity to changes in short-term rates, which further diminishes the effectiveness of monetary policy [9]. Group 4: Unconventional Policy Toolbox - The article outlines several unconventional policy options that the government might consider if traditional tools prove ineffective [10]. - One strategy could involve a significant one-time rate cut of 100 basis points, coupled with a commitment to maintain rates unless substantial data changes occur, aimed at quickly dispelling market speculation about future rate paths [11]. - Another approach could challenge the validity of inflation data, particularly regarding housing costs, to alleviate market fears about inflation and facilitate rate cuts [12]. Group 5: Specific Unconventional Measures - A key unconventional measure could be the reintroduction of "Operation Twist," which involves selling short-term bonds while buying long-term bonds to lower long-term rates [13]. - Other potential options include yield curve control (YCC) and re-evaluating U.S. gold reserves, which could generate significant accounting gains and provide funding for other initiatives [14][15].

Core Viewpoint - The upcoming Federal Reserve monetary policy meeting is raising concerns about the potential politicization of interest rate cuts and the independence of the Fed [1][2] Group 1: Market Expectations and Concerns - There is a prevailing market expectation that even if the Fed initiates rate cuts, it will primarily lower short-term rates while long-term yields may rise due to inflation concerns [1] - Concerns about a "politicized" rate cut may overlook the economic rationale for such a move, as sufficient data could support significant rate cuts without triggering panic in long-term rates [2] Group 2: Traditional Monetary Policy Limitations - The effectiveness of traditional monetary policy tools is diminishing, as changes in the federal funds rate have a long and variable transmission path, making their impact difficult to assess [3] - Many entities have locked in long-term low rates since the zero interest rate era, reducing their sensitivity to changes in short-term rates [3] Group 3: Unconventional Policy Options - The government may consider unconventional measures to directly intervene in long-term rates if traditional tools prove ineffective [4] - A potential strategy could involve a significant one-time rate cut of 100 basis points, coupled with a commitment to maintain rates unless substantial data changes occur [5] Group 4: Addressing Inflation Data - A strategy to challenge the validity of inflation data could involve highlighting discrepancies in housing cost calculations, which are currently inflating CPI figures [7] - The Cleveland Fed's new indicators suggest that real rent inflation has returned to normal levels, which could help mitigate market fears about inflation [7] Group 5: Operation Twist and Other Measures - Reinitiating "Operation Twist" could be a key method to lower long-term rates by selling short-term bonds and buying long-term ones, significantly increasing the Fed's holdings in the long-term bond market [8] - Other disruptive options may include yield curve control (YCC) and re-evaluating U.S. gold reserves, which could generate substantial accounting gains and shift market focus [9]

Core Viewpoint - The article discusses the book "The Hand of Money," which analyzes the role and impact of central banks in the global economy, particularly focusing on unconventional monetary policies and their consequences during financial crises [3][4]. Summary by Sections Book Overview - The book provides a deep analysis of the central bank's role in the economy, particularly during the 2007-2009 financial crisis and the COVID-19 pandemic, examining unconventional monetary policies like quantitative easing and negative interest rates [3]. - It highlights the effectiveness and shortcomings of these policies in stabilizing financial markets and stimulating economic growth, while also addressing unintended negative consequences such as debt accumulation and increased wealth disparity [3]. Author Background - Johan Van Overtveldt, the author, is a former Belgian Minister of Finance and has extensive experience in economic management and central banking policy [4]. - Stijn Rocher, the co-author, serves as a policy advisor to the Flemish Minister of Finance and holds a PhD from the University of Antwerp [5]. Key Themes - The book emphasizes the importance of trust in the functioning of central banks, drawing parallels to Confucian teachings on governance and the necessity of trust for effective monetary policy [14]. - It warns of the over-reliance on central bank policies since the Great Moderation era, introducing various "syndromes" that may arise from the misuse of monetary policy, such as the "Butch Cassidy Syndrome" and the "Michael Jackson Syndrome," which reflect the dangers of excessive debt and economic dependency on central bank interventions [15][16]. Conclusion - The book aims to demystify central banking and monetary policy, encouraging a better understanding of their complexities and promoting a more responsible financial system that serves society [16].

日本央行副行长内田真一：自全球金融危机以来采取的非常规货币政策的利与弊，将成为全球各国央行 面临的挑战。 ...