Research & Analysis
I publish longer research pieces and shorter notes here, mostly about monetary policy and the institutions through which it operates.
Austrian, institutional, and public-choice economics shape the questions I ask. I test claims with standard econometrics in R, using public data so the results can be reproduced. For each call, I write down what I expect, how markets are pricing it, and what would make the call wrong. I grade it when it resolves. Revisions remain visible, with dates on the edits. I also keep results that go against my claims, so readers can check my record.
Research Thesis
Long-horizon projection models assume stable growth-determinant relationships, but the 2008 crisis, the strongest post-war shock to rich economies, provides a test case for this assumption.
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Javier Milei won by promising to abolish the central bank and scrap the peso. He kept neither, and now runs the most hands-on monetary regime in the hemisphere. Inflation still collapsed, from 25 percent a month to near 2. The revolution he sold did not do it. A budget surplus propped up by elections and borrowed dollars did, lashed to an exchange-rate band that floats on the very inflation it is meant to kill. The win is real. Nothing makes it last.
The largest sustained departure from rules-based monetary policy in the post-Volcker era was followed by the highest inflation since 1983. This deep dive measures the distance the Federal Reserve strayed and tests whether that distance predicted what came next.
Treasury bought back $15.3 billion in long-term debt, yet long-term yields rose. The curve flattened, but does that show the buybacks lowered borrowing costs?
The ECB warns that stablecoins will drain Europe's bank deposits. The entire euro-stablecoin float is 0.007% of the deposit base, and MiCA has already made it deposit-neutral by design. The instrument that could actually move a trillion euros is the ECB's own digital euro, and the ECB sets its dial.
In four weeks the market repriced the Federal Reserve's policy path four times, on a hot CPI, a hawkish projection, an energy-driven PCE print, and a payroll miss. News about the economy moves any expected path. The rest of the movement priced something else: how a committee bound by no rule would choose to read that news. Data dependence is the honest name for discretion, and the honesty does not lower its price.
The Bank of Japan is the last major central bank still exiting rate suppression. Its expected June move to 1.0%, the highest since 1995, matters less for Tokyo than for everyone who borrowed cheap yen.
The ECB meets on June 11. Markets are pricing a rate hike at near certainty. The inflation numbers justify it on the surface. The problem is that this inflation does not come from too much spending, and no rate hike can close the Strait of Hormuz.
In March 2021 the Federal Reserve projected that its own policy rate would end 2022 near zero. It ended above four percent. Kevin Warsh, in his first act as chair, declined to submit a dot and put the instrument that recorded that miss under review, which forces the question of whether removing a forecast the Fed could never honor is reform or the quiet removal of the one yardstick that held it to its own word.
Kevin Warsh takes the Federal Reserve with inflation above target and nominal GDP running 13% above its pre-pandemic path. Four monetary rules are applied to that inheritance, and they do not agree on what he should do. That disagreement is the point. A central bank bound by a rule cannot select whichever rule is most convenient for the moment. One operating under discretion always can.
