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Cita de: saturno en Agosto 28, 2015, 16:56:36 pmY Chosen se topa de narices con que su planteamiento no explica el fenómeno del incremento de la riqueza o del dinero. Es la visión estática, clásica de la economia la que describe, en realidad.Nada mas lejos.- El incremento de riqueza real (sea la invención de facebook o la construcción de un nuevo acelerador de partículas) se monetiza inmediatamente. ¿Como? Los bancos "fabrican" el nuevo dinero adecuándolo a esa nueva realidad de riqueza real. Una tasación pericial, presupuestos, un plan de empresa, un informe sobre el estado de la técnica. Hay muchas formas de saber cuanto vale algo. De abajo arriba. Valoración objetiva. El dinero nuevo que se fabrica matchea esa riqueza. Sino, no se imprime. No te dan crédito.El problema es cuando te dan crédito y esas expectativas no se cumplen. Ese es el problema de las expectativas. Pero fíjate que el problema queda limitado exclusivamente a quien tiene la deuda y no puede honrar el crédito. Decir que éstos son mayoría y que por eso el dinero creado lo ha sido en base a la nada es exagerar. La mora bancaria está acotada (riesgos, etc).-El incremento de dinero (sin incremento de riqueza previo) ya está explicado por la propia inflación. La riqeuza que hay se divide en más cachos.
Y Chosen se topa de narices con que su planteamiento no explica el fenómeno del incremento de la riqueza o del dinero. Es la visión estática, clásica de la economia la que describe, en realidad.
En absoluto. Si devuelvo el paquete, simplemente no hay transacción.Veamos otro ejemplo.Dos clientes en gasolinera que ya han echado combustible por 50€ esperan en cola para pagar. El primero yo, no tengo cash y pretendo pagar con tarjeta, el de detras de mí, tiene un billete de 100.1. Doy la tarjeta... y zas! no funciona.2. El gasolinero no se plantea el embrollo de sacar los x litros exactos de depósito de mi coche. Por contra me da a firmar un papel que reza: "Reconocimiento de deuda: 50€".3. Firmo. En ese momento yo --y sólo yo-- creo dinero-deuda*. El otro se fia porque a) n es mucho dinero, b) sacar la gasolina es un rollo, y no le soluciona la papeleta al cliente y c) y muy probablemente tiene un seguro para esta circunstancia.4. Vuelvo en 15 min y recupero el papel deuda por 50€. * Lo llamo dinero deuda porque es deuda pero no es dinero estrictamente hablando. Se demuestra porque si pretende luego darlo como vuelta al otro cliente que le da 100€, éste NO lo acepta (con seguridad.) No es dinero pues. (Es dinero para mí y sólo para mí y durante un periodo de tiempo limitado, no muy largo.)
On Friday we explained why the most important chart in global finance may well be the combined FX reserves of Saudi Arabia and China plotted against the yield on the 10Y. Here’s the reason that graphic is so critical: Saudi Arabia and China are sitting on the first and third largest stores of reserves, respectively, and if these two countries continue to liquidate those reserves, it will amount to “reverse QE” or, "quantitative tightening" as Deutsche Bank calls it. For Saudi Arabia, the FX reserve pressure comes courtesy of the deathblow the country dealt to the petrodollar system late last year.In other words, the pain is largely self-inflicted as the kingdom is determined to “preserve market share” by bankrupting US shale drillers. The attendant decline in oil revenue has resulted in a fiscal deficit on the order of 20% of GDP which, in the absence of sharply higher oil prices must either be financed by drawing down reserves or else through the bond market because between the war in Yemen (which escalated meaningfully on Thursday) and the necessity of maintaining the status quo for a populace that’s become used to a certain level of stability and comfort, fiscal retrenchment is a decisively difficult task. On Thursday, we got the latest data on Saudi Arabia’s FX reserves and, thanks to new debt, the burn rate slowed. Here’s Reuters:The speed of decline in Saudi Arabia's foreign reserves slowed in July after the government began issuing domestic debt to cover part of a budget deficit created by low oil prices, central bank data showed on Thursday. The world's largest oil exporter has been drawing down its reserves to cover the deficit. Net foreign assets at the central bank, which acts as the kingdom's sovereign wealth fund, have been sliding since they reached a $737 billion peak last August. But the latest data showed net foreign assets shrank only 0.5 percent from the previous month to 2.480 trillion riyals ($661 billion) in July, their lowest level since early 2013. They had dropped 1.2 percent month-on-month in June and at faster rates early this year. In July, the government began selling bonds for the first time since 2007, placing 15 billion riyals ($4 billion) of debt with quasi-sovereign funds; this month it sold 20 billion riyals of bonds to banks. The domestic debt sales appear to have reduced the need for the government to cover its deficit by drawing down foreign assets. Authorities have not publicly said how many bonds they will issue in future, but the market is expecting monthly issues of roughly 20 billion riyals through the end of 2015. The foreign assets are held mainly in the form of foreign securities such as U.S. Treasury bonds - securities totalled $465.8 billion at the end of July - and deposits with banks abroad, which totalled $131.2 billion. The vast majority of the assets are believed to be in U.S. dollars.And while taking on debt to offset the reserve burn is a viable strategy, especially when you’re starting from a debt-to-GDP ratio that’s negligible, the reserves are still at risk of running out, even if 50% of spending is financed in the debt markets.Here’s more from BofAML on how long the Saudis can hold out under various price points for crude and assuming various mixes of debt financing and spending cuts:Safeguarding Fx reserves will require deep budgetary cuts at current oil prices, in our view. Our dynamic analysis suggested that current low oil prices could rapidly erode the sovereign creditworthiness, even as the sovereign balance sheet is at its strongest on an historical basis. Despite the rapid drawdown over 1H15, SAMA’s Fx reserves still stood at c100% of GDP in June, and government deposits at SAMA represented US$294bn or 42% of GDP. Another way to look at sustainability is a static analysis to calculate the number of years required to exhaust government deposits under various oil, spending and financing scenarios. Based on the narrow definition of resources available to the government, we think that there is no realistic mix of debt financing and spending cuts at US$30/bbl that can decrease pressure on Fx reserves, and pressure on the USD peg would be acute if oil prices were to be sustained at this level. However, at US$40/bbl and US$50/bbl, debt financing and deep capex cuts (to bring spending 25% lower) can keep government deposits at SAMA covering 7 years and 11 years of government spending, respectively. Government spending has historically adjusted to oil prices with a variable lag. It is worth recalling that spending was 50% lower in 1988 compared to its 1981 peak as oil prices tumbled, and government spending in 2000 was at the same levels as that of 1980 in nominal terms.
JACKSON HOLE, WYOMING – As central bankers from around the world gather this week in Jackson Hole for the Federal Reserve’s annual Economic Policy Symposium, one key topic of discussion will be the current global stock-market turmoil. There are many reasons for these gyrations, but the expectation that the Fed will start to raise interest rates – perhaps as early as September – is clearly one of them.The arguments for a rate hike are valid. The United States’ economy is gaining traction. The International Monetary Fund forecasts 3% annual growth in 2015 and 2016, accompanied by inflation rates of 0.1% and 1.5%, respectively. When an economy is normalizing, it is reasonable to reduce expansionary measures, such as those introduced after the crisis of 2008. Because the Fed has clearly communicated that it will move gradually toward less expansionary policies, its credibility would be damaged if it did not follow through.But there are strong reasons for the Fed to postpone interest-rate hikes and to keep monetary policy expansionary over the coming quarters. For starters, the US recovery remains weak. Historically, 3% growth during a recovery is far from impressive. In other recent recoveries, growth often hit 4% or even 5% when increased capacity utilization pushed up productivity and investment.Over the past three decades, the US has been able to grow at an average annual rate of around 2.5%. Some attribute relatively slow growth to demographic factors, which have reduced the labor force, as well as to weak productivity levels, which have been low.But America’s potential output may be underestimated, and its inflation propensity exaggerated. The US labor market works well. Unemployment is down to 5%, with no signs of overheating. The employment cost index suggests that wage increases so far have been surprisingly low.One reason for this is that labor-market flexibility increased during the recovery. Self-employment, short-term contracts, or part-time arrangements account for many of the jobs that have been created over the past few years. Full-time jobs with comprehensive benefits are now much rarer. This ongoing “Uberization” of the US labor market means that the balance in the wage-setting process has shifted. As a result, it will take longer for demand to feed through to wages and inflation than in the past.Moreover, the economy is undergoing an ongoing technological shift stemming from digitization and globalization. Estimates from Citigroup indicate that almost half of all jobs will be disrupted in the coming decades. Jobs that require lower skills and less training are particularly vulnerable; but it is also clear that many other occupational categories – including administration, accounting, logistics, banking, and various service activities – are likely to be affected. Companies will be able to reduce their headcount and production costs while improving customer service, which, like Uberization, will affect the wage-setting process.Central bankers, I believe, are underestimating the impact of this structural shift. In the more tech-oriented economies, like the US, the United Kingdom, and the Nordic countries, there is a risk that traditional macroeconomic models will overestimate the cost pressure from labor.Another reason why the Fed should postpone a rate hike is that financial turmoil in emerging markets, particularly China, could have a substantial impact on the global economy, with some clear implications for the US economy. In particular, lower energy and commodity prices are likely to dampen inflationary pressure. When inflation is low for a long period, inflation expectations also tend to be low. Add falling commodity and energy prices to the mix and there is a risk that inflation expectations will remain too low to sustain a balanced recovery.The global implications of lower emerging-market currencies are also likely to be deflationary. The direct impact is that a stronger dollar reduces the cost of imported goods. The indirect effect, which might be substantial, is that cost-competitive light manufacturing in emerging markets increases. That would reinforce the deflationary pressure from globalization for years to come.There is also a risk of greater currency-market volatility if the Fed jumps the gun in raising rates. The Fed’s unconventional monetary policies have been necessary for the US. But, because they flooded global markets with liquidity, large portfolio flows have moved into emerging-market countries, whose currencies often are not as liquid as the dollar. When investment moves back into dollars, the currency fluctuations in these less liquid markets can become excessive.The Fed clearly has a responsibility to consider how its policy decisions affect the global financial system. Excessive currency volatility is not in America’s interest, not least because large exchange-rate depreciations in emerging markets would amplify the effects of globalization on US jobs, wages, and inflation, particularly as weaker foreign currencies make outsourcing a more economically viable solution.Another reason for the Fed to reconsider hiking rates is that the legitimacy of the Bretton Woods institutions depends on a well-functioning global financial system. The global economy’s center of gravity is moving to Asia, Latin America, and Africa, but the IMF and the World Bank still seem to mirror the reality of the 1950s. If the Fed is seen as unleashing a major crisis in emerging markets, this will almost certainly do long-term damage to the global financial system.The Fed should regard lower commodity prices, reduced inflationary pressures, changes in the labor market, and further disruptive technological shifts as sufficiently convincing arguments to postpone a rate hike. Including the risk of excessive volatility in the global financial system tips the balance even further.There is plenty of time for the Fed to signal that its policy stance has shifted, and the conclave in Jackson Hole is an excellent opportunity to start that communication. If the facts have changed, the policy implications must also change. The greatest loss of credibility always comes when policymakers try to ignore changing realities.
The Value-At-Risk FiascoSubmitted by Salil Mehta of Stiatistical IdeasThe Value-At-Risk FiascoIf you were a looking at a simple portfolio that was a mix of 1 unit S&P 500 and 1 unit Shanghai Stock Exchange (SSE), then you are likely to consider value-at-risk (VAR) to feel cozy with your overall portfolio risk. This measure however is not considered a coherent risk measure that satisfies all of the properties of interest: monotonicity, translation invariance, homogeneity, and subadditivity. We'll explain the first three in a future article, but only focus here on how VAR violates the last of these four properties.Subadditivity is where the risk associated with multiple holdings, in a portfolio, should not be greater than the sum of the individual holdings' risk. This construes the hallmark of diversification, and yet combined with the inappropriateness of VAR to measure market risk we see subadditivity levels violated. Risk events that should have only happened say one month every 1.5 years have occurred in each of the past three summer months.VAR (invented at J.P. Morgan well before both the global financial crisis and their entertaining London Whale drubbing) is an expression of the largest possible loss, contained within a specified confidence interval. We can for example explore the history of worst weekly losses in the S&P, for each month starting more than 5 years ago in January 2010 (and through May 2015). A total of 65 months. We can set a probability tolerance of just over 6%, and state that the probability of seeing a loss greater than this VAR should be less than or equal to ~6% (or 1 in 16 months). We can vary this level about, but this is simply a foothold to initiate our analysis.VAR in this case, for the S&P, would come to a worst weekly loss of 6.0%. Bear in mind that the average worst weekly loss over the 65 months for the S&P was a 1.9% loss. Now we do the same exercise for the SSE, and with the same probability tolerance of ~6% we get a VAR loss of 5.3%. Here the average worst weekly loss over the 65 months for the SSE is a 2.6% loss. Note that the parametric mathematical relationship to estimate the overall VAR from blending two equally volatile stocks (or indexes) does relate to the correlation between those 2 indexes. VARoverall= VARindex?[(1/number of indexes) + (1-1/number of indexes)r]= VARindex?[½ + ½r]The reason it seems as if the VAR for SSE is set at an easier loss level, versus that for the S&P, is a reflection of the nonparametric nature of equity returns. This turns out to be critical as we go through this article. Also keep in mind that these VAR express a fixed week period, and not any continuous range beyond that. We know the maximum-VAR was higher if we simply augment to the trading week, ending August 21, the following "Black Monday". And most also know by now, that these stock returns are not related to the normal distribution (or elliptical distributions for that matter), and now we also see these fat tails are not even related to one another. For more on the Student t distribution, see here, here.The number of months where the worst weekly losses should exceed the VAR over 65 months is no more than 3 (roughly an integer <6%*65). For the S&P, the changes have been (in order of severity): -6.6%, -6.8%, and the worst weekly loss before the summer of 2015 was -7.5%.For the SSE, the changes were: -5.3%, -6.6%, and -6.9%. The 3 months associated with the S&P above, and the 3 months associated here with the SSE, have one month in common (May 2010). The four bolded months of the six months noted (3 S&P and 3 SSE) are part of the worst 3 joint, "worst weekly losses". We show these 3 joint losses below, where again the portfolio constitutes 1 unit S&P and 1 unit SSE (for a portfolio that is 50% in both indexes you would take ½ of every loss and VAR for the purposes of comparison):-7.5% + (-2.8%) = -10.3%(-5.2%) + -6.9% = -12.1%-6.6% + -6.6% = -13.2% (this is May 2010)Note values in () are the paired worst weekly loss for the bolded S&P or the SSE worst weekly losses.Again the portfolio theoretical VAR should have been no greater than the sum of the two holdings' VARs. Or 11.3% (6.0%+5.3%). And empirically we see above that the portfolio VAR comes to smaller than a 10.3% loss.Does this make everything feel good about your portfolio risk measures? Can you take comfort with the VAR model and diversification, and feel comfortable that you would only see a <10.3% loss level once out of every 16 months? It's attractive, but look at what immediately happened next over the following 3 months of the summer:June 2015: -0.7% + -14.3% = -15.0%July 2015: -2.2% + -12.9% = -15.1%August 2015: -5.9% + -12.3% = -11.9%In each of these 3 months, the S&P always stayed within VAR yet the overall losses still were always greater than the 10.3% VAR (and all were greater than the theoretical 11.3% VAR for that matter!) A 1 in 16 months event immediately happening 3 months straight is not a quirky <0.02% (6%3) probability situation. It was a case of incorrectly using VAR as the preferred nonparametric risk measure for the market we are modeling (e.g., "extreme" tail risk events). Despite how commonly it is endeared anyway by investors and middling stress testing regulators.
Sí y no.No porque en el caso de pagar con trajeta (proxy de un depósito) son dos transacciones. Si las aislamos individualmente se cumple lo que yo digo, dos veces.Sí porque claro, la primera vez que se meten las monedas en el mercao y esto lo hace siempre el Estado, sí es deuda porque el Estado no da riqueza presente, sino futura; el colateral es su capacidad de establecer impuestos (que se pagan con esa misdma moneda,) y ademas impone por la fuerza el curso legal. Pero SÓLO lo hace el Estado y SÓLo la primera vez que lo mete en el mercao, y SÓLO es el 2% aprox del dinerito que circula. Y el Estado somo todos. Pensad en las fichas (tokens) del Casino, no son dinero pero "representan" dinero frente a la caja del Casino. O de la futura recaudación del Estado, o de sus reservas. (Oro? Petroleo?)El dinero facilita (engrasa) el comercio, las transacciones. El privilegio (señoriaje) se lo reserva el Estado por la fuerza. El Estado somos todos, y hace falta que ALGUIEN lo haga. El caso menos malo es que lo haga el Estado (dsiendo malo) porque es mucho peor si lo hacen los amigos de Rallo et cia. Lo menos malo, lo mejor a fin de cuentas, es que sea el Estado. ¡Que mas quisieran los austriacos que establecer el dinero privado! Ya tuvieron el privilegio, y los Estados se lo quitaron por la FUERZA. Por eso rajan del Estado.Pensad en un circuito electrico: hace falta un pila en alguna parte; un diferencia de potencial (una usura en jerga del foro) que haga que "circulen" los electrones (e-). La opción menos mala, es el Estado, esa "bomba de redistribución de Renta".Hay deuda, pero sólo en los billetes y monedas, que es menos del 4% del total de dinero. NO HAY DEUDA en el dinero bancario, al contraio de lo que predica el video "Money is debt"., que se alega con mala fé, para no pagar deudas "impagables" (como titulaba hoy mismo el mismísimo diario "El País".)[ Seguiré el debate cuando pueda, ahora voy a estar sin conexión un rato. ]
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution.As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
The 12 regional Federal Reserve Banks are organized similarly to private corporations[/b]--possibly leading to some confusion [ ] about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
La critique de la « loi de 1973 » s’inscrit en fait dans un débat économique plus large, notamment sur la création monétaire. La France a en 2014 une dette de plus 2 000 milliards d’euros. La France a déjà payé plus de 1 400 milliards d’euros d'intérêts2 à ses créanciers depuis quarante ans. Ses créanciers sont à 65 % étrangers et en grande partie des banques privées et de gros clients des marchés financiers.Jusqu'en 1972, la Banque de France pouvait prêter à l’État sans intérêt 10,5 milliards puis 10 autres milliards à taux très faible. Au-delà, l'État devait emprunter sur le marché privé. C'est ce qui s'est passé en 1973. Ce montant de 20,5 milliards défini dans la loi de 1973 était supérieur à ce que la Banque de France prêtait à l’État au cours des années précédentes.Des essayistes, économistes, et personnalités politiques pensent que la loi de 1973 oblige l'État à emprunter aux marchés financiers privés par son article 25 : « le Trésor public ne peut être présentateur de ses propres effets à l'escompte de la Banque de France. ». En réalité, ce n'est qu'en 1993, avec le Traité de Maastricht, qu'une telle interdiction de principe est énoncée pour la première fois7 dans son article 104, paragraphe 1 également réécrit à l'article 123 du Traité sur le fonctionnement de l'Union européenne (TFUE).En effet l'article 19 de la loi de 1973 autorise l'État à emprunter à la Banque de France, mais il ne permet pas au Parlement lui-même de se servir de cette initiative : « Les conditions dans lesquelles l'État peut obtenir de la Banque des avances et des prêts sont fixées par des conventions passées entre le ministre de l'Économie et des Finances et le gouverneur, autorisé par délibération du conseil général. Ces conventions doivent être approuvées par le Parlement. » En outre, la loi de 1973 ne présentait pas de forte rupture par rapport à ce qui préexistait : ainsi, l'article 25 de la loi de 73-7 du 3 janvier 1973 stipule : « le Trésor public ne peut être présentateur de ses propres effets à l'escompte de la Banque de France », qui reprend presque mot pour mot une interdiction qui avait été introduite par Léon Blum, dans la loi du 24 juillet 1936. L'article 13 de cette loi de 1936 précise en effet que « tous les effets de la dette flottante émis par le Trésor public et venant à échéance dans un délai de trois mois au maximum sont admis sans limitation au réescompte de l’Institut d’émission, sauf au profit du Trésor public ».
MCKEE: Is there a fundamental difference with the way inflation is being generated this time such that we will not see a rapid acceleration in inflation, particularly with commodity prices, oil prices where they are?BULLARD: The committee is organized around the Phillips curve, and I have not been a big advocate of the Phillips curve, but you just have to recognize that that's a lot of monetary policy, and that's how people think. We've got unemployment down at most -- at what most people would estimate as the natural rate. We've been getting good jobs report.There's no reason to think otherwise going forward. Unemployment is going to come down into the four percent range over the forecast horizon. Under conventional models that's going to put upward pressure on inflation. Again, I haven't been a big advocate of this, but a lot of people on the committee are a big advocate.MCKEE: When does your model suggest that we're going to start seeing it?BULLARD: We've got -- we've got inflation coming up over the next year. By the end of 2016 we'd be at two percent.GREELEY: But developed economies all --BULLARD: Above two percent.GREELEY: And above two percent.BULLARD: Yes.
MCKEE: Labor markets do seem to be tightening somewhat, but we're not seeing it reflected in wages. Has something fundamentally changed there?BULLARD: Yes. Wages are a lagging indicator, so you can't really look at wages as a way to predict inflation. I think that's one thing to keep in mind. I think that wages will improve. Also we need better productivity in the U.S., and productivity has been very low.So you just think of a simple model of wages it would be productivity growth plus inflation. And it has been equal to that over the last four or five years, but the productivity growth component has been so low that wage growth hasn't been that great.MCKEE: What's happened there?BULLARD: I wish I knew. I think we need to get better productivity. That's the single thing that would improve the U.S. economy the most. You guys remember the late '90s where we had a productivity boom in the U.S. It was excellent for the U.S. economy. If we could get that going that would be excellent.I think one of the problems is that after the crisis we naturally, I think, after the crisis wanted to re-regulate the U.S. economy, because you naturally felt, well, a lot of things went wrong here, we have to change the rules. And that re-regulation process I think slows down productivity growth.GREELEY: When you talk about productivity growth, does it give you pause at all that the traditional relationship between the business cycle, that mirror image in productivity growth that that's broken down. Does that say to you that perhaps the models we've used in the past aren't appropriate now?BULLARD: I think measurement is a huge issue for productivity, and just like in the '90s you have new technology coming online. You've got social media and other imponderables. How much is Twitter contributing to productivity? I don't know. It seems like it is, but I am not sure if that's really showing up in the data. So if you talk to somebody like Hal Verian out at Google, he will give the story about there's all this productivity all over the place, but it's not measured. So I think that remains a puzzle, and a good area for research actually.
TOM KEENE: I wanted to jump in here. Jim Bullard, the reason I am not out at Jackson Hole is I couldn't go unless the Pittsburgh Pirates, who are in first place, and that didn't work out, the Cardinals doing better than good. I want to go back to your comments on the Philips curve from another generation, of course out of the London School Economics, you were out of the real world of Indiana University. If Stan Fischer and Janet Yellen are on a Philips curve model, what model would you suggest for the chair and the vice chair?BULLARD: As you know, I put a lot of emphasis on inflation expectations. So let me just talk about that for a minute. If you look at the TIPS measures and inflation expectations --KEENE: Right.BULLARD: -- they're down. I don't know where they are today, but they have been down maybe 40 basis points on average across the different yields. That does give me pause, and I think is a concern, but a lot of that is driven by oil prices. They're highly correlated with oil prices, and they shouldn't be. And so for that reason, people on the committee, including me, put some emphasis also on survey measures, which have been more stable. So as long as we have these anchored expectations we'll probably be okay. But I do find the TIPS declines a bit concerning.
GREELEY: Over the last year, banks have been removing their excess reserves. We've seen about $200 billion leave the Fed. Does that say to you that that will be a less effective tool in the future?BULLARD: Well $200 billion on the amount of excess reserves out there is not actually a big number. So it's funny to say $200 billion is not a big number, but it's not. So we're going to have to use this method as long as we have super abundant reserves. And that's the way it's going to be, but I do think it will work as we try to normalize here.MCKEE: Well are you going to cap reverse repo amounts, and if so, how much? A lot of people in the markets are worried that you're going to become the repo market, private sector is going to dry up and everybody is going to take their money out of money funds and banks and put it at the Fed.BULLARD: I think right around the time of liftoff we'd probably not put any cap on it -- we -- because we just want to see what happens. Later on we probably would make a decision on that and try to limit the size. Where we're going to come down on that I don't know exactly.GREELEY: Okay, Jims Bullard -- James Bullard of the St. Louis Fed, thank you very much.
BEIJING, Sept. 1 (Xinhua) -- China's central bank continued to pump billions of yuan into the financial system on Tuesday to ease liquidity strains.The People's Bank of China (PBOC) conducted 150 billion yuan (23.6 billion U.S. dollars) of seven-day reverse repurchase agreements (repo), a process in which the central bank purchases securities from banks with an agreement to resell them in the future.The reverse repo was priced to yield 2.35 percent, unchanged from the yield of the last reverse repo conducted by the PBOC on Aug. 27.The latest move followed four reverse repos in the past two weeks that injected a total of 540 billion yuan into the market, as liquidity has tightened recently due to dropping new yuan funds outstanding for foreign exchange and a depreciating Chinese yuan.The PBOC also pumped in 340 billion yuan in the past week through short-term liquidity operations, another tool for banks to borrow from the central bank.In Tuesday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, increased by 2 basis points to 1.821 percent.