All Articles Finance Modern Money ICYMI - August 19

ICYMI – August 19

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Modern Money

A collection of stories from SmartBrief publications and around the web…

Did the Federal Reserve’s quantitative easing do any good?: Stephen D. Williamson says no. The vice president of the St. Louis Fed takes a critical view of the crisis management measures policymakers deployed during and in the aftermath of the 2008-09 financial crisis. Williamson challenges the efficacy of the Federal Reserve’s prolonged zero interest rate policy and also believes the Fed’s attempt to improve the manner in which it communicates has only muddied the waters. But Williamson takes his biggest swing at the massive quantitative easing the Fed rolled out in hopes of boosting the economy. With the Fed’s balance sheet now swollen at $4.5 trillion, Williamson argues that the economic benefits of the much-maligned QE program remain hard to discern.

Speaking of quantitative easing…: The European Central Bank is in the throes of its own round of QE, and it looks like Mario Draghi & Co. have done such an efficient job of snatching up eligible bonds that they might have to expand the list of bonds that are eligible for the program.

Navinder Sarao, meet Richard Jewell: The FT does a multi-part, deep dive on the story of Navinder Sarao. Regulators and law enforcement agencies keep selling the story that Sarao played a big role in causing the Flash Crash, but virtually no one in the industry is buying what they are selling (Just like nobody bought the Waddell & Reed story the SEC spun years ago). Sarao seems like he is going to end up like Richard Jewell. Jewell is the guy everyone associates with being the Atlanta Olympics bomber back in 1996 … except he wasn’t.

Always check the source (and who funded the source): Jane Dokko over at the Brookings Institution has an excellent piece on how to wade through all the hot air and “research” being thrown around as part of the debate over the Department of Labor’s proposed fiduciary rule. “Independent research must generally undergo an anonymous review process before publication. Studies funded by special interests need not face such scrutiny. When it is to their advantage, they may use analytic techniques that would not be accepted in academic research, draw inaccurate inferences, use inappropriate data, or selectively report the results.” Believing some of the “research” and “studies” surrounding the DoL debate is akin to believing a study funded by McDonald’s that found McNuggets are healthier than kale.