Stephen Williamson
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1954swilliamson.bsky.social
Stephen Williamson
@1954swilliamson.bsky.social
1.2K followers 170 following 760 posts

Professor, Western University (University of Western Ontario)

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Economics 95%
Business 3%
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1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 22h
Headline PCE inflation, which is what the FOMC claims to care about, was at 2.8% in November. Best guess is that, when the level effects of tariffs go away, PCE inflation will be at or below 2%. So, no need to do much here.

Reposted by Stephen D. Williamson

financialtimes.com
Financial Times @financialtimes.com · 22h
Fed officials warn progress towards inflation goal will be ‘uneven’ ft.trib.al/92sUTsn
Fed officials warn progress towards inflation goal will be ‘uneven’
Minutes from January meeting show US policymakers saw risk that price growth will remain above 2%
ft.trib.al

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
You're expecting too much here, or anywhere, if what you want is for people to instantly absorb the genius of your posts and agree with everything you say. Especially given the nature of the medium.
nicktimiraos.bsky.social Nick Timiraos @nicktimiraos.bsky.social · 2d
This is a good example of why I find Bluesky exhausting and not worth cross posting. You could write a piece that carefully lays out the evidence, and the first (and 2nd-4th) replies are Big Mad that you didn't just write the piece they wanted. X has its problems — many, many problems — but ...
catmemesplease.bsky.social Undersecretary Of The Dept Of Please-God-Not-These-Clowns-Again. @catmemesplease.bsky.social · 3d
Well look at that.

If only the media had reported realistically about the economy in 2024, would we even be in this position?

But bothsides, amirite?

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
Sometimes we get lucky. A politician with a brain.
t0nyyates.bsky.social Tony Yates @t0nyyates.bsky.social · 1d
Carney's incredible secret sauce seems to be - say what the problem is, whose fault it is, what you will have to do about it and what it will cost.
samfr.bsky.social Sam Freedman @samfr.bsky.social · 1d
Keep reading articles about how impossible it is to be a successful centre/left PM these days. And then I look at Mark Carney...

Reposted by Andrew Scott, Stephen D. Williamson

t0nyyates.bsky.social
Tony Yates @t0nyyates.bsky.social · 1d
Carney's incredible secret sauce seems to be - say what the problem is, whose fault it is, what you will have to do about it and what it will cost.
samfr.bsky.social Sam Freedman @samfr.bsky.social · 1d
Keep reading articles about how impossible it is to be a successful centre/left PM these days. And then I look at Mark Carney...
thestar.com Toronto Star @thestar.com · 1d
#Breaking: Conservative MP Matt Jeneroux joining Liberal caucus, Carney says

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
I'd say no.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
I'm not saying I prefer it. You're claiming it's not feasible, and I'm saying it is.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
The balance sheet was not large in 2007. How come?

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
There's no difficulty involved, and this could happen very quickly if the portfolio is just sold outright.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 1d
To a first approximation, QE does not subsidize the federal government. Doesn't make much difference if the government is paying the interest on government debt held by the central bank, which in turn pays interest on its reserves, or the government pays the interest directly to the private sector.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 2d
The same way the Fed now deals with it. Active daily intervention in the repo market.

Reposted by Stephen D. Williamson

nicktimiraos.bsky.social
Nick Timiraos @nicktimiraos.bsky.social · 2d
This is a good example of why I find Bluesky exhausting and not worth cross posting. You could write a piece that carefully lays out the evidence, and the first (and 2nd-4th) replies are Big Mad that you didn't just write the piece they wanted. X has its problems — many, many problems — but ...
catmemesplease.bsky.social Undersecretary Of The Dept Of Please-God-Not-These-Clowns-Again. @catmemesplease.bsky.social · 3d
Well look at that.

If only the media had reported realistically about the economy in 2024, would we even be in this position?

But bothsides, amirite?

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 2d
Reducing the Fed's balance sheet would actually be easy. The weird element here is that this article propagates a myth initiated by the Fed itself

Reposted by Stephen D. Williamson

michaelsderby.bsky.social
Michael Derby @michaelsderby.bsky.social · 2d
Warsh may want a smaller Fed balance sheet, but that's hard to achieve
Warsh may want a smaller Fed balance sheet, but that's hard to achieve
Kevin Warsh, nominated to lead the Federal Reserve, may want a smaller central bank balance sheet, but he’s unlikely to get it absent major tinkering with the financial system, and even then, it might...
www.reuters.com

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 7d
Exactly.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 8d
nastier.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 8d
You hear these sorts of things in Canada often. The awfulness of contemplating an increase in debt/GDP from 42% to 43%.

Reposted by Stephen D. Williamson

jansueselbeck.bsky.social
Jan Süselbeck @jansueselbeck.bsky.social · 13d
“The West is feeling its betrayal turn into rage. The world is waking up to both its vulnerability and its value. But better late than never: We’re all Canadian now.”
Opinion | The Globalization of Canadian Rage
www.nytimes.com

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 16d
He had never backpacked. So how does he know what would have happened with some other boots?

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 16d
Well, it would puzzle the markets for sure.

Reposted by Stephen D. Williamson

nytimes.com
The New York Times @nytimes.com · 16d
"Before I went on a 46-mile hike through Utah and Arizona, I’d never backpacked. I wouldn’t have made it without these Wirecutter-recommended hiking boots."
After a 46-Mile Hike, Everything Hurt. Except My Feet in These Boots.
After I hiked 46 miles of canyons, riverbeds, valleys, and hills in the Salomon Quest 4 Gore-Tex Hiking Boots, everything hurt. Except my feet.
nyti.ms

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 16d
2/No, banks do not lend reserves, any more than they lend Treasuries. The Fed could indeed buy the stock of Treasuries if it wanted to, thus converting the U.S. government debt into bank reserves backed by government debt. It wouldn't be the end of the world, but very strange debt management.

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 16d
1/I'm puzzled about what you're trying to say. Is there some joke in here, or what? I'll just take it at face value. "Banks can't lend reserves?" This seems in reference to a standard misconception about how monetary policy works - basically a money multiplier story...

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
4/the financial sector to hold safe assets in the banking sector as reserves - this entails "balance sheet costs."

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
3/balance sheet makes monetary policy implementation easier. But under the large balance sheet, since 2016, the Fed has had to actively intervene, daily, on one side or the other of the repo market, most of the time. As well, there are efficiency losses due to the fact that the Fed is forcing...

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
2/entity that does not have a reserve account. All of the reasons the Fed gives for continuing with a large balance sheet don't make sense. They claim that banks need and want this high quantity of liquidity. But Treasuries are essentially as liquid as bank reserves. They claim that the large...

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
1/The Fed's large balance sheet involves withdrawing Treasury securities and MBS - basically highly-liquid eligible collateral - from financial markets and replacing those assets with interest bearing reserves. Those reserves are confined to the banking sector - you can't trade them to any other...

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
Not shrinking the balance sheet is silly (after serious thought).
darioperkins.bsky.social Dario Perkins @darioperkins.bsky.social · 17d
shrinking the balance sheet is a silly idea and I doubt Warsh will do it. Pure virtue signaling.

BUT if he does do it, he should read David's proposal in this blog. At least David has thought seriously about this issue.. required reading today

macroeconomicpolicynexus.substack.com/p/deja-vu-at...
Déjà Vu at the Federal Reserve
How liquidity dependence keeps ratcheting up the Fed’s balance sheet and what can be done about it.
macroeconomicpolicynexus.substack.com

Reposted by Stephen D. Williamson

darioperkins.bsky.social
Dario Perkins @darioperkins.bsky.social · 17d
shrinking the balance sheet is a silly idea and I doubt Warsh will do it. Pure virtue signaling.

BUT if he does do it, he should read David's proposal in this blog. At least David has thought seriously about this issue.. required reading today

macroeconomicpolicynexus.substack.com/p/deja-vu-at...
Déjà Vu at the Federal Reserve
How liquidity dependence keeps ratcheting up the Fed’s balance sheet and what can be done about it.
macroeconomicpolicynexus.substack.com

1954swilliamson.bsky.social
Stephen Williamson @1954swilliamson.bsky.social · 17d
It's certainly feasible to get back to a corridor system, and the Fed could improve on the pre-2008 system, for example by adopting SOFR as the target rate. I don't think the large balance sheet has anything going for it. Warsh doesn't like it, but he doesn't understand it, as far as I can tell.