Millennial Macro

Companies Get Paid to Be Junk in Europe "Yields plunged. Corporate-bond sales ballooned. Values became utterly distorted.  Investors are now literally  paying European companies to borrow . Sanofi, a French drugmaker, just became the first nonfinancial private company to issue debt that yields less than zero, according to Bloomberg News. Henkel, a German household products maker, quickly followed suit." "European central bankers don't seem too worried about these distortions. In fact, they seem eager to see those animal spirits return to generate growth. The ECB is considering  expanding its program , possibly to new asset classes.   The ECB may end up getting too much of what it wants. The Bank of America strategists warn against a rapid rise in leverage" "In the meantime, European central bankers seem to have created an Alice-in-Wonderland credit market that's infecting the rest of the world. It's sending investors into emer...

Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation "During private deleveraging cycles monetary policy will largely be ineffective if it is aimed at stimulating private credit demand.  What matters is not monetary stimulus per se, but whether monetary stimulus is paired with fiscal stimulus (otherwise known as helicopter money) and whether  monetary policy is communicated in a way that helps the fiscal authority maintain stimulus for as long as private deleveraging continues . Fiscal dominance and central bank independence come in secular cycles and mirror secular private leveraging and deleveraging cycles, respectively. As long as there will be secular debt cycles, central bank independence will be a station, not a final destination." Out of Many, One? Household Debt, Redistribution and Monetary Policy during the Economic Slump* One could, indeed, go further and regard the financial position of firms and households more generally as a po...