Federal Funds Futures Quotes

Not wanting to have an obvious hand in actually separating church and state, the U.S. Congress amended an appropriations bill to ensure that federal funds could not be used for the monument’s removal.

Today’s computer technology exists in some measure because millions of middle-class taxpayers supported federal funding for basic research in the decades following World War II. We can be reasonably certain that those taxpayers offered their support in the expectation that the fruits of that research would create a more prosperous future for their children and grandchildren.

Today’s computer technology exists in some measure because millions of middle-class taxpayers supported federal funding for basic research in the decades following World War II. We can be reasonably certain that those taxpayers offered their support in the expectation that the fruits of that research would create a more prosperous future for their children and grandchildren. Yet, the trends we looked at in the last chapter suggest we are headed toward a very different outcome. BEYOND THE BASIC MORAL QUESTION of whether a tiny elite should be able to, in effect, capture ownership of society’s accumulated technological capital, there are also practical issues regarding the overall health of an economy in which income inequality becomes too extreme. Continued progress depends on a vibrant market for future innovations—and that, in turn, requires a reasonable distribution of purchasing power.

The Sputnik moment for the Open Classroom movement came in 1983, when a blue-ribbon commission appointed by Ronald Reagan’s Secretary of Education, T. H. Bell, delivered a scathing report, entitled, A Nation at Risk, whose famously ominous conclusion warned that “the educational foundations of our society are presently being eroded by a rising tide of mediocrity that threatens our very future as a Nation and a people.” The response this time was a fervent and growing bipartisan campaign for more accountability from schools, mostly in the form of more of those standardized tests. And by 2001, “accountability” had become a buzzword. Under President George W. Bush that year, the “No Child Left Behind” Act tied federal funding to students’ performance on tests. Eight years later, President Barack Obama’s “Race to the Top” program sought similar results, although this time using carrots instead of sticks. However the federal policy was constructed, the message was becoming clear: for schools to survive, their students would have to score high on mandated tests. Teachers consequently understood that to preserve their own jobs, they’d have to spend more time and energy on memorization and drills. The classrooms of the so-called Third Industrial Revolution began to look ever more like the dreary common schools of the turn of the twentieth century, and the spirit of Emile retreated once again.

As I saw it, there was a 75 percent chance the Fed’s efforts would fall short and the economy would move into failure; a 20 percent chance it would initially succeed at stimulating the economy but still ultimately fail; and a 5 percent chance it would provide enough stimulus to save the economy but trigger hyperinflation. To hedge against the worst possibilities, I bought gold and T-bill futures as a spread against eurodollars, which was a limited-risk way of betting on credit problems increasing. I was dead wrong. After a delay, the economy responded to the Fed’s efforts, rebounding in a noninflationary way. In other words, inflation fell while growth accelerated. The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history. How was that possible? Eventually, I figured it out. As money poured out of these borrower countries and into the U.S., it changed everything. It drove the dollar up, which produced deflationary pressures in the U.S., which allowed the Fed to ease interest rates without raising inflation. This fueled a boom. The banks were protected both because the Federal Reserve loaned them cash and the creditors’ committees and international financial restructuring organizations such as the International Monetary Fund (IMF) and the Bank for International Settlements arranged things so that the debtor nations could pay their debt service from new loans. That way everyone could pretend everything was fine and write down those loans over many years. My experience over this period was like a series of blows to the head with a baseball bat. Being so wrong—and especially so publicly wrong—was incredibly humbling and cost me just about everything I had built at Bridgewater. I saw that I had been an arrogant jerk who was totally confident in a totally incorrect view. So there I was after eight years in business, with nothing to show for it. Though I’d been right much more than I’d been wrong, I was all the way back to square one.

Getting U.S. public debt on a sustainable path will require more sacrifice from the American public. Just to slow debt growth to the rate of GDP growth (or a steady debt-to-GDP ratio) from today through 2040, changes to current policy would have to be dramatic: cut entitlements by 10 percent or cut discretionary spending by 24 percent or increase tax revenue by 6 percent, or some combination of the three.27 Adjustments to actually lower the debt-to-GDP ratio would be even more painful. Ideally, the debt-reduction burden would be shared by all Americans. But one thing is certain—less generous entitlement programs and tax increases will need to be part of any balanced solution. PUBLIC OPINION: FOR A BALANCED BUDGET, BUT AGAINST SACRIFICES TO BALANCE THE BUDGET Changes in entitlement programs and tax increases, however, collide with an American public that largely wants neither. Almost as a rule, Americans support a balanced federal budget. But public opinion moves decisively in the other direction when Americans are asked about the specific actions necessary to balance the budget.28 Entitlement programs are broadly popular. Although most Americans understand that entitlements have a financing problem, they oppose making them less generous. When given the choice between preserving entitlements and reducing the deficit, Americans prefer the status quo. A solid majority, or 69 percent, would rather keep entitlements as they are and incur the debt consequences, whereas only 23 percent say the country should take steps to reduce the budget deficit that would include entitlement cuts.29 It is understandable that older Americans are more inclined than their younger counterparts to want to preserve entitlements. But even so, most Americans age eighteen to twenty-nine, who will foot the future debt interest bill, still favor entitlement preservation over debt reduction. Perspectives differ depending on party affiliation: Republicans are more likely than Democrats to favor making deficit reduction a priority. There may be a “tax more” option. Americans do appear to favor increasing taxes on the rich, though Democrats more so than Republicans.30 It is unclear, however, whether Americans would favor raising their own taxes to cover their entitlement expenses. This suggests a fundamental disconnect between the services Americans want and what they are willing to pay in taxes to fund them.

It was only after World War II that Stanford began to emerge as a center of technical excellence, owing largely to the campaigns of Frederick Terman, dean of the School of Engineering and architect-of-record of the military-industrial-academic complex that is Silicon Valley. During World War II Terman had been tapped by his own mentor, presidential science advisor Vannevar Bush, to run the secret Radio Research Lab at Harvard and was determined to capture a share of the defense funding the federal government was preparing to redirect toward postwar academic research. Within a decade he had succeeded in turning the governor’s stud farm into the Stanford Industrial Park, instituted a lucrative honors cooperative program that provided a camino real for local companies to put selected employees through a master’s degree program, and overseen major investments in the most promising areas of research. Enrollments rose by 20 percent, and over one-third of entering class of 1957 started in the School of Engineering—more than double the national average.4 As he rose from chairman to dean to provost, Terman was unwavering in his belief that engineering formed the heart of a liberal education and labored to erect his famous “steeples of excellence” with strategic appointments in areas such as semiconductors, microwave electronics, and aeronautics. Design, to the extent that it was a recognized field at all, remained on the margins, the province of an older generation of draftsmen and machine builders who were more at home in the shop than the research laboratory—a situation Terman hoped to remedy with a promising new hire from MIT: “The world has heard very little, if anything, of engineering design at Stanford,” he reported to President Wallace Sterling, “but they will be hearing about it in the future.

In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy. From 1966 through late 2001, one study claimed, $1 held continuously in stocks would have grown to $11.71. But if you had gotten out of stocks right before the five worst days of each year, your original $1 would have grown to $987.12.1 Like most magical market ideas, this one is based on sleight of hand. How, exactly, would you (or anyone) figure out which days will be the worst days—before they arrive? On January 7, 1973, the New York Times featured an interview with one of the nation’s top financial forecasters, who urged investors to buy stocks without hesitation: “It’s very rare that you can be as unqualifiedly bullish as you can now.” That forecaster was named Alan Greenspan, and it’s very rare that anyone has ever been so unqualifiedly wrong as the future Federal Reserve chairman was that day: 1973 and 1974 turned out to be the worst years for economic growth and the stock market since the Great Depression.2 Can professionals time the market any better than Alan Green-span? “I see no reason not to think the majority of the decline is behind us,” declared Kate Leary Lee, president of the market-timing firm of R. M. Leary & Co., on December 3, 2001. “This is when you want to be in the market,” she added, predicting that stocks “look good” for the first quarter of 2002.3 Over the next three months, stocks earned a measly 0.28% return, underperforming cash by 1.5 percentage points. Leary is not alone. A study by two finance professors at Duke University found that if you had followed the recommendations of the best 10% of all market-timing newsletters, you would have earned a 12.6% annualized return from 1991 through 1995. But if you had ignored them and kept your money in a stock index fund, you would have earned 16.4%.

The high degree of public skepticism over the use of surplus funds is reflected in a widely cited poll in the early 1990s that found that nearly twice as many young Americans age 18 to 34 believed in extraterrestrial life than that Social Security would exist when they reached retirement age.

While MTA officials were completing the assessment of their needs, they learned that President Carter was not going to be the system’s savior. On November 4, he lost his reelection bid to Ronald Reagan, a California Republican who wanted to slash federal aid to urban areas. Three weeks after the election, the MTA board issued a detailed report proposing a ten-year, $14.4 billion capital program to restore the system to a state of good repair. Most importantly, the board suggested ways to pay for the capital program and new legislation that would streamline the process so that projects could be completed in a more cost-effective and timely manner.44 Ravitch said, “I will not cease for a minute petitioning the government to provide more capital funding. But on the other hand, we should not put our heads in the sand and think that we have fulfilled our responsibilities at the MTA merely by exhorting elected officials to provide funds which, as a practical matter, are simply not available.” That is why Ravitch was prepared for the MTA to take on billions of dollars in new debt to pay for improvements. He suggested increasing the maximum amount of bonds that the MTA’s Triborough Bridge and Tunnel Authority (TBTA) could issue, and allowing its bond proceeds to be used for transit improvements, something it had never done before. He also proposed that the MTA be able, for the first time, to issue bonds that would be paid back from future fares.

Unfortunately, the mental health centers legislation passed by Congress was fatally flawed. It encouraged the closing of state mental hospitals without and realistic plan regarding what would happen to the discharged patients, especially those who refused to take the medication they needed to remain well. It included no plan for the future funding of the community mental health centers. It focused resources on prevention when nobody understood enough about mental illnesses to know how to prevent them. And by bypassing the states, it guaranteed that future services would not be coordinated.

It is worth noting that the fiscal impact of immigrants is more positive at the federal level—given that most of them are of working age—than at the state and local levels, which fund the education of their children.

And, as inflation has fallen, so bonds have rallied in what has been one of the great bond bull markets of modern history. Even more remarkably, despite the spectacular Argentine default – not to mention Russia’s in 1998 – the spreads on emerging market bonds have trended steadily downwards, reaching lows in early 2007 that had not been seen since before the First World War, implying an almost unshakeable confidence in the economic future. Rumours of the death of Mr Bond have clearly proved to be exaggerated. Inflation has come down partly because many of the items we buy, from clothes to computers, have got cheaper as a result of technological innovation and the relocation of production to low-wage economies in Asia. It has also been reduced because of a worldwide transformation in monetary policy, which began with the monetarist-inspired increases in short-term rates implemented by the Bank of England and the Federal Reserve in the late 1970s and early 1980s, and continued with the spread of central bank independence and explicit targets in the 1990s. Just as importantly, as the Argentine case shows, some of the structural drivers of inflation have also weakened. Trade unions have become less powerful. Loss-making state industries have been privatized. But, perhaps most importantly of all, the social constituency with an interest in positive real returns on bonds has grown. In the developed world a rising share of wealth is held in the form of private pension funds and other savings institutions that are required, or at least expected, to hold a high proportion of their assets in the form of government bonds and other fixed income securities. In 2007 a survey of pension funds in eleven major economies revealed that bonds accounted for more than a quarter of their assets, substantially lower than in past decades, but still a substantial share.71 With every passing year, the proportion of the population living off the income from such funds goes up, as the share of retirees increases.

the technology behind every part of the iPhone—from the touch screen to 3G wireless to GPS to the internet itself—was directly funded by the US government. Apple brilliantly commercialized the technology, but the work behind the iPhone was created by academic researchers funded by federal investments. The work goes back decades. After the Second World War, the United States began investing heavily in research in science, technology, medicine, and other fields through the Defense Advanced Research Projects Agency, or DARPA. This agency is in charge of identifying and funding technologies that could provide military and domestic benefits.

A WORLD OF SLOWER GROWTH AND HIGHER INFLATION If triple-digit oil prices are the true culprit behind the recent recession, what happens if oil prices recover to triple-digit levels or even close to them when the economy recovers? Does the economy slip right back into recession again? Everything else being equal—or ceteris paribus, as they say in the economics textbooks—that’s probably as good a forecast as any. Every oil shock has produced a global recession, and the record price increase of the past few years may produce the biggest one of all. But recessions, no matter how severe, are finite events. Ultimately, we face a far more challenging economic verdict from oil. Any way you cut it, a return to triple-digit oil prices means a much slower-growing world economy than before. And not just for a couple of quarters of recession. That’s because virtually every dollar of world GDP requires energy to produce. Not all of that energy, of course, comes from oil, but far too much does for world GDP not to be affected by oil’s growing scarcity. And there is nothing at the end of the day that we can do about depletion. Big tax cuts and big spending increases can mitigate triple-digit oil’s bite, but the deficits they inevitably produce ultimately lead to tax hikes and spending cuts that just make the suffering all the more painful down the road. Taking out a loan to pay your mortgage might defer your problems for a month or so, but in the end, it often makes your difficulties more acute. Borrowing from the future just turns today’s problems into tomorrow’s, and by the time tomorrow comes, they’ve become a lot bigger than if we had dealt with them today. Trillion-dollar-plus deficits, just like a near-zero percent federal funds rate, can mask the impact of high energy prices for a while, but ultimately they can’t protect economies that still run on oil from the impact of higher energy prices and the toll that they take.

The creation of this digital collection, which brings together the entire body of research materials related to William F Cody's personal and professional life, will enable a variety of audiences to consider the impact of William F. Cody the cultural entrepreneur on American life and provide contextualizing documents from other sources, including audio-visual media that exist for the final years of his life. It will allow more scholars to study the man within his times, will provide new resources to contextualize studies of other regional and national events and persons, and will encourage digital edition visitors to explore and learn more about these vital decades of American expansion and development. The digital edition of the Papers will differ significantly from the print edition by including manuscript materials, photographs, and film and sound recordings, and it will offer navigational and search options not possible in the print edition. As Griffin's volume reveals, it took many people to make Buffalo Bill's Wild West happen. Likewise, there are many people whose combined efforts have made this documentary project a reality. All of the generous donors and talented scholars who have contributed to the success of this effort will be noted in due course. But in this, the first publication, it is appropriate to acknowledge that big ideas are carried to fruition only by sound and steady leadership. The McCracken Research Library was fortunate at the advent of the papers project that in its board chair it had such a leader. Maggie Scarlett was not only an early supporter of this documentary editing project but also its first true champion. It was through her connections (and tenacity) that the initial funds were raised to launch the project. Whether seeking support from private donors, the Wyoming State Legislature, federal granting agencies, or the United States Congress, Maggie led the charge and thereby secured the future of this worthy endeavor. Thus, this reissue of Griffin's account is a legacy not only to William Cody but also to all of those who have made this effort and the larger undertaking possible. In that spirit, though these pages rightfully belong to Charles Eldridge Griffin and to Mr. Dixon, if this volume were mine to dedicate, it would be to Maggie. Kurt Graham

The Commodity Futures Modernization Act of 2000 -- buried in an 11,000-page budget bill and never debated -- was passed the night before Congress recessed for Christmas in December 2000. It exempted credit-default swaps from federal oversight and from state gambling laws.

Beginning in 2001, there was another shift in the Repo market. The CFTC changed their margin investment rules, allowing for FCMs (Futures Commission Merchants) to invest their cash in federal agencies, municipal bonds, and corporate bonds, instead of just Treasurys. The premium that U.S. Treasury collateral enjoyed narrowed. Before the rule change in 2000, GC was averaging around 7 basis points below fed funds. Beginning in 2001, GC was averaging almost flat to fed funds. When there’s less demand for Treasurys, there’s a smaller premium.

In retrospect, I think our view of market expectations was too dependent on our survey of securities dealers. Futures markets gave us a reliable read of where markets thought the federal funds rate was going—but not for our securities purchases. For that, economists at the New York Fed asked their counterparts at the securities firms, who paid careful attention to every nuance of Fed policymakers’ public statements. In effect, our PhD economists surveyed their PhD economists. It was a little like looking in a mirror. It didn’t tell us what the rank-and-file traders were thinking. Many traders, apparently, didn’t pay much attention to their economists and were betting our purchases would continue more or less indefinitely. Some called it “QE-ternity” or “QE-infinity.” Their assumption was unreasonable and entirely inconsistent with what we had been saying. Nevertheless, some investors had evidently established market positions based on it. Now, like Metternich, they looked at our statements about securities purchases and asked, “What do they mean by that?” Their conclusion, despite the plain meaning of what I said at the press conference, was that we were signaling an earlier increase in our federal funds rate target. They sold their Treasury securities and mortgage-backed securities, driving up long-term interest rates.

Government-subsidized private sector job creation is one way forward. Recently, the federal government sponsored a promising short-term subsidized jobs program through something called the TANF Emergency Fund. States that chose to participate were allowed to use TANF dollars to provide employers (mostly in the private sector) with incentives to hire unemployed workers, targeting those on TANF or those who were in a spell of extended unemployment. Each state was given considerable leeway to design the program however it saw fit, often in close collaboration with employers. Across the District of Columbia and the thirty-nine states that took part in the program, employers created more than 260,000 jobs with an investment of only $1.3 billion dollars. Roughly two-thirds of participating employers said they created positions that would not have existed otherwise, and the businesses that took part expressed, on the whole, eagerness to participate in such a program in the future. Further, many participants remained employed after the subsidy ended, and those who had experienced significant trouble finding work especially made gains. Researchers who studied the program noted that it garnered “strong support from employers, workers, and state and local officials from across the political spectrum.” Creating a subsidized jobs program modeled on the TANF Emergency Fund would be one way to improve the circumstances of America’s $2-a-day poor.

Attempts to Close the Detention Center The United States Detention Center on the grounds of the Naval Base at Guantánamo Bay, Cuba was established in January of 2002 by the U.S. Secretary of Defense Donald H. Rumsfeld. It was designated as the site for a prison camp, euphemistically called a detention center, to detain prisoners taken in Afghanistan and to a lesser degree from the battlefields of Iraq, Somalia and Asia. The prison was built to hold extremely dangerous individuals and has the facilities to be able to interrogate these detainees in what was said to be “an optimal setting.” Since these prisoners were technically not part of a regular military organization representing a country, the Geneva Conventions did not bind the United States to its rules. The legality of their incarceration is questionable under International Law. This would lead one to the conclusion that this facility was definitely not a country club. Although, in most cases these prisoners were treated humanely, there were obvious exceptions, when the individuals were thought to have pertinent information. It was also the intent of the U.S. Government not to bring them into the United States, where they would be afforded prescribed legal advantages and a more humane setting. Consequently, to house these prisoners, this Spartan prison was constructed at the Guantánamo Bay Naval Base instead of on American soil. Here they were out of sight and far removed from any possible legal entanglements that would undoubtedly regulate their treatment. Many of the detainees reported abuses and torture at the facility, which were categorically denied. In 2005 Amnesty International called the facility the “Gulag of our times.” In 2007 and 2008, during his campaign for the Presidency, Obama pledged to close the Detention Center at Guantánamo Bay. After winning the presidential election, he encouraged Congress to close the detention center, without success. Again, he attempted to close the facility on May 3, 2013. At that time, the Senate stopped him by voting to block the necessary funds for the closure. The Republican House remained adamant in their policy towards the President, showing no signs of relenting. It was not until thaw of November of 2014 that any glimmer of hope became apparent. Despite Obama’s desire to close the detention center, he also knew that the Congress, headed by his opposing party, would not revisit this issue any time soon, and if anything were to happen, it would have to be by an executive order. The number has constantly decreased and is now said to be fewer than 60 detainees. There are still problems regarding some of these more aggressive prisoners from countries that do not want them back. It is speculated that eventually some of them may come to the United States to face a federal court. Much is dependent on President-Elect Trump as to what the future holds regarding these incarcerated people.

In these uncertain days, bond funds are an especially important option for investors. Unlike stock funds, they have high predictability in at least these five ways: (1) The current yields (on longer-term issues) are an excellent—if imperfect—predictor of future returns. (2) The range of gross returns earned by bond managers clusters in an inevitably narrow range that is established by the current level of interest rates in each sector of the market. (3) The choices are wide. As the maturity date lengthens, volatility of principal increases, but volatility of income declines. (4) Whether taxable or municipal, bond fund returns are highly correlated with one another. Municipal bond funds are fine choices for investors in high tax brackets, and inflation-protected bond funds are a sound option for those who believe that much higher living costs will result from the huge federal government deficits of this era. (5) The greatest constant of all is that—given equivalent portfolio quality and maturity—lower costs mean higher returns. (Don’t forget that index bond funds—or their equivalent—carry the lowest costs of all.)

Walking north along Hastings, Jimmy would have come to the future site of the Brewster Homes, one of the first two federally funded—and segregated—housing projects in the city. The project’s opening was a year away, but it had already been two years since the city began clearing the project site—designated by the Detroit City Plan Commission as the “East Side Blighted Area”—displacing hundreds of families (the vast majority of them African American) and several businesses. The project was part of the city’s racially coded slum clearance plan, which reinforced residential segregation and did little to ameliorate the city’s housing crisis. 100 The cleared site was in effect an expression of one of black Detroit’s major struggles—access to housing—anticipating the extreme wartime tensions around race and housing that exploded five years later with the controversy and mini-riot at the Sojourner Truth Homes.

The resources committed to Aboriginal language programs are far fewer than what is committed to French in areas where French speakers are in the minority. For example, the federal government provides support to the small minority of francophones in Nunavut in the amount of approximately $4,000 per individual annually. In contrast, funding to support Inuit-language initiatives is estimated at $44 per Inuk per year.

Competition also was coming from a new trend in industry to finance future growth out of profits rather than from borrowed capital. This was the outgrowth of free-market interest rates which set a realistic balance between debt and thrift. Rates were low enough to attract serious borrowers who were confident of the success of their business ventures and of their ability to repay, but they were high enough to discourage loans for frivolous ventures or those for which there were alternative sources of funding—for example, one's own capital. That balance between debt and thrift was the result of a limited money supply. Banks could create loans in excess of their actual deposits, as we shall see, but there was a limit to that process. And that limit was ultimately determined by the supply of gold they held. Consequently, between 1900 and 1910, seventy per cent of the funding for American corporate growth was generated internally, making industry increasingly independent of the banks.12 Even the federal government was becoming thrifty. It had a growing stockpile of gold, was systematically redeeming the Greenbacks—which had been issued during the Civil War—and was rapidly reducing the national debt. Here was another trend that had to be halted. What the bankers wanted—and what many businessmen wanted also—was to intervene in the free market and tip the balance of interest rates downward, to favor debt over thrift. To accomplish this, the money supply simply had to be disconnected from gold and made more plentiful or, as they described it, more elastic.