A Tapir Is Born

Congratulations! We just got the news, the baby Tapir was born at 2 P.M. EST Wednesday. He’s a real cutie, although a bit undersized!


So, starting in January the Fed will buy $75,000,000,000 of bonds per month, down from the $85 billion per month they have been buying. So a little less money will be pumped into the “system” every month next year. As we mentioned before, most of that money does not get into circulation in the economy anyway. The speed with which money circulates in the economy is called “velocity,” and that number is still down a lot from its normal historical levels. And the Fed promised to keep policy loose in other ways, such as keeping short rates essentially at zero for years. So, all in all, a baby taper, small and light, and the market was relieved. They were fearing something worse.

Between the modest size of the adjustment and the lack of impact the money has been having anyway, early indications are that the dreaded attack of the Tapir may not happen. He is just a little ankle biter, and appears good-natured enough. But time will tell.

The markets seemed to like the message that the Fed is cautiously optimistic, that some of the recent numbers (jobs, housing starts) are improving a bit from their depressed levels the last five painful years. Let’s all hope these numbers are indications of better things to come!


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A Tapir Is Born

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