A Catastrophic Failure of Macroeconomic Policy

Michael Mackenzie and Robin Harding:

Yield record in US Treasury sale: Investors accepted the lowest yields ever for 10-year paper in a US Treasury auction shortly before the release of Federal Reserve minutes showing a bias towards more monetary easing. The scale of demand at the auction suggests investors expect US interest rates to remain low for several years. The $21bn sale of 10-year paper sold at a yield of 1.459 per cent, the lowest ever in an auction…

UPDATE: Brad DeLong: "In 2005 I would have given you 10,000 to 1 odds that future historians would regard Ben Bernanke as a better central banker than G. William Miller": So a learned colleague emails. He continues:

I still think Bernanke has a 75% 60% chance of coming out on top in the eyes of historians.

But if I had put $1000 down in 2005 on what I then regarded as a next-to-sure thing, I would now have to report a mark-to-market loss of $2.5 $4 million...

The tails are indeed thicker than you imagine, even when you know that the tails are thicker than you can imagine...