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You too can now relax

Summary:
People have stopped worrying about covered interest parity. This worry has expired along with the cross-currency basis. Here’s Matt Klein at Alphaville explaining that for much of 2016, it was much cheaper to borrow dollars in the U.S. and hedge them into yen than it was to borrow yen in Japan, creating an obvious arbitrage that nonetheless didn’t go away. But then it did, due to declining dollar strength or the full phasing-in of money-market-fund reform or changes in Federal Reserve balance-sheet policy. I look forward to other recurring Money Stuff worries being so fully and satisfactorily resolved. That is from the “no one else could do what he does” Matt Levine at Bloomberg.  And Matt points out that Stephen Curry is reading Ray Dalio’s Principles. The post You too can now relax

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People have stopped worrying about covered interest parity.

This worry has expired along with the cross-currency basis. Here’s Matt Klein at Alphaville explaining that for much of 2016, it was much cheaper to borrow dollars in the U.S. and hedge them into yen than it was to borrow yen in Japan, creating an obvious arbitrage that nonetheless didn’t go away. But then it did, due to declining dollar strength or the full phasing-in of money-market-fund reform or changes in Federal Reserve balance-sheet policy. I look forward to other recurring Money Stuff worries being so fully and satisfactorily resolved.

That is from the “no one else could do what he does” Matt Levine at Bloomberg.  And Matt points out that Stephen Curry is reading Ray Dalio’s Principles.

The post You too can now relax appeared first on Marginal REVOLUTION.

Tyler Cowen
Tyler Cowen is an American economist, academic, and writer. He occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. Cowen and Tabarrok have also ventured into online education by starting Marginal Revolution University. He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, the Wall Street Journal, Forbes, Newsweek, and the Wilson Quarterly.

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