I gave a short discussion of quantitative easing in the second post of my Inflation/Deflation series. I learned recently that the Financial Times web site has a nice explanation of how quantitative easing works to check deflation; if you're a visual learner, you might find it helpful. You may have to register at the FT site to view it, but registration is free.

The piece explains the risks of quantitative easing and makes an important point: although many economists believe that too much quantitative easing could be very bad and that too little easing won't check deflation, no one knows for certain a priori how much quantitative easing is too much (or not enough). Read the full article

Previously I discussed some of the differences between inflationary and deflationary economic environments. I’d like to pick up where I left off, mention one challenging aspect of deflation, and talk a bit about which environment we’re experiencing. Read the full article

Life insurance companies, normally thought of as bastions of stability, have come under greater scrutiny from concern that their holdings of mortgage-backed securities and aggressive annuity guarantees may put their financial stability at risk. Where can you go to determine the strength of your insurer? Read the full article

Increasingly in the media, there are discussions relating to deflation: are we experiencing deflation, and is deflation worse than inflation? Occasionally, discussions of the economy refer to disinflation. This will be the first in a series of posts exploring price changes and their implications for investing. Read the full article

Treasury Secretary Timothy Geithner and Securities and Exchange Commission Chairman Mary Schapiro each testified before different congressional committees today to disclose their recommendations on regulatory reform of US financial markets. Read the full article

For buyers in the most expensive housing markets, the rules concerning “conforming” mortgages have been confusing over the last year or so. Conforming mortgages are eligible to be purchased by Fannie Mae and Freddie Mac, the two government-run companies that together own or guarantee most home mortgages. One benefit of a conforming mortgage is the all-important interest rate: mortgages whose values exceed a specified amount are not conforming and typically carry interest rates that are ¾% or more higher than conforming mortgage rates. Read the full article

There are a number of differences between stocks and bonds. In addition to those I discussed earlier, the two also differ in terms of the unpleasant things that can go wrong with them. The deal struck between Citigroup and the Treasury recently provides an opportunity to illustrate a few more differences. Read the full article

With short-term Treasuries yielding fractions of a percent, people who need safe investments find they're getting very little for their money. What are the best options for low-risk cash investments right now? Read the full article

The final version of the 1071-page American Recovery and Reinvestment Act of 2009 is due to be signed by President Obama tomorrow. My summary of the bill's key tax items two weeks ago was not far off the mark, but there are a number of nips and tucks in the final version. Read the full article

Yesterday's House Financial Services Committee hearing gave evidence that bank lending is flowing again, but credit is still tight. Read the full article

As promised, the House and Senate have been busy working on The American Recovery and Reinvestment Act of 2009, which includes several tax law changes intended to boost the economy. Read the full article

Boston-based Fidelity Investments provides 401(k) plan management for over 17,000 employers, making it the largest plan administrator in the country. Fidelity’s annual “State of the 401(k)” report, released yesterday, provides a window into the behavior of 401(k) plan participants. Read the full article

What do FedEx, General Motors, Frontier Airlines, Eastman Kodak, Motorola, Sears and Unisys all have in common? All have announced plans to cut costs by suspending their matching contributions to employee 401(k) plans. Even Starbucks has announced that it may drop its 401(k) match in 2009. Read the full article

It's now agreed that our nation is in a recession. With increasing frequency, recent media discussions about the economy have turned to the question of whether it will turn into a depression. What's the difference? Read the full article

It's too early to say with certainty what changes will be made in the tax laws this year. But it's possible to make some educated guesses. Read the full article

Back in October, some influential members of the House of Representatives held hearings to discuss overhauling the 401(k) retirement plan system. Soon thereafter, talk radio, the blogosphere, and even the generally-sober Wall Street Journal erupted with dark warnings of a plot afoot to “nationalize” or “confiscate” everyone's 401(k) plans and convert them to accounts managed by the Social Security Administration. Read the full article

I wasn’t the only one to make fun of the NBER’s not-too-timely announcement that we are in a recession. Following on the heels of many others, David Merkel (Alephblog) gave his own raspberry to the NBER today. He provided a link to a very funny clip on the recession announcement from CBS Radio’s Dave Ross. Like David, I normally don’t care for audio links, but this is a worthy exception. Hope you enjoy it as much as I did…. Read the full article

A comment that I've heard several times in the last few weeks is, "I took a look at my 401(k)/mutual fund statement and it was really depressing." Well, take heart: at least you're not down by eight billion dollars.... Read the full article

Sometimes, a well-meaning gift giver just doesn't know enough about a recipient’s needs to select “the perfect gift.” A gift card or gift certificate seems like a nice solution in that situation, but what if the retailer that issued the card subsequently goes bankrupt? In the present economic climate, it seems likely that a few retailers will go bankrupt in the next few months. Here are a few thoughts to keep in mind as you consider giving a gift card. Read the full article

We all knew it in our bones, but now the word has come down from on high - the US economy has been in a recession since last December. Read the full article

Bloomberg.com has toted up all the Federal commitments made to date to stabilize the markets and the figure, if correct, is staggering: $7.76 trillion. Read the full article

Yesterday I attended the semiannual conference of the New England Economic Partnership (NEEP), a nonprofit organization that analyzes economic issues relevant to New England. The dismal scientists lived up to their name, although there were valiant attempts at optimism during the conference, which was held in the auditorium of the Boston Federal Reserve Bank. Read the full article

Most people thought that the Federal Reserve was being generous when it provided $85 billion to AIG in an equity deal plus $37.8 billion in liquidity lending. As it turns out, that might not be enough to keep the company going. Read the full article

Last month I wrote that the federal government, in its takeover of Fannie Mae and Freddie Mac, had begun effectively guaranteeing the debt of the two agencies.

But it became clear this week that the government is still hedging about the extent of its backing of the agencies' debts. Read the full article

The parties involved in the Lehman credit default swap (CDS) auction are settling up today, and everyone is hoping that none of the participants got too badly burned (even if they're hedge funds). Read the full article

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