Tag: "Monetary Policy"

Which Is More Important For Monetary Policy: The Growth Of The Fed’s Balance Sheet Or Its Level?

In my previous post, I noted that the FOMC has apparently begun to think of its low interest rate policy and its quantitative easing/balance sheet expansion policy as two different things. Their latest minutes suggest sentiment by some members for slowing or ending the announced open market purchases by the end of 2013, or possibly […]

Allow Interest Rates To Rise While Keeping Monetary Policy Accommodative

The minutes of the December 11-12 FOMC meeting, released today, have emboldened me to come out of the closet with a monetary policy suggestion and the reasoning behind it that I’ve been reluctant to express before lest I be ridiculed as hopelessly naïve. My suggestion is that the FOMC allow interest rates to rise a […]

Where Is The Inflation?

Going through some newspaper clippings the other day, I ran across an opinion piece in the Wall Street Journal titled, “Get Ready for Inflation and Higher Interest Rates.” The fourth paragraph is quoted below: “But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect […]

Hello QE3

Well, we have it now. The FOMC has promised (or threatened, depending on your viewpoint) to: –Extend the low-interest policy through mid-2015 –Purchase $40 billion of agency MBS per month indefinitely –Confirm “Operation Twist” to year-end –Continue its easy policy well into the eventual recovery period The most significant part of the program is its […]

Back To Jackson Hole

I went back to Jackson Hole again this summer, twice actually. I took family the first time since most had never been. My second trip, I took alone. My objectives were to get out of the unbearable Dallas heat, take long bike rides and moderately long hikes to lose a few pounds. The local scales […]


Arguments for: The dual mandate is getting lopsided. Inflation is low and falling; employment growth has stalled, and the unemployment rate is stuck above 8 %. Whatever trade-off or balance before, it has tipped recently. We may have a double dip. We are on the verge of the third consecutive weak GDP quarter, if you […]

End the Minutes

Today’s release of the minutes of the FOMC meeting held on June 19-20—three weeks ago—caused the stock market to decline, apparently because there was no substantial support revealed in the minutes for further quantitative easing. As one who believes that markets are pretty efficient, I find that remarkable and disconcerting because we already knew that […]

The Diminishing Marginal Utility of Excess Bank Reserves

This is not an argument for more quantitative easing, or QE3, as it would inevitably be called. Instead, this is about the logic of the argument for more quantitative easing. It is intended as a response to the oft-heard argument that more quantitative easing wouldn’t stimulate the economy because past quantitative easing hasn’t produced the […]

Some Questions and Answers

Prior to a recent speech to a small group of individual investors, my host asked them to submit some questions to me in advance. Here are the questions submitted with some brief answers. Is it possible for the sitting president who is up for reelection to manipulate economic figures in order to create a falsely […]

Sterilizing QE3

I find bizarre reports that Federal Reserve policymakers are considering sterilizing a new round of bond purchases in order to “subdue worries” about potential inflation. Here’s how the WSJ put it in the first two paragraphs of its story on March 8: “Federal Reserve officials are considering a new type of bond buying program designed […]