Tag: "quantitative easing"

Are All QE’s the Same?

The evolution of viewpoints about the Fed’s QE programs has been astounding. Among the chattering classes on the financial networks, sentiment went from “it’s dangerous and will cause hyper-inflation and a collapse of the dollar” to “we need QE for the stock market” to “why is the ECB dragging its feet in adopting a similar […]

Good Bye QE

I retired from the Fed on November 4, 2004, which will be 10 years ago in 6 days. At 8 AM tomorrow, I’m scheduled to give a speech on the economy after which I’ll have to give a defense of Quantitive Easing unless I try to preempt it during the speech. Texas audiences are polite, […]

Rethinking Quantitative Easing

First, it’s time to address the term “Quantitative Easing” once again. It originated when the Fed pushed its target federal funds rate down to near zero, and people said, that’s it. That’s all the arrows in the Fed’s quiver. No, even after short-term rates reach bottom, you can still add to the quantity of money […]

The Fed Has Not Been Printing Boatloads of Money

As I listen to commentary on cable TV about the Fed’s quantitative easing, I find it amazing that people smarter than I, as well as better trained and more knowledgeable about many things, keep making the same mistake they have made for the past three or four years. Their predictions of an inflationary break-out and/or […]

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 […]


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 […]

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 […]

Two Quibbles From Today’s Data

All day today, I’ve heard people say that there was no good news in the employment report. That is substantially true, but not totally true. For some time now, labor force drop-outs (shrinkage) have artificially lowered the official unemployment rate. Most pundits recognized that eventually that would reverse and returnees to the labor force would […]

QE2 Was A Really Big Ocean Liner

Not a good metaphor for monetary policy I know that the acronym, QE2, for Quantitative Easing 2 must have been irresistible, but it has been unfortunate. By making open market purchases, which should be routine, sound like such a big harry deal—printing money, debasing the currency, etc.—the term has, temporarily at least, delayed needed policy […]

Quantitative Easing

A Toxic Phrase for a Routine Policy When the Fed “eases” monetary policy by stepping up its purchases of government securities,bank reserves and deposits usually expand by the amount of the purchases, and, because of the fractional reserve system, further multiple expansion of bank credit and money ensues. This process is also usually associated with […]