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 [...]
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 [...]
Click here to see my CNBC interview today on St. Louis Fed President Bullard’s comments on possible deflation and the potential need for more quantitative easing by the Fed.
Once upon a time, people took rising interest rates as evidence of tighter money. Then, circumstances and growing sophistication led to recognition that rising inflation and/or rising inflationary expectations would show up in higher interest rates, especially longer-term rates. Then, apparently, everyone decided that rising long rates could ONLY be explained by easy money and [...]
The stance of monetary policy is confusing these days. The target Federal funds rate is near zero, but that's the nominal rate. With inflation low, the real rate cannot move as far into negative territory as it could if inflation were higher. It's not "zero bound," but it's much closer than usual. I've always regarded [...]