Today’s monetary policy debates sound increasingly like the
process of trying to get a picture on the wall centered and
straight: “A little more to the left.” “No, that’s not helping,
more to the left.” “Yes, that is helping.” “No, that is making it
worse, back to the right.”
Depending on your perspective, the picture is either crooked or straight. And when a host of people is noisily debating whether the frame should be tilted left or right, the sound can become downright unhelpful. The same goes for monetary policy.
Yesterday, the Federal Open Market Committee (FOMC) released the minutes from its June meeting, giving financial industry analysts a peek inside what our illustrious leaders at the Federal Reserve are thinking. Unfortunately, there is little agreement as to what the meeting notes mean—there's a near 50/50 split on whether the FOMC’s concerns about a deteriorating economy are proof positive that we’ll see QE3 or some other monetary stimulus program later this year.
QE—or quantitative easing—is a fancy way of saying create money out of thin air to put in a digital bank account and then spend on mortgage-backed securities or government debt in order to lower long-term interest rates. It's kind of like that Libor interest rate scandal you might have read about, except the Fed fixing interest rates is, well, sold as more of a market driven process for setting rates at a non-market established rate.
Read more: http://reason.com/archives/2012/07/12/the-harms-of-monetary-policy
Depending on your perspective, the picture is either crooked or straight. And when a host of people is noisily debating whether the frame should be tilted left or right, the sound can become downright unhelpful. The same goes for monetary policy.
Yesterday, the Federal Open Market Committee (FOMC) released the minutes from its June meeting, giving financial industry analysts a peek inside what our illustrious leaders at the Federal Reserve are thinking. Unfortunately, there is little agreement as to what the meeting notes mean—there's a near 50/50 split on whether the FOMC’s concerns about a deteriorating economy are proof positive that we’ll see QE3 or some other monetary stimulus program later this year.
QE—or quantitative easing—is a fancy way of saying create money out of thin air to put in a digital bank account and then spend on mortgage-backed securities or government debt in order to lower long-term interest rates. It's kind of like that Libor interest rate scandal you might have read about, except the Fed fixing interest rates is, well, sold as more of a market driven process for setting rates at a non-market established rate.
Read more: http://reason.com/archives/2012/07/12/the-harms-of-monetary-policy
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