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Posts Tagged ‘Federal Reserve’

The Fed’s quantitative easing programs did indeed lower interest rates, but more so for Treasuries and mortgage-backed securities than for other kinds of debt. Small businesses are overrated as job creators. Extended unemployment insurance does increase unemployment rates, but not that much. Those are just a few of the findings from papers presented today at [...]

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Today’s humor break: Remy does the Debt Ceiling Rap (with some asides about monetary policy): Best line: “I got a monetary plan, and it involves a lot of toner.”

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In case you haven’t heard of him, let me introduce Brian Sack. As Executive Vice President at the New York Fed, he’s the guy in charge of implementing the Federal Reserves’s monetary policy efforts including all the purchases of agency securities and Treasury bonds in QE1 and QE2  (LSAP1 and LSAP2 in Fedspeak, where they are known as large-scale asset purchases). Sack [...]

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The Fed’s second round of quantitative easing ended in late June. That means we are now in a period of quantitative accommodation. The Fed continues to hold a hefty portfolio of mortgage-backed securities and longer-term Treasuries — thus providing continued, unconventional monetary stimulus — but it’s not adding more. At the FOMC’s June 21-22 meeting, the [...]

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Everyone has been writing epitaphs for the “end” of QE2, the Federal Reserve’s program to buy $600 billion in Treasury bonds. In a narrow sense, they are right: the Fed just completed those purchases. What most coverage misses, however, is that the effects of “quantitive easing” depend at least as much on the Fed’s owning [...]

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The Federal Reserve system is doing its part to cut the budget deficit. The central bank earned $81 billion in fiscal 2010, of which a bit more than $78 billion will be remitted to the Treasury. That’s $31 billion more than last year. According to the Fed’s news release yesterday, the following items drove profits: $76.2 billion [...]

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Here’s the simplest argument in favor of the Fed’s decision to restart quantitative easing: The economy remains very weak. Unemployment, for example, is still almost 10%, and the underemployment rate is close to 17%. Key inflation measures are exceptionally low. The core consumer price index (CPI), for example, is up only 0.6% over the past [...]

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When Ben Bernanke and his colleagues at the Federal Reserve announced their plan for $600 billion in new quantitative easing, I am sure they expected criticism. Angela Merkel? No surprise. Hu Jintao? Ditto. Domestic inflation hawks? Ditto again. But could the Fed have anticipated that its most vocal critics would be a pair of talking [...]

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Quantitative Easin’

In the style of Barry White, Curtis Threadneedle considers the Fed’s expected Wednesday move: Money quote (so to speak): “Lending short term–baby, that’s just teasing–I want to lend forever.” P.S. If this reminds you of Merle Hazard, it should. Merle and Curtis are buddies.  

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Economists have traditionally drawn a sharp distinction between monetary and fiscal policy. Monetary policy should try to promote growth and limit inflation by setting short-term interest rates, managing the money supply, and providing liquidity during times of financial stress. Fiscal policy should also encourage growth and, more broadly, promote the general welfare through careful choices [...]

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