The beige book is an important indicator on the state of the U.S. economy and a critical tool for the Federal Reserve. CNBC explains.
Originally from All News, Video and Posts related to TOPIC: Federal Reserve
Jeffrey Lacker lays out rationale for why he doesn’t agree with pledging to keep interest rates low for at least two more years. He also foresees the U.S. economy continuing to improve.
Originally from MarketWatch
Jeffrey Lacker lays out rationale for why he doesn’t agree with pledging to keep interest rates low for at least two more years. He also foresees the U.S. economy continuing to improve.
Originally from MarketWatch
Jeffrey Lacker lays out rationale for why he doesn’t agree with pledging to keep interest rates low for at least two more years. He also foresees the U.S. economy continuing to improve.
Originally from MarketWatch
Whether it's Market Monetarist NGDP targeting (a.k.a. Damn The Inflation Rate; We Need Growth!) or Menzie's recommendation of Conditional Inflation Targeting with a notably higher target, everything tells us that somewhat higher inflation is the current path to greater and more widespread long-term prosperity.
Raising the expected inflation rate will lower real interest rates and spur investment and consumption. It will also make it difficult for the de facto dollar peggers, such as China, to sustain their policies. The resulting real depreciation of the dollar would stimulate production of U.S. exports and domestic goods that compete with imports, boosting American production. The United States would get faster growth, an accelerated process of deleveraging, a quicker recovery, and a firmer foundation upon which to address long-term fiscal problems.
Like the market monetarist approach, Chinn's proposal is basically for an automatic stabilizer based on unemployment levels, that anchors expectations (emphasis mine, both above and below):
a policy that would keep the Fed funds rate near zero and supplemented with other quantitative measures as long as unemployment remained above 7 percent or inflation stayed below 3 percent. Making the unemployment target explicit would also serve to constrain inflationary expectations: As the unemployment rate fell, the inflation target would fall with it.
As I said a while back:
Automatic stabilizers are the key to effective 1) policy and 2) expectation-setting. Because 1) They happen, and 2) People know they’re gonna happen. Could be fiscal or monetary, largely a question of where you inject the money.
In other words:
Full disclosure: as a wealth-holder/creditor, the policy proposed here is directly contrary to my own short-term best interests. I would much prefer to see a crash in financial asset prices resulting from deleveraging and slow-growth expectations, so I could buy those assets cheap with all the cash I'm sitting on. But for whatever crazy reasons, I'd rather that my (and your) children and grandchildren spend their lives in a thriving and widely prosperous country.
Cross-posted at Asymptosis.com
Originally from Angry Bear
This is Part III, the final part of our series "Robert Prechter Explains The Fed." (Here are Part I and Part II.) Money, Credit and the Federal Reserve Banking System Conquer the Crash, Chapter 10 By Robert Prechter
Originally from The Market Oracle
This is Part III, the final part of our series "Robert Prechter Explains The Fed." (Here are Part I and Part II.) Money, Credit and the Federal Reserve Banking System Conquer the Crash, Chapter 10 By Robert Prechter
Originally from The Market Oracle
The ongoing economic problems have made the central bank's decisions -- interest rates, quantitative easing, monetary stimulus, etc. -- a permanent fixture on six-o'clock news. Yet many of us don't truly understand the role of the Federal Reserve.
Originally from The Market Oracle
The Federal Reserve shouldn’t have pledged to keep interest rates at ultralow levels for two years because businesses now have even less incentive to move off the sidelines and start spending and hiring, one of three dissenting central bank presidents argued Wednesday.
Originally from MarketWatch
Most people have no idea how the Fed works, what it actually does and why its decisions have so much impact. To help you better understand the Fed and the people that run it, we'll discuss those issues and more.
Originally from All News, Video and Posts related to TOPIC: Federal Reserve
Articles and Discussions on The Federal Reserve
