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Fed's Fisher Commissions Paper To Bolster Easy Money Opposition

Monday, August 27, 2012 - 2:25 PM
From Reuters
Dallas Federal Reserve Bank President Richard Fisher on Monday sought to add heft to his opposition to further monetary stimulus with the release of a paper by a well-known economist critical of ultra-easy policy.

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Here's a link to that paper: Ultra Easy Monetary Policy and the Law of Unintended Consequences

A few interesting excerpts:

The central banks of the advanced market economies (AME’s) have embarked upon one of the greatest economic experiments of all time - ultra easy monetary policy. [...] The size and global scope of these discretionary policies makes them historically unprecedented. Even during the Great Depression of the 1930’s, policy rates and longer term rates in the most affected countries (like the US) were never reduced to such low levels.

[...]

ultra easy monetary policies have a wide variety of undesirable medium term effects - the unintended consequences. They create malinvestments in the real economy, threaten the health of financial institutions and the functioning of financial markets, constrain the “independent “ pursuit of price stability by central banks, encourage governments to refrain from confronting sovereign debt problems in a timely way, and redistribute income and wealth in a highly regressive fashion.

The economist who wrote this paper is William R. White. I'm afraid he and this paper probably won't have much influence. I found this excerpt from his Wikipedia bio interesting:
On Aug. 28, 2003, White made his argument directly to Greenspan, at the Kansas City Fed's annual meeting in Jackson Hole, Wyoming. White recommended to "raise interest rates when credit expands too fast and force banks to build up cash cushions in fat times to use in lean years.". Greenspan was unconvinced that this would work and said: "there has never been an instance, of which I'm aware, that leaning against the wind was successfully done"

4
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Monday, August 27, 2012 - 3:21 PM
Assimilation and accommodation aside, who still doubts that QE is anything more than academician ruse?
In a little under two-and-a-half minutes, CNBC's Rick Santelli surveys the landscape of just what exactly is Quantitative Easing, why more debt does not solve the problem of too much debt and why these actions are nothing but counterfeiting.
 

From Zero Hedge
1
CraigPDCraigPD94 posts since
Jun 12, 2010
Rep Points: 336
2. Monday, August 27, 2012 - 3:49 PM
The usual suspect eager for more QE...

The Federal Reserve needs to take action now to bring down the jobless rate, a top Fed official said on Monday.

Charles Evans, president of the Chicago Federal Reserve, said the central bank should not wait for more data. "I don't think we should be in a mode where we are waiting to see what the next few data releases bring. We are well past the threshold for additional action; we should take that action now," he told reporters at a seminar at the Hong Kong Bankers Club.

Federal Reserve official urges central bank to act on US unemployment | Business | guardian.co.uk
3
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
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