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A Fed Hawk And Dove Debate Monetary Policy

Wednesday, April 3, 2013 - 6:03 AM
The inflation dove, Charles L. Evans,  president of the Chicago Fed, and the inflation hawk, Jeffrey M. Lacker, the president of the Richmond Fed, debated monetary policy on Tuesday.

Excerpts from the NYT Times:
Mr. Lacker said he doubted monetary policy had more power to increase growth.

Mr. Evans said the Fed had an obligation to try because unemployment remained high.

Mr. Evans said the Fed would have sufficient warning of inflationary pressures to keep price increases under control. Mr. Lacker said he was worried the Fed was overconfident about its ability to manage the risk.

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This provides some insights into the minds of the doves and hawks. The doves are convinced that this extreme monetary policy is helping to push down the unemployment rate and is worth the risks. The hawks are skeptical about its usefulness and are more worried about the risks.
3
Ken TuminKen Tumin5,467 posts since
Nov 29, 2009
Rep Points: 124,996
1. Wednesday, April 3, 2013 - 8:37 AM
“You know, the banking system has been saved on the back of the savers of the United States. We have totally destroyed any incentive for thrift, for deferred gratification.  If you were going to bail out the banking system with this kind of transfer -- I calculate it at three or four hundred billion a year -- the suppression of interest rates on depositors, on the seven trillion or so of deposit base that we have, is at least three or four hundred billion a year. That’s the same thing as taxing the public by three or four hundred billion and redistributing it to banks based on the distribution of their deposit base.”

- David Stockman
4
ShorebreakShorebreak2,602 posts since
Apr 6, 2010
Rep Points: 14,079
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