monetary policy

The research presented below from the IMF from October 2010 "finds that fiscal consolidation typically reduces output and raises unemployment in the short term. At the same time, interest rate cuts, a fall in the value of the currency, and…

I flagged the inevitability of deficit fatigue as early as November 2008. I am sympathetic to the view that these deficits are an attempt to prop up excess credit growth and thus retard full recovery. But I also fear the consequences of a…

One thing I like about the Fed Chairman is that he speaks in understandable prose, unlike his predecessor. Why did everyone think the Fed will ride to the rescue? It’s wishful thinking.

There will be no stimulus unless the economy and/or asset markets deteriorate further.

What happens on August 3rd if no debt ceiling negotiation is reached in the US. This column argues that Treasury could go around, not over the debt ceiling limit by using its constitutional authority to mint money.

Rather than just send you to the link of Chairman Bernanke’s prepared remarks, I have coopied it hear and underlined the part you should pay attention to

The Fed could do a number of things: rate easing, municipal easing, inflation targeting, nominal GDP targeting. It is just that “the forward-looking cost-benefit analysis has shifted away from the potential benefits and towards greater…

The ECB does have the power to end this. They are not doing so for ideological reasons. Let me suggest two scenarios.

Clearly, the Europeans’ dithering has had catastrophic consequences. The extend and pretend strategy has not prevented contagion from infecting the core. So we need to see a response here. In the shorter-term, the Europeans are likely to…

Felix Zulauf sees problems ahead because of private sector debt. Expansionary fiscal policy and deficit spending have allowed the real economy to cope while expansionary monetary policy has helped asset prices. Zulauf sees a pause in this…