Federal Reserve Program Is Socialism for the Rich

By: Friday September 20, 2013 12:50 pm

If you have followed any economic news at all you will have heard the term quantitative easing, or QE, which is technocratic shorthand for the Federal Reserve shoveling funds into Wall Street banks to produce a phenomenon known as the “wealth effect.” The wealth effect relies principally on trickery. The hope being that people will see higher asset prices, and in a self-fulfilling prophecy, invest and produce more thinking the economy is better – which will make the economy better. So endeth the theory.

The reality is the Federal Reserve’s QE program has made the rich a lot richer and done little to nothing for the poor and middle class.

 

Janet Yellen’s Game-Changing Speech for Monetary Policy

By: Wednesday November 14, 2012 6:10 pm

The President opened his press conference by designating the top two priorities as jobs and growth, and then spent the next 60 minutes answering questions about David Petraeus and Susan Rice and tax rates and Benghazi and deficit reduction. And Obama didn’t seek to break out of that constraint and suggest actual near-term job creation strategies. So it’s pretty clear that jobs are a dead end as far as the legislative process is concerned.

On monetary policy, however, things have suddenly become a bit more promising. Janet Yellen, the Vice-Chair of the Federal Reserve, delivered a speech yesterday that strongly endorsed the idea of “forward guidance” in the economy, tying monetary policy actions to a specific employment target. The idea was first brooched by Charles Evans, the President of the Chicago Federal Reserve, who because of the rotation of regional Fed Presidents on the Federal Open Market Committee, will actually get a policymaking slot in 2013.

Assessing the Impact of QE3

By: Friday September 14, 2012 4:00 pm

Stocks have leveled off after yesterday’s boost from the Federal Reserve’s resumption of quantitative easing, this time in a more modest but open-ended capacity.

Most analysts take for granted that this new QE3 will work, in fact, better than the first two rounds despite its smaller footprint. That stems from the use of the expectations channel, and the Fed communicating that they will continue to take steps at monetary easing even after the recovery takes hold and the labor market improves. This represents a kind of admission of guilt on the part of Ben Bernanke, whose Jackson Hole speech was full of defenses of his prior view of the monetary situation. Basically, Bernanke said “we didn’t do enough, we’re changing course.”

Fed Announces Open-Ended QE3

By: Thursday September 13, 2012 12:00 pm

The Federal Reserve made a major and dramatic change to their monetary policy today, moving forward with a third round of quantitative easing that is actually more modest than the first two. However, the much more crucial component to the policy action was the open-ended nature of the commitment, including a promise to keep interest rates low even after the recovery takes hold.

Paper Criticizes Federal Reserve Approach, Suggests Radical Overhaul of Monetary Policy in the Crisis

By: Sunday September 2, 2012 12:55 pm

The upshot of Ben Bernanke’s speech at the economic symposium at Jackson Hole, Wyoming, at least to most interested observers, is that the Federal Reserve will enact a new round of quantitative easing at their next policy meeting the week of September 10.

Doing Just Enough: Why Ben Bernanke and Company Irk Me

By: Friday August 31, 2012 2:10 pm

For half a second I felt like I was being too hard on Ben Bernanke and his Jackson Hole speech. Mr. Market certainly thinks it presages another round of quantitative easing, with stocks up big today. And it’s considerate Fed-speak to merely hint and nod at a policy change before embarking on it, probably at the September 13 meeting.

But all of that went away when Joe Weisenthal got to the heart of his disappointment in the speech, and really in Bernanke’s tenure as well as the whole of the economic policy apparatus

Federal Reserve Keeps Missing Targets, Plans to Miss Them for Years

By: Tuesday July 10, 2012 10:30 am

Over the past few days, members of the Federal Reserve Board of Governors have begun to prepare the ground for another round of monetary easing. The arguments for this are simply that unemployment is coming in above target, and inflation below target, so in order to get back on track, the Fed must act. But this has been true for years, and the Fed has not acted as it can.

Monetary Easing in China, UK, EU Boosting Economies and the US Dollar

By: Thursday July 5, 2012 9:06 am

The Bank of England, People’s Bank of China and the European Central Bank all cut lending rates or added quantitative easing today, a near-global spurt of monetary stimulus designed to increase economic growth. Because the Federal Reserve hasn’t joined in, the dollar is growing stronger, which is bad news for US exports.

Operation Twisted

By: Thursday September 22, 2011 7:08 am

Speaker Boehner and the rest of the Republican leadership owe no apologies for sharing their views with Chairman Bernanke and the rest of the governors. The cause for outrage is the nature of these views.

The Fed Warms to More Monetary Easing

By: Sunday September 11, 2011 7:10 pm

Thoughts turn to monetary policy, and yesterday we saw at least some movement toward some action on that front. In addition to Charles Evans of the Chicago Fed talking unusually rationally about the crisis of high unemployment, Ben Bernanke hinted at more steps.

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