tag:blogger.com,1999:blog-5713178645208582139.post1211119903366810109..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: There is No Free Lunch in Central BankingDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5713178645208582139.post-10647021754480336322009-04-15T10:56:00.000-05:002009-04-15T10:56:00.000-05:00To me, the most striking part of the article was t...To me, the most striking part of the article was the authors' stating the Fed paying a positive interest rate on reserves currently is "inexplicable." <br /><br />I agree, although I've seen it argued elsewhere that the point was to give the Fed to ability to expand its balance sheet buy buing agencies, mbs, etc. The Fed creates money, it's recycled back to the Fed by banks rather than lent out,Justin D. Tapphttps://www.blogger.com/profile/12618278252714742391noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-80568405765611181032009-04-14T21:23:00.000-05:002009-04-14T21:23:00.000-05:00Anonymous #3:
Yes, I am looking ahead but also re...Anonymous #3:<br /><br />Yes, I am looking ahead but also recognize the need for the Fed to stabilize nominal spending now and avoid a deflationary collapse. You can see my concerns about the collapse in nominal spending and my endorsements of the current Fed policies <A HREF="http://macromarketmusings.blogspot.com/2009/04/there-is-no-free-lunch-in-central.html" REL="nofollow"></A><A HREF="http:/David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-86862267526457004032009-04-14T21:10:00.000-05:002009-04-14T21:10:00.000-05:00I'm glad you're trying to get ahead of thi...I'm glad you're trying to get ahead of things & worry about inflation, but at the moment, i see deflation everywhere. Incredible amounts of supply, nonexistent demand. The only way i can see inflation, even in the mid to long term, is in a few concentrated areas, like maybe oil and/or commodities. But a large run-up in across-the-board consumer prices? It seems highly improbable. We Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-43222298942627746512009-04-14T18:39:00.000-05:002009-04-14T18:39:00.000-05:00The Fed only needs to announce a particular target...The Fed only needs to announce a particular target for the price LEVEL, which allows for all the inflation up to this point, but implies a slowing inflation rate.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-78240421873310143752009-04-14T15:51:00.000-05:002009-04-14T15:51:00.000-05:00David Pearson--interesting point on the Fed effect...David Pearson--interesting point on the Fed effectivly targeting a quantity by paying interest on excess reserves. Monetarism could make a comeback afterall.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-86255547262335691142009-04-14T14:53:00.000-05:002009-04-14T14:53:00.000-05:00You think QE proponents assume 4? I think they as...You think QE proponents assume 4? I think they assume something like 2. The idea of QE is that you increase the money supply, depending on how you measure that, by <I>orders of magnitude</I>; nobody is so sanguine as to think that real GDP is going to grow at 1000% annualized for several quarters in a row to sop that up.<br /><br />I think 3) could be a valuable piece of it; I expect 2) to be dWjhttps://www.blogger.com/profile/12072494989829344049noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-77949775998042301362009-04-14T14:22:00.000-05:002009-04-14T14:22:00.000-05:00It is the consumer who will suffer, not rich Fed p...It is the consumer who will suffer, not rich Fed personnel. Once again, consumers get no seat at the decision making table. That is why they always lose.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-50461679397955542412009-04-14T09:52:00.000-05:002009-04-14T09:52:00.000-05:00I suspect that most QE proponents assume 4) withou...I suspect that most QE proponents assume 4) without making it explicit. I believe they see a world in which "automatic stabilizers" (depleted inventories, pent-up durables demand) kick in and create robust growth. The more steep the recession, the more depressed the levels of these "stabilizers", the quicker the reversion to the mean. So basically, they believe the Fed not only can withdraw David Pearsonnoreply@blogger.com