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Federal Reserve

Under Chair Yellen’s guidance, the Federal Reserve ended its aggressive asset purchasing program, quantitative easing (QE), this year. The Fed’s next move will be to raise the federal funds rate from its current near zero level, but when that will happen will depend on many factors including the strength of the US and global economies. Markets are watching these moves carefully, as are many AEI scholars.

John H. Makin, Stephen D. Oliner, and Desmond Lachman are among the AEI scholars who follow the Fed’s actions closely. Here is a collection of their work and other selected pieces on the Federal Reserve.

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7-second takeaway

The celebration of the US economy’s second-quarter growth “rebound” to 4 percent will be short. The headline number’s strength exaggerates the growth pace. It would be dangerous if this number speeds up Federal Reserve tightening.

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7-second takeaway

It would be shocking if the Fed were to change monetary policy in any notable way at the FOMC meeting that concludes today. One reason is simply that Fed Chair Yellen does not have a press conference after this meeting.

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7-second takeaway

The good news for Janet Yellen is that she will take the reins at the Federal Reserve on Saturday with inflationary pressures subdued and the United States economy finally in an upswing (occasional stock market gyrations notwithstanding).

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Traders work on the floor of the New York Stock Exchange January 21, 2014.

7-second takeaway

As the U.S. economy continues to sputter, American Enterprise Institute economists identify five areas that could heavily affect an American recovery in 2014: trade, the Federal Reserve, housing, taxes and the Internet.

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7-second takeaway

In addition to her impending, and no doubt ultimately successful, quest for Senate confirmation, Janet Yellen will have a lot on her plate in the coming months. Now that House Republicans and Senate Democrats have come to yet another temporary agreement on the budget and debt ceiling, there still exists another threat to the economy.

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7-second takeaway

Discretionary fiat-currency central banking is subject to high uncertainty. Therefore the attempts of central banks to “manage” financial and economic stability are inevitably subject to mistakes, and recurring big mistakes.

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7-second takeaway

In the years leading up to the financial crisis, market participants assumed that policy makers would intervene to avoid the potential negative economic impact from the failure of a systemically important bank.

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7-second takeaway

Even as the American economy continues to struggle in the Great Recession’s aftermath, Americans continue to blame President George W. Bush and the Republicans for causing the worst economic catastrophe since the Great Depression. It’s an understandable conclusion.

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US Federal Reserve Vice Chair Janet Yellen testifies during a Senate Banking Committee confirmation hearing on her nomination to be the next chairman of the US Federal Reserve, on Capitol Hill in Washington November 14, 2013.

7-second takeaway

Someday the U.S. government’s currency monopoly might end. But probably not in my lifetime. I am willing to concede, though, that before our yellow sun goes red giant — the Republic will endure, my friends! — America might find itself awash in a competitive, Hayekian market of private currencies, perhaps the digital descendants of Bitcoin. It could happen.

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