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Discussion: (2 comments)

  1. Agreed.

    Sadly, the Fed has all but committed to tapering down, despite evidence it should actually taper up. So now, if the Fed begins to taper up, the inflation-hysterics will scream about flip-flopping, lack of resolve and direction, bad guidance etc.

    QE has not really led to inflation in either Japan or the USA, but it has been coincident to improved growth.

    When near the ZLB, QE is the central bankers’ only real tool (well, maybe lowering or raising IOER).

    in ZLB-land, the Fed cannot low interest rate below zero, nor can raising rates (tightening money) do anything but lower rate expectations in the long run. Remember what Milton Friedman said, “Low rates are a sign money has been tight.”

    So when at ZLB, more tightening has the perverse effect of lowering long-term rate expectations. You cannot forever tighten your way to higher interest rates!

    Add on, the globe has a capital glut.

    The Fed should be doing QE hard and heavy. The Fed should shoot for back-to-back years of real GDP growth in the 4 percent range.

  2. M Hunger

    Once again, looking to the overly self impressed to fix our problems.
    Some quick solutions:
    1) Repeal the 16th Amendment, get rid of the IRS, collect the taxes needed to run our government by implementing a national consumption tax.
    2) Sunset Obamacare, and introduce a real solution to our health care needs that is in the hands – and the responsibility of – the individual.
    3) Tie our monetary unit to something of value.
    4) Get out of the way, let the free market roll.

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